Labor Cost Calculator
Calculate total labour cost including base pay, overtime, payroll tax, and benefits. Cost per employee and effective hourly cost.
Use the Labor Cost Calculator
Enter wage, hours, optional overtime, payroll tax %, benefits, and headcount. Total labour cost and effective hourly cost are calculated.
Wage & hours
Hourly wage, hours per period, optional overtime. Then employer costs and headcount.
Employer costs
Results
Gross = (Wage × Hours + Wage × OT multiplier × OT hours) × Employees. Total = Gross + (Gross × Payroll tax %) + (Benefits × Employees).
What this metric means
Total labour cost is what you actually spend on labour: gross pay plus employer taxes and benefits. It's higher than take-home pay and matters for budgeting and pricing.
How to calculate it
Gross = (Wage × Hours + Wage × OT multiplier × OT hours) × Employees. Add (Gross × Payroll tax %) and (Benefits × Employees). Effective hourly = Total ÷ (Employees × Total hours).
How to improve the metric
Control overtime; review benefits and tax efficiency; improve productivity so you need fewer hours for the same output. Balance cost with retention and quality.
Common mistakes
Forgetting employer-side taxes; using salary without converting to hourly equivalent; or mixing periods (e.g. weekly wage with monthly benefits).
How to interpret your result
Use total labour cost for P&L and budgets. Use effective hourly when pricing jobs or comparing full-time vs contract labour.
FAQs
What's included in total labour cost?▾
What is effective hourly cost?▾
How do I add multiple pay rates?▾
Should benefits be per period?▾
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