How Do I Calculate the True Labor Burden for Construction Crews in Ohio?
Base wages are just the starting point. A $25/hour employee doesn’t cost you $25/hour. The true cost includes everything you pay because that person is on your payroll.
Start with payroll taxes. Social Security is 6.2% and Medicare is 1.45%, totaling 7.65% of wages. Federal unemployment (FUTA) adds 0.6% on the first $7,000 per employee. Ohio unemployment (SUTA) varies based on your experience rating but typically runs 1% to 5% on the first $9,000.
Ohio BWC is where construction gets expensive. Workers comp premiums are based on classification codes, and construction trades carry high rates. A roofer might be $15 to $20 per $100 of payroll. A general carpenter might be $8 to $12. An electrician might be $4 to $6. Your actual rate depends on your claims history and group rating if you participate in one. This is often the single largest burden cost for construction.
Add benefits if you provide them. Health insurance, retirement contributions, paid holidays, paid vacation. If you offer a week of paid vacation, that’s roughly 2% of annual wages. Health insurance might run $500 to $1,500 per month per employee depending on the plan and how much you cover.
Include indirect costs that exist because you have employees. Training time, safety equipment, uniforms, small tools you provide, vehicle costs if they drive company trucks. These vary by trade and how you run your operation.
Calculate the burden rate as a percentage or multiplier. Add up all the costs beyond base wages and divide by base wages. If a $25/hour employee costs you an additional $9/hour in taxes, BWC, and benefits, your burden is 36%. Your fully loaded cost is $34/hour. As a multiplier, that’s 1.36 times base wage.
For construction job costing, use the burdened rate, not the base wage. Bidding a job at $25/hour labor when your true cost is $34/hour means you’re losing $9 on every hour worked before you’ve covered any overhead or profit. This is how contractors stay busy and still lose money.
The burden rate varies by employee. A foreman with health insurance and three weeks vacation has a different burden than a laborer with no benefits. Calculate rates by employee category if precision matters for your bidding.
Review your burden calculation annually. BWC rates change based on claims experience. Unemployment rates adjust. Benefit costs increase. Last year’s burden rate isn’t this year’s burden rate.
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