Employer taxes —
Paid on top of wages, not withheld from them
Free employer tool
Employee Cost Calculator
Salary is the part of the iceberg you see. Employer taxes, benefits, overhead and paid time off sit below the waterline — and they are what makes an employee cost 1.25–1.4× their pay. Fill in what you know; the iceberg and the numbers update as you type.
a year
an hour
people
optional — for labor cost %
US 2026 federal rates as defaults. Every rate is editable, so it works anywhere: set a line to 0 or put your country's total employer contributions into “other”.
on the first
% of pay
Federal unemployment (FUTA)
0.6 % on the first $7,000 after the state credit — $42 a year
on the first
% of pay
typical: office 0.3 %, retail 1.5 %, manufacturing 3 %, construction 6 %+
% of pay
a year
% of pay
a year
a year
a year
a month
days a year
days a year
days a year
The cost iceberg
above the waterline: what the employee sees
below: what the employer also pays
Base pay
—
Employer taxes
—
Benefits
—
Overhead
—
—
True annual cost
—
of base pay
—
a month
—
per paid hour
—
per productive hour
—
labor cost, % of revenue
An estimate. Social Security 6.2 % (to the $184,500 wage base), Medicare 1.45 % and FUTA 0.6 % are the 2026 US federal defaults; state unemployment, workers’ comp, benefits and overhead are assumptions — replace them with your own figures.
What's below the waterline
Every dollar of the true cost, in four layers. The bar and the cards follow the calculator above.
Benefits —
The biggest layer for most full-time hires
Overhead —
What the role needs to function
Paid time off, in hours —
Already inside base pay — it changes the hours you get, not the dollars you spend
How it adds up
Start from base pay. Annual salary, or hourly rate × hours a week × 52. Paid time off is already inside it.
Add employer taxes. In the US: Social Security 6.2 % up to the wage base, Medicare 1.45 %, FUTA 0.6 % on the first $7,000, state unemployment on its wage base, workers’ comp as a percent of pay.
Add benefits and overhead. The employer share of health insurance, retirement match, other benefits; equipment, software, training, workspace.
Divide by the hours. True cost ÷ paid hours is the fully loaded hourly cost; ÷ productive hours (paid hours minus holidays, PTO and sick days) is what an hour of actual work costs.
With a team size the total is your labor cost; add revenue and the rail shows labor cost as a percentage of revenue — the figure restaurants and retailers watch (20–35 % is a common target).
How your number compares
The multiplier — true cost ÷ base pay — is the one figure to remember.
MIT’s Joseph Hadzima put the real cost of an employee at 1.25–1.4 times base salary, and the US Bureau of Labor Statistics keeps landing there: in its Employer Costs for Employee Compensation series, wages are about 70 % of what private employers pay and benefits — legally required contributions, insurance, paid leave, retirement — the other 30 %, i.e. roughly 1.4× wages before any overhead. Low-rate, part-time or contract-like roles sit nearer 1.2×; salaried roles with family health plans and equipment sit above 1.4×.
—paid hours a year
—productive hours
—per productive hour
The cost per productive hour — and the hours nobody counts
Paid hours are not worked hours. A 40-hour employee is paid for 2,080 hours a year; holidays, vacation and sick days take roughly 200–250 of them before anyone opens a laptop, and the true cost is spread over what is left. That is why the per-productive-hour figure above is always higher than the per-paid-hour one — and why it is the honest price of an hour of work when you quote a project, set a billable rate or compare an employee with a contractor.
The calculator stops at productive hours on paper. WebWork’s workforce analytics continues from there: tracked hours, activity and productivity per person, team and project, so you can see how many of the hours you are paying for turn into work — and what each of those really costs.
Try WebWork FreeThree hires side by side
Same arithmetic, three very different roles — computed with the calculator’s own formula.
| Office hire$60,000 · health $7,500 · 3 % match · WC 1 % | Retail, hourly$16/h × 40 h · health $5,000 · WC 1.5 % | Engineer$120,000 · family health $19,000 · 4 % match · WC 0.3 % | |
|---|---|---|---|
| Base pay | $60,000 | $33,280 | $120,000 |
| Employer taxes | $5,475 | $3,330 | $9,825 |
| Benefits | $9,800 | $5,200 | $25,300 |
| Overhead | $3,000 | $1,000 | $5,500 |
| True annual cost | $78,275 | $42,810 | $160,625 |
| Multiplier | 1.30× | 1.29× | 1.34× |
| Per paid hour | $37.63 | $20.58 | $77.22 |
| Per productive hour | $42.54 | $22.20 | $89.24 |
Know what every hire costs — and what every hour returns.
WebWork tracks time, attendance and productivity for the whole team, so payroll cost and real output sit side by side in one report.
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Explore WebWork
This calculator is one small piece of WebWork — a full time tracking and workforce platform for teams.
Workforce analytics software
Reports on hours, productivity and costs across teams and projects — the numbers behind every decision.
See workforce analyticsEmployee time tracking software
Automatic time tracking for every employee — hours, projects and activity, without manual entry.
See time tracking softwareProductivity tracker
See where the day actually goes — active vs idle time, apps, tasks and focus, per person or team.
See the productivity trackerAttendance tracking software
Clock-ins, late arrivals, absences and shifts recorded automatically — no sign-in sheets.
See attendance trackingEmployee cost — FAQ
Typically 1.25 to 1.4 times base pay once employer taxes, benefits and overhead are added — a $60,000 salary is roughly $75,000–$84,000 a year to the employer. The US Bureau of Labor Statistics puts benefits at about 30 % of total compensation for private employers, which alone is 1.4× wages; roles with little insurance or overhead sit lower, roles with family health plans and equipment higher. The calculator gives you the exact figure for your inputs.
Base pay (salary or hourly wages, including paid time off); employer payroll taxes — in the US Social Security 6.2 %, Medicare 1.45 %, federal and state unemployment, workers’ compensation; benefits the employer pays for — health insurance, retirement match, life and disability insurance, perks; and overhead the role needs — equipment, software, training and onboarding, workspace. Recruiting costs and management time are real too but are usually kept out of a per-employee running cost.
The 2026 US federal defaults: Social Security 6.2 % of wages up to the annual wage base, Medicare 1.45 % with no cap, FUTA 6.0 % on the first $7,000 reduced to 0.6 % by the state credit ($42 a year), plus state unemployment at the rate and wage base you enter (new-employer rates are commonly 2–3.5 % on the first $7,000–$15,000, higher in some states) and workers’ compensation as a percentage of payroll, which depends on the job’s risk class. Every rate is editable — set a line to zero or enter your own.
Divide the true annual cost by the hours. By paid hours (40 × 52 = 2,080 for full time) you get the fully loaded hourly cost used in budgets; by productive hours — paid hours minus holidays, vacation and sick days, typically 1,800–1,900 — you get what an hour of actual work costs, the number to use for quotes, billable rates and employee-vs-contractor comparisons. The calculator shows both.
Yes. Labor cost is the true cost of your people — wages plus employer taxes, benefits and the overhead you choose to include — for one employee or, with the team-size field, for the whole team. Enter annual revenue and the rail also shows labor cost as a percentage of revenue, the ratio restaurants, retailers and service businesses manage against a target (often 20–35 %, lower in capital-heavy businesses, higher in professional services).
A contractor’s hourly rate looks high because it carries what the employer otherwise pays: payroll taxes, benefits, paid time off, equipment, and the contractor’s own unbilled time. Compare a contractor rate with the employee’s cost per productive hour, not with the hourly wage: a $60,000 employee at about $42 per productive hour is in the same range as a $40–45 contractor, before you weigh availability, control and the legal tests for classification.
Not as extra dollars — vacation, holidays and sick days are already inside base pay. It changes what you get for the money: the same salary buys fewer productive hours, so the cost per productive hour rises. That is how the calculator treats it: PTO is shown as the hatched part of base pay on the iceberg and removed from the hours, not added to the dollars.
Health insurance is the big one: US employers paid on average about $7,500 a year for single coverage and about $19,000 for family coverage in recent KFF surveys. Add a retirement match of 3–4 % of pay, a few hundred dollars of life and disability insurance, and benefits land at 15–25 % of salary for a typical full-time role. Part-time and hourly roles often carry far less. Enter your own plan costs — the defaults are national averages.
Yes — the tax lines are defaults, not rules. Set Social Security, Medicare and the unemployment lines to 0 and enter your country’s total employer social contributions as a percentage of pay in “other employer contributions” (for example around 20 % in Germany, 13.8 % above the threshold in the UK, 25–45 % in France depending on pay). Benefits, overhead and paid time off work the same everywhere; currency is a label, the arithmetic is identical.
Two levers: the dollars (benefit plan design, overhead, the unemployment and workers’ comp rates your claims history drives) and the hours — how many paid hours become work. The second is usually larger and less visible: attendance gaps, idle time and time spent off-task do not appear on any invoice. Time tracking with activity and productivity reports shows where paid hours go, which is the point of the WebWork section above.