Construction Costs

Labor Cost Calculator

Find the total and hourly labor cost with total labor burden for any construction project

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This Construction Labor Cost Calculator is designed to help you accurately project the actual labor cost of an individual worker in a project by accounting for wage, hours worked and labor burden.

What is Labor Burden?

Your labor burden is the additional costs that you pay beyond a standard wage of a worker on payroll. This includes both state and federal taxes, medicare, and insurance premiums. Additional costs may include retirement plan support, vacation, bonuses, allowances, membership dues, or any other expenses you pay for each employee.

How to calculate construction labor costs?

Calculating your real cost of labor is an important step in providing accurate estimates. The additional costs of labor beyond an hourly wage can quickly wipe out your profit margin from any job if they're not properly accounted for upfront.

To find your construction labor cost, you need to know three things:

  1. Hourly wage
  2. Hourly labor burden
  3. Hours worked/needed

The formula for calculating the construction labor cost is:

(Hourly Wage + Hourly Labor Burden) * Hours Worked/Needed

For example, if you have a worker that is paid $25 per hour with a labor burden of $7 per hour and they will be needed for 40 hours during your project, the labor cost for this worker is $1,280 ( ($25+$7)*40 ).

How to reduce construction labor costs?

There are a number of ways to reduce construction labor costs, but it will generally depend on the type of construction project you are undertaking. For residential construction projects, one of the easiest ways to reduce labor costs is to WBS - work breakdown structure. By outlining all the tasks that need to be completed for a project and assigning a value to each task, you can have a clear understanding of how much each stage of the project should cost. This then allows you to show your crew and potential subcontractors exactly what needs to be done and how long it should take.

Another exercise to consider is determining whether employees or subcontractors are better for your particular business. There are advantages and disadvantages to both which you can read more about here.

Finally, make sure you have a solid employee retention plan in place to ensure that you're retaining your best skilled employees and avoiding high turnover. Finding and hiring good employees is a very costly process so building team loyalty is the key to keeping those costs at bay.

What's the average hourly wage of a skilled laborer?

The average wage of a skilled laborer will vary depending on several factors including skill and location, but according to the U.S. Bureau of Labor Statistics, the median hourly wage for all workers in 2016 was $17.09. Skilled laborers may earn more or less than the average salary based on their experience and trade. For example, carpenters earned a median hourly wage of $21.69 in 2016, while general construction workers earned a median hourly wage of $12.85.

When determining what wage you should pay, your location will matter. For example, in some parts of the country, a carpenter might earn $22 per hour, while in other parts of the nation, that same carpenter could earn $32 per hour. Likewise, masons and electricians also have different average wages based on location and expertise.

How to find and hire skilled laborers?

There are a few different ways that you can find skilled laborers for your business or project. One way is to post a job listing on websites or online job boards. This will allow you to reach a large number of potential candidates who may be interested in your opening. Another way is to use social media to spread the word about your job opening. You can use platforms like Facebook, Twitter, and LinkedIn to reach a wider audience and attract qualified candidates.

However, the best way to find skilled laborers is by contacting local schools and training programs that provide education in specific trades. These programs typically have a staff of knowledgeable and experienced instructors who can help you find students that have the necessary skills. You might consider offering an apprenticeship program, which allow students to get hands-on experience while earning a wage.

By using a combination of these methods, you should be able to find the best candidates for your open positions.