Beyond Taxes: Figuring Out What an Employee Costs

Figuring out what an employee costs means paying attention to all the price tags accompanying his or her base wage or salary. Those tags represent all the “extras” that make up the total expenditure associated with each employee. Accounting for all those tags is how you figure out what an employee genuinely costs. 

Figuring out the Cost Example

You know that when you find just the right thingamabob, the $38.88 price tag isn’t what you’ll end up paying. Sales tax, shipping costs, run-to-the-supplier costs, and additional parts that make the whatchamacallit fully functional must be considered. You may have to include the cost of storing your gizmo when it isn’t in use. And if your doodad requires power, then the actual cost of using it goes up some more. 

However, the additional costs associated with your bright and shiny new doohickey are nothing compared to the additional expenses of each person in your employ. Many construction contractors overlook the costs they should consider concerning each employee's full labor burden (yeah, those extra costs). 

When construction contractors carefully calculate all the costs associated with an employee and determine what an employee genuinely costs, they can make more informed decisions about hiring, budgeting, and resource allocation.  

Labor Burden Rate Calculator Example

Here at The Profit Constructors, we like to keep it simple. Click on the link for an example of what to expect from a Labor Burden Rate Calculator.

Of course, all these little price tags add up over the span of a year and can end up being substantial. It is better to plan for these “extras” than to figure out how to deal with them at some time in the future.

We have said it before, and we will repeat it: understanding labor burden is crucial for accurate project cost estimation, sound bidding, and overall profitability in construction.

Pro Tip: Look for an accounting professional who uses construction-specific project accounting software.

Help Figuring Out What an Employee Costs

If you need help figuring out what an employee costs, get in touch. We understand the formula, which includes spreadsheets, exceptional construction-centric software, and (most importantly) the need for human input. 

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

• Clients and customers

• Employees and subcontractors

• Vendors and service providers

• Governmental entities 

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

• Remain informed

• Avoid hassles

• Reduce risks

• Be future-ready

Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735