I used to look at an employee making $20 an hour and figure he probably really cost our company something like $23 an hour after payroll taxes and other expenses. The problem was that I had no numbers to back that up. Once I started looking closely at our actual payroll, overtime, paid time off,…
Understanding the $25/hour employee cost starts with the employee’s base wage, but the true cost to an employer is considerably higher. If the employee works 40 hours, the obvious calculation is: $25 × 40 hours = $1,000 per week But that $1,000 paycheck is not the full cost of having that employee on your crew….
Paying an employee $25 per hour does not mean that employee costs your construction business $25 per hour. The real cost of an employee can be significantly higher once you account for employer payroll taxes, workers’ compensation insurance, paid time off, benefits, overtime, and other employee-related expenses. That difference is commonly called labor burden. Understanding…