Your employee's wage is not what they cost you. Add payroll taxes, workers comp, benefits, paid time off, tools, and vehicle costs—and you'll see the real number. Calculate your true burden rate so your labor pricing actually covers what it costs to put a tech in the field.
Add FICA (7.65%), workers comp (6.5% for most trades), FUTA/SUTA (2.5–3%), PTO (2 weeks = 4% of wages), health insurance ($350/month = ~$2.00/hr), vehicle ($600/month = ~$3.50/hr), and uniform/PPE ($75/month = ~$0.45/hr) to a $28/hr wage and you're at $42–$48/hr before you cover a single dollar of overhead or profit. Contractors who price labor at $28/hr are losing money on every hour. This isn't abstract — it's a cash flow problem that shows up when you can't make payroll while jobs are full and the bank account is empty.
Workers compensation insurance is priced per $100 of payroll and varies dramatically by trade classification. An office worker might pay $0.30 per $100. An HVAC tech: $4–$8 per $100 (4–8%). A roofer: $15–$30 per $100 (15–30%). Electricians: $3–$8. Plumbers: $4–$9. These rates also vary by state, experience modification factor (EMR), and claims history. A business with a poor safety record and high claims pays 50–100% more in workers comp than a competitor with a clean record. Know your actual rate from your insurer — not a guess — and build it into every labor quote.
An employee paid 2,080 hours per year does not generate 2,080 billable hours. Subtract: 2 weeks PTO (80 hrs), 8 holidays (64 hrs), drive time (typically 1–2 hrs/day unbillable = 250–500 hrs/year), shop time and truck loading (30–60 min/day = 125–250 hrs), callbacks and warranty work (varies), training. A realistic billable efficiency is 65–75% of paid hours for a field tech. If you staff for 2,080 paid hours but only bill 1,400 hours, your cost-per-billable-hour is 49% higher than the raw wage math suggests. Build billable efficiency into your rate calculation — not as an afterthought.
The Tradesman's Business Starter Kit includes a labor costing worksheet, overhead rate calculator, and service agreement template. Guide from $19 — Complete Kit with all 19 templates, $49.
Get the Business Kit — $19An employee's real cost is far more than their hourly wage. This calculator adds employer FICA, FUTA/SUTA, workers' comp, health benefits, and other overhead to give you the true hourly cost of keeping someone on payroll. Use it to set billable rates that actually cover your labor costs, or to compare the cost of adding headcount vs. subcontracting the work.