LABOR BURDEN: WHAT A WAGE REALLY COSTS.
Labor burden is every cost of employing someone beyond their wage. For a $28 an hour carpenter, employer payroll tax of 7.65 percent, workers compensation at 12 percent, health insurance and a retirement match bring the cost to $37.34 an hour, and spreading that over productive hours puts the true figure at $43.15. A bid or job cost report built on the $28 wage understates labor on every job.
A $3M subcontractor with 40 percent labor content has $1.2M of labor, and using wage rates in place of burdened rates understates labor cost by $420K to $660K a year. That error is a pricing error on every bid, and it never appears as a line item, which is why it reads as a mystery at closeout.
WHAT IT MEANS.
Labor burden is the cost of employing a worker above the wage itself: employer payroll taxes, workers compensation, insurance, benefits and paid time off, expressed as a rate on wages or as a cost per productive hour.
Burden is a rate, so it changes whenever insurance renews, a workers comp audit closes or a benefit is added. Calculate it once a year and again when any of those change.
WHY THE WAGE MISLEADS.
The wage is only the first line
Employer payroll tax is 7.65 percent for Social Security and Medicare, plus unemployment tax set by your state. Workers compensation is priced on payroll by class code and often costs 8 to 15 percent in the trades. Health insurance and a retirement match add dollars per hour, and some insurance premiums are priced on payroll too.
Paid hours are more than productive hours
A worker paid for 2,080 hours may produce 1,800 on jobs after holidays, paid time off, training and shop time. Dividing the full cost by productive hours is what moves $37.34 to $43.15. Without that step every estimate leaves out the cost of the hours nobody billed.
One burden rate does not fit every crew
Foremen and laborers, union and non-union crews, and different workers comp classes all carry different burden. A single company-wide rate overstates the cost of some work and understates the rest, so bids on the cheaper crews lose and bids on the costlier ones win and lose money.
WHAT IT LOOKS LIKE IN DOLLARS.
Wage $28.00. Employer payroll tax at 7.65 percent, $2.14. Workers comp at 12 percent, $3.36. Health insurance at $3.00 an hour, assumed. Retirement match at 3 percent, $0.84. Total $37.34 per paid hour. Divide by 0.865, which is 1,800 productive hours out of 2,080 paid, and the cost is $43.15 per productive hour. Your inputs will differ and the method does not.
The job costing guide puts a $28 carpenter at $38 to $44 an hour fully burdened, and the bid pricing guide shows $42 to $60 on a $28 wage. The spread comes from the workers comp class, the benefits package and how many paid hours are unproductive.
WHAT WE CHANGE.
We build the rate from your payroll register, workers comp policy and benefit invoices, by crew type. It is recalculated at renewal and whenever a benefit changes, so the number in the estimate matches the number in the books.
The estimate and the job cost report use the same burdened rate, and hours and dollars are both tracked. A job that comes in on hours and over on dollars is a rate problem, and only a burdened rate shows it.
Burdened labor posts to jobs from payroll each month, and the total ties back to the payroll register. Labor that never reaches a job is counted in overhead, which is how a rate gets understated without anybody deciding it.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
FREQUENTLY ASKED.
