Labor Cost Calculator
Calculate the true cost of employment beyond base salary including benefits, taxes, and overhead expenses. This comprehensive calculator helps businesses accurately budget for staff and understand the full financial impact of hiring decisions.
Benefits
Taxes & Overhead
Related Calculators
Understanding Total Labor Costs
Labor costs extend far beyond the base salary or hourly wage paid to employees. Businesses that understand the comprehensive cost of employment can make more informed hiring decisions, set appropriate billing rates, and develop realistic budgets. This calculator provides a systematic approach to quantifying the full financial impact of staffing decisions.
What This Calculator Includes
- Base pay: annual salary, or an hourly wage converted to an annual salary using hours per week and weeks per year.
- Benefits: health insurance, retirement contributions, and any additional benefits you track as an annual cost.
- Employer taxes: payroll taxes and required employer contributions expressed as a percentage of wages.
- Overhead: workspace costs, equipment and software, plus training and onboarding expenses.
How the Calculation Works
The output helps you compare candidates, price services, and understand the real budget impact of a hire. For consistent planning, enter costs on the same basis, such as all annual figures.
Example: Loaded Cost vs Base Salary
Suppose a role has a base salary of $60,000. Add $6,000 health insurance, $3,000 retirement matching, 7.65% employer taxes, and $4,000 in overhead. The total annual cost will be higher than $60,000 because the additional components represent real cash and operational costs needed to support the role.
Labor Cost Calculation Formula
The comprehensive formula for calculating total labor costs includes several components:
Total Labor Cost = Base Salary + Benefits + Employer Taxes + Overhead
Where:
- Benefits = Health Insurance + Retirement Contributions + Other Benefits
- Employer Taxes = Base Salary × Tax Rate
- Overhead = Workspace + Equipment + Training
For hourly employees, the annual base salary is calculated as:
Annual Base Salary = Hourly Rate × Hours Per Week × Weeks Per Year