Labor Burden Rate & Fully Burdened Hourly Cost Formula
Labor burden formula in Excel: (payroll taxes + benefits + insurance) ÷ base wages, and the fully burdened hourly rate per productive hour. Free labor burden calculator.
=LET( wages, [@AnnualBaseWages], burden, [@PayrollTaxes] + [@Benefits] + [@WorkersComp], productiveHours, [@PaidHours] - [@PTOHours], burdenRate, burden / wages, (wages + burden) / productiveHours )
Employer costs on top of wages: payroll taxes, benefits and insurance.
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The Problem with Standard Excel Approaches
Quoting jobs at the base wage ignores FICA, unemployment tax, workers comp, health insurance and paid time off, which typically add 25% - 40% to the real cost of an hour of work.
How Modern Dynamic Arrays Execute This Formula
Starts from annual base wages per employee or role.
Adds employer FICA (7.65%), FUTA/SUTA, workers comp and benefit premiums.
Removes paid-but-unworked hours to find productive hours.
Returns both the burden % and the fully burdened hourly rate.
Common Excel Errors & How to Fix Them
Solution: Subtract PTO and holiday hours before dividing.
Solution: Use one method only: reduce productive hours, or add PTO cost, not both.
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