What percentage does labor burden, including employment taxes and insurance, typically add to labor costs?

Labor burden refers to the additional costs associated with employing workers beyond their direct wages. This includes employment taxes, such as Social Security and Medicare taxes, as well as various forms of insurance, including workers' compensation and health insurance.

Typically, labor burden can add about 30% to labor costs. This percentage reflects the common practice in many industries where businesses calculate the total cost of labor, considering both the direct pay and the associated overheads, to accurately budget and price their services. Understanding this percentage helps businesses set realistic pricing strategies and ensures they cover all costs related to employing workers adequately.

Using this percentage helps businesses in planning their finances, forecasting project costs, and ensuring they remain competitive while sustaining profitability.