Employee cost calculator
Work out what an employee really costs. Start from an hourly rate or salary, add employer payroll taxes, workers' comp, benefits, paid time off and training hours, and get the total annual cost, labor burden rate and fully burdened cost per paid and per productive hour.
- Labor burden (% of wages)
- 23.1%
- Burden incl. PTO & training (% of productive wages)
- 38.1%
- Cost per paid hour (1,872 hrs)
- $55.38
- Cost per productive hour (1,668 hrs)
- $62.15
- Base pay per hour
- $45.00
- Wages for productive hours
- $75,060 72.4%
- Paid time off
- $8,100 7.8%
- Paid training & orientation
- $1,080 1.0%
- Social Security (6.2%)
- $5,223 5.0%
- Medicare (1.45%)
- $1,221 1.2%
- FUTA
- $42 0.0%
- SUTA
- $189 0.2%
- Workers' comp
- $2,527 2.4%
- Health insurance
- $7,200 6.9%
- Retirement match
- $2,527 2.4%
- Other benefits
- $500 0.5%
- Total
- $103,670
Estimates, not tax or legal advice. The defaults describe an example registered nurse at $45.00/hr on 36 hrs/week and are not market data. Tax rates use 2026 federal figures; SUTA, workers' comp and benefit costs vary by state, carrier and plan. For real market pay, see salary data or Rate Explorer.
What labor burden is
Labor burden is everything an employer pays for an employee on top of gross wages: payroll taxes, workers' compensation insurance and benefits. Wages are only the visible part of the cost. A $45.00/hr nurse on 36 hours a week earns $84,240 a year, but with the example inputs above the employer spends $103,670, a burden of 23.1% of wages.
There is a second, quieter cost: paid hours that aren't worked. Paid time off and paid training are inside wages, so they don't change the annual total, but they shrink the hours the cost is spread over. That is why this calculator reports cost per paid hour and cost per productive hour separately.
The labor burden formula
The calculator works on a full year so that capped taxes are applied correctly:
Taxes with a wage base are applied to annual wages, not per hour: Social Security on the first $184,500, FUTA on the first $7,000, and SUTA on your state's wage base. Applying them as a flat percentage of every hour overstates the cost for higher earners and for anyone who works a full year.
What goes into the cost of an employee
- Employer FICA: 7.65%
- 6.2% Social Security on wages up to the $184,500 wage base for 2026, plus 1.45% Medicare on all wages with no cap. The employee pays a matching 7.65% out of their own pay; that half is not an employer cost.
- FUTA
- Federal unemployment tax of 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% when the employer gets the full credit for state unemployment tax. Employers in credit-reduction states pay more.
- SUTA
- State unemployment tax. Each state sets its own taxable wage base and assigns each employer a rate, which moves with the employer's claims history. Use the rate on your state notice.
- Workers' compensation
- Quoted as a rate per $100 of payroll, set by state and job class code. Patient-handling clinical roles are classed differently from office staff, so use the rate for the specific class.
- Health insurance and other benefits
- The employer share of medical premiums, plus dental, vision, life, disability, retirement match, tuition and licensure or CEU reimbursement. Health insurance is usually a fixed dollar amount, so it weighs more heavily on lower-wage roles.
- Paid time off and non-productive hours
- Vacation, sick time and holidays, plus paid orientation, competency training, education days and meetings. These hours are paid but not worked, so they raise the cost of each productive hour.
A 1099 contractor carries none of these employer costs and pays self-employment tax instead. Compare the two with the 1099 vs W-2 calculator.
Burden rate vs fully burdened labor rate
The two terms are often used interchangeably, but they answer different questions.
- Burden rate is a percentage: employer costs on top of wages ÷ wages. It tells you how much to add to pay. In the example it is 23.1% on gross wages, or 38.1% if paid time off and training are counted as burden and measured on wages for productive hours.
- Fully burdened labor rate is a dollar figure per hour: total cost ÷ hours. The example nurse costs $55.38 per paid hour and $62.15 per productive hour, against a pay rate of $45.00.
Use the per-productive-hour figure when comparing an employee with an agency or contract clinician, who is billed only for hours worked. Comparing a pay rate against a bill rate, or a per-paid-hour cost against a bill rate, makes the employee look cheaper than they are.
Healthcare-specific notes
- Shift differentials and overtime
- Night, weekend and charge differentials are wages, so they carry FICA, unemployment tax, workers' comp and any percentage-based retirement match. Enter a blended hourly rate that includes the differentials a nurse typically works.
- Orientation hours
- New hires often spend weeks in paid orientation before taking a full assignment. Enter those hours in training and orientation to see how they lift the cost of each productive hour in the first year.
- Per diem staff with no benefits
- Per diem employees are often paid a higher hourly rate in place of benefits and PTO, but they are still W-2 employees, so payroll taxes and workers' comp still apply. The same example nurse with benefits and PTO set to zero comes to a burden of 10.9% and $50.56 per productive hour. See what per diem means in healthcare.
- Agency staff
- When a facility uses agency clinicians, the agency is the employer of record and carries the burden. It is built into the bill rate along with the agency's margin and any MSP fee. Read bill rate vs pay rate, or use this calculator's burden rate in the bill rate calculator.
Worked example: one nurse, five pay rates
The table runs the calculator's example inputs (36 hrs/week, 52 weeks, SUTA 2.7% on $7,000, workers' comp $3.00 per $100, health insurance $600/month, 3% retirement match, $500 other benefits, 15 PTO days of 12 hours and 24 training hours) at different pay rates. These are illustrative inputs, not market data.
| Pay rate | Gross wages | Burden | Burden rate | Total cost | Per paid hr | Per productive hr |
|---|---|---|---|---|---|---|
| $35.00/hr | $65,520 | $16,874 | 25.8% | $82,394 | $44.01 | $49.40 |
| $45.00/hr | $84,240 | $19,430 | 23.1% | $103,670 | $55.38 | $62.15 |
| $60.00/hr | $112,320 | $23,263 | 20.7% | $135,583 | $72.43 | $81.28 |
| $80.00/hr | $149,760 | $28,373 | 18.9% | $178,133 | $95.16 | $106.79 |
| $100.00/hr | $187,200 | $33,316 | 17.8% | $220,516 | $117.80 | $132.20 |
The burden rate falls as pay rises, from 25.8% at $35.00/hr to 17.8% at $100.00/hr. Health insurance is a fixed dollar cost, and FUTA and SUTA stop at their wage bases, so they shrink as a share of higher pay. At $100.00/hr annual wages of $187,200 also pass the $184,500 Social Security wage base. A single burden percentage applied to every role will overcost your highest earners and undercost the rest.
Frequently asked questions
How do you calculate labor burden?
Add up everything the employer pays on top of gross wages for one year: employer Social Security and Medicare, federal and state unemployment tax, workers' compensation, health insurance, retirement contributions and other benefits. That total is the labor burden in dollars. Divide it by gross wages to get the burden rate as a percentage.
What is a fully burdened labor rate?
It is the total annual cost of an employee (wages plus burden) divided by hours. Divided by paid hours it gives the cost of every hour on the payroll. Divided by productive hours, which excludes paid time off and paid training, it gives the true cost of each hour the employee is actually working, which is the right number for pricing and staffing decisions.
How much does an employee cost on top of salary?
It depends on the components rather than a fixed percentage. Employer FICA is 7.65% of wages (Social Security stops at the annual wage base). FUTA and SUTA apply only up to their wage bases. Workers' comp is a rate per $100 of payroll set by state and job class. Health insurance is usually a fixed dollar amount, so it is a larger share of pay for lower-wage roles. Retirement match, other benefits, and paid time off and training add the rest. Enter your own figures in the calculator to see the total.
What is the difference between a burden rate and a fully burdened labor rate?
A burden rate is a percentage: employer costs on top of wages divided by wages. A fully burdened labor rate is a dollar figure per hour: wages plus burden divided by hours. The burden rate tells you how much to add to pay; the fully burdened rate is what an hour of that employee actually costs.
Is paid time off part of labor burden?
PTO is already inside gross wages, so it does not add to the annual total. It does reduce productive hours, which raises the cost of each hour worked. Some companies report burden on gross wages; others treat PTO and paid training as burden and measure it on wages for productive hours only. The calculator shows both.
Does labor burden apply to agency or 1099 workers?
Not to the facility. When a clinician is a W-2 employee of a staffing agency, the agency pays the payroll taxes, workers' comp and any benefits, and builds them into the bill rate. A 1099 contractor pays self-employment tax and covers their own benefits and time off, so the client pays only the contract rate.