What is my labor cost?
Type the workers, hours and hourly wage, and the labor burden for payroll taxes and benefits. The labor cost calculator shows the total, the true cost of each hour worked, and labor cost as a percent of sales.
- Total labor cost
- $4,500.00
5 workers for 40 hours each at $18.00 an hour cost $4,500.00 in labor, or $22.50 per hour worked.
- Wages
- $3,600.00
- Labor burden
- $900.00
- Cost per hour worked
- $22.50
- Labor cost percentage
- 30%
Total labor cost: $4,500.00. 5 workers for 40 hours each at $18.00 an hour cost $4,500.00 in labor, or $22.50 per hour worked.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Works out the labor cost of a job or pay period from workers, hours and the hourly wage plus a labor burden for payroll taxes and benefits, the cost per hour, and labor cost as a percent of sales.
Example with the default inputs (Number of workers 5, Hours each 40, Hourly wage $18.00, Labor burden 25%, Sales for the period $15,000.00): 5 workers for 40 hours each at $18.00 an hour cost $4,500.00 in labor, or $22.50 per hour worked.
Method: Wages = workers × hours each × hourly wage. Labor burden = wages × burden ÷ 100. Total labor cost = wages + labor burden. Cost per hour worked = total ÷ (workers × hours each). Labor cost percentage = total ÷ sales × 100.
- Every worker is paid the same wage for the same hours; overtime and a second wage go in a second run.
- The labor burden is one percent of wages for payroll taxes, insurance, paid leave and other benefits, as typed.
- Arithmetic is exact on the typed decimals; money shows to the cent and the percentage to 2 decimals, halves rounded up.
Worked examples
Each example is checked against the calculator on every build.
- Number of workers 5, Hours each 40, Hourly wage $18.00, Labor burden 25%, Sales for the period $15,000.00 gives Wages $3,600.00, Labor burden $900.00, Total labor cost $4,500.00, Cost per hour worked $22.50, Labor cost percentage 30%.
- Number of workers 1, Hours each 8, Hourly wage $7.25, Labor burden 7.65% gives Wages $58.00, Labor burden $4.44, Total labor cost $62.44, Cost per hour worked $7.80.Source: Beth Egan, Penn State, Introduction to Food Production and Service, Lesson 4.2, Managing Labor Costs (labor cost percentage = labor dollars ÷ sales × 100; employer taxes of 7.65% on an $58 day), https://workforce.libretexts.org/Bookshelves/Food_Production_Service_and_Culinary_Arts/Introduction_to_Food_Production_and_Service_(Egan)/04:_Managing_and_Controlling_Operating_Expenses/4.02:_Managing_Labor_Costs: 8 hours × $7.25 = $58.00
- Number of workers 1, Hours each 1, Hourly wage $437.30, Labor burden 0%, Sales for the period $1,500.25 gives Total labor cost $437.30, Labor cost percentage 29.148475%.Source: Beth Egan, Penn State, Introduction to Food Production and Service, Lesson 4.2, Managing Labor Costs (labor cost percentage = labor dollars ÷ sales × 100; employer taxes of 7.65% on an $58 day), https://workforce.libretexts.org/Bookshelves/Food_Production_Service_and_Culinary_Arts/Introduction_to_Food_Production_and_Service_(Egan)/04:_Managing_and_Controlling_Operating_Expenses/4.02:_Managing_Labor_Costs: $437.30 ÷ $1,500.25 × 100 = 29.1%
How it works
- Wages = number of workers × hours each × hourly wage.
- Labor burden = wages × labor burden percent ÷ 100. An empty burden box counts as 0%.
- Total labor cost = wages + labor burden.
- Cost per hour worked = total labor cost ÷ (workers × hours each).
- Labor cost percentage = total labor cost ÷ sales × 100, shown only when sales of more than $0 are typed.
Rules:
- Workers: a whole number from 1 to 1,000,000. Hours each: 0.01 to 1,000,000. Hourly wage: $0.01 to $1,000,000. Labor burden: 0% to 500%. Sales: $0 to $1,000,000,000,000.
- A result too large to show as a number (a percentage over about 1.8 × 10³⁰⁸, which only sales far below a cent can give) or not $0 but too small to show (under about 2.5 × 10⁻³²⁴, from a burden typed with hundreds of decimal places) gives no answer: "A result is too large or too small to show as a number."
- The arithmetic is exact on the decimals you type. Money shows to the cent and the percentage to at most 2 decimals (trailing zeros dropped), with halves rounded up (away from zero), from the exact value.
Assumptions
- Every worker in a run has the same wage and hours. Run overtime or a second wage separately and add the totals.
- The labor burden is typed as one percent of wages. It does not split by tax or by benefit, and caps such as the Social Security wage base are not applied.
Worked examples by hand
A week for a small crew. 5 workers × 40 hours × $18 = $3,600; burden 25% = $900; total = $4,500; cost per hour = 4,500 ÷ 200 = $22.50; with $15,000 of sales, labor cost percentage = 4,500 ÷ 15,000 × 100 = 30%.
A part-time worker’s day (Penn State lesson). 1 worker × 8 hours × $7.25 = $58; the employer’s 7.65% Social Security and Medicare tax = 58 × 7.65 ÷ 100 = $4.437 (shown $4.44); total = $62.437 (shown $62.44); per hour = 62.437 ÷ 8 = $7.804625 (shown $7.80). The lesson’s $69.04 day also counts a meal, uniforms and workers’ compensation.
A labor cost percentage (Penn State lesson). $437.30 of labor against $1,500.25 of projected sales: 437.30 ÷ 1,500.25 × 100 = 29.15% (29.148…; the lesson shows 29.1%).
Other questions people ask
How do I calculate labor cost?
Multiply workers × hours × hourly wage for the wages, then add the labor burden: payroll taxes, insurance, paid leave and other benefits. 5 workers × 40 hours × $18 = $3,600 of wages; a 25% burden adds $900, so the labor cost is $4,500.
What is the labor burden?
The costs an employer pays on top of wages, as a percent of wages. Social Security and Medicare alone are 7.65% of wages for the employer; unemployment insurance, workers’ compensation, health insurance, retirement contributions and paid leave add more. In June 2026, private employers spent $14.07 an hour on benefits on top of $32.82 of wages, about 43%.
How do I calculate the labor cost percentage?
Divide the labor cost by sales for the same period and multiply by 100. Labor of $437.30 against $1,500.25 of sales is 29.15%. Restaurants and food services watch it to keep labor in line with sales.
What is the cost per hour worked?
The total labor cost divided by the hours worked: the hourly wage plus its share of the burden. An $18 wage with a 25% burden costs $22.50 an hour.
How do I include overtime?
Run the calculator twice: once for regular hours at the regular wage, once for overtime hours at the overtime rate (usually 1.5 times the wage), and add the two totals.
Is the labor cost the same as an employee’s total compensation?
For one worker over a year, it is close: wages plus the benefits and payroll taxes the employer pays. The total compensation calculator breaks those parts out one by one.