What is the labor cost
- True annual cost of this employee
- $75,775
- Social Security, employer share (6.2%)
- $3,720
- Medicare, employer share (1.45%)
- $870
Every figure on this page is computed from the inputs you enter, by the method stated below it. The only constants HeadcountDesk supplies are the published federal payroll tax rates and the overtime multiplier, each cited where it is used. The defaults are a worked example to replace with your own.
What is the labor cost of an employee is answered with one calculation, not a lookup: the wage plus the employer's share of Social Security and Medicare, unemployment insurance, workers' compensation and the benefits, divided by the hours actually worked. The answer is specific to the employee and the business, which is why a published average is a benchmark and not your number. The true cost of employee calculator on this site runs the calculation from your inputs, free and without an account; HeadcountDesk Pro keeps it against each employee.
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The calculation
Labor cost is the wage plus the employer's payroll taxes, workers' compensation and benefits, divided by the hours actually worked rather than the hours paid. The IRS gives the employer's share of Social Security as 6.2% of wages up to the $184,500 base for 2026 and Medicare as 1.45% with no limit, and FUTA as 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% with the full 5.4% credit.
Your number versus the average
The Bureau of Labor Statistics' March 2026 employer cost release puts total compensation for private industry workers at $46.60 per hour worked, of which wages and salaries are $32.60 and benefits $14.01. Your figure belongs beside that; a business pricing on the average is pricing someone else's payroll.
The divisor that surprises
Hours actually worked exclude the holidays, the PTO and the training, so the divisor is smaller than the schedule and the hourly figure is higher than the wage suggests.
Where the number is used
Every quote, every budget line, every hire-or-outsource decision. Pro keeps the figure per employee and the calculator reruns it when a rate changes. From the vendors' own pricing pages: Homebase lists Essentials at $24 per location per month billed annually or $30 monthly, with a free Basic plan for one location of up to ten employees; BambooHR lists Core at $10 and Pro at $17 per employee per month; Deputy lists Core at $6.50 per user per month. HeadcountDesk Pro is $24 a month per location.
What is the labor cost: common questions
How do I find the labor cost of an employee?
Run the calculation from your figures: wage, employer taxes, insurance, benefits, hours worked. The calculator on this site does it free.
Is labor cost the same as payroll cost?
Payroll is the wages line; labor cost adds the employer taxes, insurance and benefits and divides over worked hours.
Is the calculator free?
Yes, with no account. Pro keeps the figure per employee.
Will it do what you need for What is the labor cost?
Tell us what your business needs and we will tell you straight whether HeadcountDesk Pro does it today, whether it is coming, or whether you are better off with something else. A person reads these and replies.