What labor burden actually is
Labor burden is every dollar of cost attached to a worker's paycheck that is not the paycheck itself. The bid-level formula is simple and the component detail is where the damage happens:
Burdened Rate = Base Wage × (1 + Statutory % + Insurance % + Fringe %) + Small Tools + Share of Supervision
A "38%" total is a convenient shorthand for an all-in non-union commercial crew. Union trades with full fringe packages and high workers-comp codes routinely run 55-75%. Federal Davis-Bacon prevailing-wage work layers a separate hourly cash-fringe obligation on top. Miss any one of these stacks and the labor line in your bid is low by the amount of the miss, times every manhour in the estimate.
The statutory layer (FICA, FUTA, SUTA)
These are the non-negotiable federal and state payroll taxes. They apply to every W-2 employee regardless of trade:
- FICA — Social Security 6.2% on wages up to the Social Security Wage Base ($176,100 in 2025 per SSA) plus Medicare 1.45% on all wages, for a combined 7.65% employer share.
- FUTA — Federal Unemployment, 6.0% on the first $7,000 of wages, typically credited down to 0.6% net in states with current SUTA compliance.
- SUTA — State Unemployment, the most variable line in the stack. 2025 new-employer rates: California 3.4% on first $7,000; Texas 2.7% on first $9,000; New York 4.1% on first $12,500; Washington around 1.0%-5.4% on first $68,500. Experience-rated firms with recent claims can hit 8-12% in high-rate states.
For a tradesperson working 2,000 hours a year at $38/hour ($76,000 gross), FICA is $5,814, FUTA/SUTA together is usually $240-$900. Expressed as a percentage of hourly cost, the statutory layer is typically 7.9-9.0% of gross wages.
Workers compensation — the wildcard line
Workers comp rates are set by class code. The National Council on Compensation Insurance (NCCI) classifies construction work in a small number of codes that drive enormous premium differences:
- NCCI 5022 — Masonry NOC — typical rate $8-$16 per $100 of payroll
- NCCI 5183 — Plumbing NOC — typical rate $4-$8 per $100
- NCCI 5190 — Electrical wiring inside — typical rate $3-$6 per $100
- NCCI 5403 — Carpentry NOC — typical rate $9-$18 per $100
- NCCI 5606 — Contractor — executive supervisor — typical rate $1-$3 per $100
- NCCI 5645 — Carpentry residential — typical rate $14-$22 per $100
- NCCI 5538 — Sheet metal work — typical rate $6-$12 per $100
- NCCI 5551 — Roofing — typical rate $20-$48 per $100
Those rates are the manual rate. The actual rate you pay is manual rate × experience modification factor (EMR, also called the "X-Mod") × scheduled credits or debits. A firm with a 0.78 EMR pays 22% less than manual; a firm with a 1.35 EMR pays 35% more. A roofing contractor at 0.85 EMR on a $28/$100 class still pays $23.80 per $100 of payroll — effectively 23.8% burden just for workers comp, on top of everything else.
Using a firm-wide "blended" workers comp rate when bidding a trade-heavy project. If your firm's blend is 11% but the scope is 80% roofing (NCCI 5551 at 28%) and 20% carpentry (5403 at 12%), your actual burden on this job is closer to 24% — not 11%. Calculate workers comp at the class-code level for the scope you are bidding, not the company average.
General liability, umbrella, and the builder's risk share
General liability is usually rated per $1,000 of receipts, typically $8-$35 per $1,000 for construction classes. Expressed against labor, it commonly works out to 1.5-4.5% of gross wages. Umbrella policies add 0.3-1.0%. Builder's risk, when the subcontractor is named or contributes to the OCIP/CCIP, adds another 0.2-0.8% — though on an owner-controlled insurance program the sub typically takes a credit back from the GC rather than carrying it as burden.
Fringe benefits — union vs. non-union
This is where the spread gets loud. On non-union commercial work, "fringe" is whatever benefits the employer provides: health insurance contribution, 401(k) match, PTO, holiday pay. A typical non-union commercial contractor runs 18-26% of base wage in fringe cost. Union trades under a collective bargaining agreement (CBA) carry defined-benefit pension, health-and-welfare, training fund (apprentice program), vacation/holiday, and annuity, all itemized on the wage sheet.
A 2025 Chicago Local 150 Operating Engineer working at a $58.10 base rate pays out $26.85 in H&W, $18.20 in pension, $1.90 in training, for roughly $47 in hourly fringe. That is 81% of base wage in fringe alone before statutory or insurance burden. The same math on a Carpenters Local 1977 St. Louis agreement, a 2024 Plumbers UA 290 Oregon agreement, or any Laborers LIUNA agreement lands in the 60-90% range.
Davis-Bacon and prevailing wage adders
Federal projects subject to the Davis-Bacon Act (40 USC 3141, implemented by 29 CFR Parts 1, 3, and 5) require contractors to pay "prevailing wage" plus a cash fringe rate published by the Department of Labor on the applicable Wage Determination (WD-###). The base wage and the fringe are separate obligations — you can pay the fringe as cash or fund an approved benefit plan, but you must pay both.
A 2025 WD for building construction in Philadelphia lists a carpenter at $46.19 base plus $29.68 fringe, for a Davis-Bacon total of $75.87 per hour. On the same non-federal job the carpenter might earn $38 all-in. The Davis-Bacon delta is real money and it cascades through burden: statutory and insurance % apply to the base wage only, but the cash fringe is an additional line. Add state prevailing wage (California DIR, New York DOL, Washington L&I) on state-funded work and you have the same structure with different wage rates.
Bonding capacity draw
This is the line estimators chronically miss. Every bid over your firm's single-project bonding threshold requires a performance and payment bond under AIA A312. Surety pricing scales with project size and your firm's financial strength: typical first-$100K rate is around 2.5%, with tapered rates thereafter — 1.5% on the next $400K, 1.0% above. A $6M project carries roughly $45K-$65K in bond premium, and a percentage of your available bonding capacity is tied up in WIP (work-in-progress) for every open project, which constrains what else you can bid.
You can carry the bond premium as a separate line on the bid, or load it into burden — either is defensible, but it has to appear somewhere or the gross margin you reported to ownership at bid time is not the margin you will book.
Full burden buildup — commercial non-union carpenter
| Line | Basis | Rate | $/hr on $38 Base |
|---|---|---|---|
| Base wage | — | — | $38.00 |
| FICA (SS + Medicare) | % of gross | 7.65% | $2.91 |
| FUTA net | % of first $7K | ~0.2% blended | $0.08 |
| SUTA (mid-state) | % blended | ~1.2% | $0.46 |
| Workers comp NCCI 5403 | $ per $100 × EMR 1.0 | 12.0% | $4.56 |
| General liability | % of labor | 2.5% | $0.95 |
| Health / benefits | % of base | 14% | $5.32 |
| PTO / holiday | % of base | 6% | $2.28 |
| 401(k) match | % of base | 3% | $1.14 |
| Small tools | % of labor | 2% | $0.76 |
| Supervision share | % of labor | 4% | $1.52 |
| Total burdened rate | ~52.7% | $57.98 |
That is the "38%" most estimators carry informally coming in 52.7% on a real buildup — and this is the easy case. The same exercise on a Boston Local 33 union ironworker with full fringe, NCCI 5059 at $24/$100, a 1.10 EMR, and a 0.8% bond load lands north of 95% above base.
Put it in the bid, then audit it on the job
The discipline is threefold. First, build the burden stack for the specific project — class codes, jurisdiction SUTA, wage determination if applicable. Second, apply it at the crew line, not as a single percentage on the bottom. Third, after the job closes, pull actuals from the accounting system and reconcile against the bid assumption — if your estimating burden was 52% and cost accounting shows 57%, your next bid's baseline moves.
PILRS ties takeoff quantities to trade-specific crew assemblies where the burden stack is already in place at the class-code level. See pricing and stop carrying a round-number burden on bids that deserve the real math.