Labor Burden - Do You Know What Your Employees Cost You?

You can ask business owners, big and small, if they know what their employees really cost them per hour to have them on the job and most will guess but very few will really know what that number is for anyone.  Do you know what your labor burden is for you and your employees?  Do you understand what the government taxes do to your rates?

Let's take a look at what it includes for you to hire an employee:  First you will pay the hourly rate, then if you are in the United States, you will pay a percentage for Social Security and matching amounts for Medicare.  You will also pay for Federal and State Unemployment for the first $7,000 in wages paid each year.  In some states, you will pay a Job Training Tax on the first $7,000 of wages each year as well.  Then you have to take into consideration any company paid benefits such as health insurance, dental insurance, union dues, paid holidays, paid sick days and paid vacation.  You will also need to take into consideration for any overtime hours that the employee is compensated for plus workers compensation insurance.

There is a lot to calculating Labor Burden but employers need to know what employees cost them so that they can correctly budget for the employees they currently have plus any that they are wanting to add to the workforce.  Your general liability insurance premiums could also come into play in calculating the burden as well.

If you need help calculating your particular labor burden, please feel free to contact us and we can assist you.  Our company provides services in the Greater Phoenix area for businesses including accounting, construction management, personnel training, employee manuals, policies and procedures including workplace violence and sales tax.  Let us know how we can help -- contact us today!

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If you are in the greater Phoenix area, we also offer on site services for consulting, accounting, training and custom spreadsheets. Follow us on Facebook and Twitter for new posts that are relevant to the construction industry. Contact us if there is a topic you would like covered. We look forward to working with you to help make your company more profitable and run more efficiently.

Charlene S. Reed, Author
Construction Administration Handbook
Owner - Responsible Business Services
"We only succeed when you succeed."