Why "salary × 12" is the wrong number
When owners budget for a hire, most mentally reserve the wage and stop there. But the employer — not the employee — pays FICA's other half, unemployment insurance, workers' compensation, the employer share of health premiums, the retirement match, the laptop, the uniform, and every hour of PTO. Across US small businesses the fully-burdened cost typically lands between 1.25× and 1.4× base pay — higher in trades with expensive workers' comp classifications.
The number that matters for pricing decisions is cost per productive hour: total cost divided by hours actually worked (not hours paid). If you bill clients based on a $20/hr wage but the true number is $29/hr, every quote you send is quietly eating your margin.
How to use the result
- Pricing jobs: use cost per productive hour — never the wage — as the labor cost in your quotes. Our Job Quote & Markup Calculator takes it from there.
- Hire vs outsource: compare the true hourly figure against contractor rates like-for-like.
- Raises: a $1/hr raise costs you roughly $1.12–$1.15/hr after taxes that scale with wages.
Frequently asked questions
What are typical US default rates?
FICA is 7.65% of wages. FUTA is 6% on the first $7,000 (usually 0.6% after credits). SUTA commonly runs 1–5% on a state wage base depending on your experience rating. Workers' comp ranges from under 0.5% for office work to 10%+ for roofing. Replace the defaults with your actual rates for a precise answer.
Does the calculator handle part-time staff?
Yes — set the real hours per week. Fixed costs like equipment then spread over fewer hours, which is exactly why part-time hires often cost more per productive hour.
Where does my data go?
Nowhere. Everything is calculated in your browser; nothing is transmitted or stored on a server.
Is overtime included?
This tool models a standard week. If your team regularly works overtime, calculate the OT-inclusive average wage first with our Multi-Job-Site Time Card Calculator and use that as the rate here.
Disclaimer: Tax rates, insurance costs and employment rules vary by state, industry and year. This tool gives planning estimates, not payroll or tax advice — confirm figures with your accountant before making hiring decisions.