Labor Burden: What an Hour of Field Labor Actually Costs You

Labor burden is everything you spend to employ a person above the wage on their check. Employer payroll taxes, unemployment insurance, workers' compensation premium, health and retirement contributions, paid time off, licensing, training, and in field service the truck that person drives and the tools they carry.

Three buckets get mixed together constantly, so keep them separate. Burden attaches to a person. Overhead attaches to the company: rent, dispatcher salary, software, the office phone bill, marketing. Markup and profit sit on top of both and are a pricing decision, not a cost. Burden belongs in your job cost. Overhead gets recovered through your rate structure. Profit is what is left when the first two are honest.

BLS gives you a useful floor here. In March 2026, employer compensation costs for private industry workers averaged $46.60 per hour worked, split $32.60 in wages and salaries and $14.01 in benefits, which puts benefits alone at 30.1% of total compensation. That figure covers no truck, no fuel, no tool replacement, and no windshield time. For a field trade it is the starting line.

Split the list into what you must pay and what you chose to pay.

Mandatory

| Item | Notes | |---|---| | Employer Social Security | 6.2% of wages, statutory | | Employer Medicare | 1.45% of wages, statutory | | FUTA and SUTA | State experience rate varies | | Workers' compensation | Trade class codes run far above office class codes | | General liability, state disability | Varies by state and carrier |

Voluntary, plus the part nobody prices

| Item | Notes | |---|---| | Health, retirement, PTO, sick | Your benefits election, per tier | | Truck payment or lease | Assigned per tech, monthly fixed | | Fuel and commercial auto insurance | Monthly, tracks with route density | | GPS or telematics, phone and data | Monthly per unit | | Tools, replacement, uniforms | Annualized, then divided by hours | | License and certification renewals | Annual, plus the paid hours to sit for them |

That second table is where the office-worker articles stop being useful. A software company's equipment line is a laptop. Yours is a vehicle that costs more per month than most benefits packages.

Almost every burden calculator divides annual cost by 2,080 hours. For a field service company that number is fiction, and it is the single most expensive assumption on this page.

Start at 2,080. Take out holidays, PTO, and sick time. Now take out what only field work has: drive time between calls, shop and warehouse time, parts runs, callbacks, warranty rework, and the dead gaps when a cancellation leaves a tech sitting. None of that bills. All of it is paid. If you want the arithmetic on paid hours by month before you subtract anything, we walked through it in How Many Work Hours in a Month.

In 14 years of customer conversations, this is the thing I see owners discover last and regret most. They know their techs lose time. They have never divided by it. The same annual cost over a smaller denominator produces a materially higher hourly number, and that number is the one your bids should be built on.

Unbilled labor also leaks through scope. Contractors on Reddit and Quora consistently describe change orders arriving after the work is finished and projects launching without deliverables locked in writing, so crews perform work that never makes it onto an invoice. That is burden with no billable hour attached to absorb it.

Use your own rates in place of the illustrative ones. The structure is what matters.

| Line | Annual | |---|---| | Base wage, $28.00 x 2,080 | $58,240 | | Employer FICA at 7.65% | $4,455 | | FUTA and SUTA at an illustrative 2% | $1,165 | | Workers' comp at an illustrative 8% | $4,659 | | Health and retirement contribution | $6,000 | | Employment cost | $74,519 | | Truck, fuel, commercial auto, telematics, phone, tools at $2,200/month | $26,400 | | Total annual cost | $100,919 |

Burden on wages before the vehicle is $16,279, or 28%, which lands inside the 25% to 50% range the contractor calculators publish and near their 30% to 45% cluster. Those are vendor estimates rather than primary research, so treat them as a sanity check.

Now the denominator.

• Divided by 2,080 paid hours: $48.52 per hour
• Divided by 1,470 billable hours after PTO, holidays, drive time, shop time, and callbacks: $68.65 per hour

Same technician. Same year. A $20 gap on every hour you sell. Against the $28 wage, the honest multiplier is roughly 2.45x, not the 1.3x most owners carry in their head.

The order matters. Burdened cost per billable hour, then overhead recovery, then target margin, then bill rate.

The trap is counting the same dollar twice. If truck payments, fuel, and tool replacement already sit in your overhead pool, and you also load them into the hourly rate, your quote carries them twice and you lose bids you should have won. Strip them out of overhead and price on bare wage instead, and you win work at a loss. The rule: each cost belongs in exactly one place, and your markup assumption has to match wherever you put it. Write down which pool each line lives in before you touch a bid.

Here is the consequence that compounds. A bill rate set against an unburdened wage looks profitable on the estimate and on the invoice. It is wrong on every hour, on every job, all year. A 10% labor overrun on a $120,000 labor budget quietly removes about 27% of a small commercial job's gross margin, turning $45,000 into $33,000 before anyone notices. A wrong burden rate does that on purpose, quietly, from day one.

An apprentice, a journeyman, and a senior tech do not carry the same burden. They differ on comp class, benefits election, whether a truck is assigned to them or shared, and how much of their paid week is actually billable. A senior tech running solo calls may bill 80% of working hours. An apprentice riding along bills close to none of them, and that is fine, as long as your rate knows it.

Overtime is structural in this trade, not an exception. After-hours calls and emergency dispatch shift the wage base for those hours and the burden rides along with it.

Run a rate per tier. Then run a margin column per technician on every job, and let it turn red when someone is billed below what they cost. That single column is the cheapest diagnostic in the business. It surfaces the blanket-rate problem within a week instead of at closeout.

Most advice treats burden as a quarterly spreadsheet exercise. That is why it goes stale. The rate needs to attach to the time entry when the tech clocks in, roll into job cost against estimate, and sync to payroll and accounting without a re-key.

That means field time capture that reflects reality: clock in at arrival, drive time logged separately from wrench time, notes and parts attached to the work order. Techs will do this if it takes seconds on their phone, which is most of the argument in 7 Reasons You Need to Give Your Technicians a Mobile Field Service Management App. It also means the work order is the cost container, so every hour and part has a home. We covered how to structure that in our guide to work order management, and for crews you rarely see in person, the supervision side is in 9 Best Practices for Managing Remote Field Teams.

One of our construction customers put it plainly in a review, saying multi-phase builds used to mean juggling spreadsheets and paper logs and that PMs now track every job and dispatch crews from one screen. That is the shift. The rate stops being a document and becomes a field on a time entry.

One discipline I feel strongly about: if cost coverage is incomplete, withhold the margin number rather than displaying it. A confident margin computed from half-priced labor is worse than a blank cell, because owners act on it.

Review the rate every six months, annually at absolute minimum, and immediately after any of these: a workers' comp renewal, a health premium change, a wage adjustment, a hiring wave, or a new truck hitting the road.

Four errors do most of the damage:

1. Stale rate. Last year's premiums against this year's payroll.
2. Blanket rate. One number across apprentice, journeyman, and senior tech.
3. Double-counted overhead. The truck priced in the rate and in the overhead pool.
4. Paid-hours denominator. Dividing by 2,080 when the tech bills 1,470.

I would rather an owner run a rough burden rate they update twice a year than a precise one they built once in 2023. Precision on old inputs is just confident error.