How to Calculate Labor Burden Rate for Electrical Bids (With Real Numbers)
Most electrical subs add 20% to their base wage and call it a day. Here's why that's costing you money — and a clear method to calculate your actual burdened labor rate with a real crew example.
How to Calculate Labor Burden Rate for Electrical Bids
Ask ten electrical subcontractors how they calculate labor cost on a bid, and you’ll get ten different answers. Most of them go something like: “I take the hourly wage, add 20%, and that’s my number.”
That 20% figure isn’t based on anything. It’s a guess that gets passed down from estimator to estimator like a bad habit. The problem is, labor is typically 35-45% of an electrical bid. If you’re off by even a few points on your burden rate, you’re either leaving money on the table or pricing yourself out of work.
Here’s how to calculate it properly, with real numbers.
What Is Labor Burden?
Labor burden is every cost you pay for an employee on top of their base hourly wage. If your journeyman electrician makes $35/hr, your actual cost to put them on a job site is higher — significantly higher.
The burden includes:
- Payroll taxes — FICA (Social Security + Medicare), FUTA, SUTA
- Workers’ compensation insurance — varies by trade classification
- Liability insurance — your general liability allocated per employee
- Health insurance — medical, dental, vision
- Retirement contributions — 401(k) match or pension
- Paid time off — vacation, sick days, holidays
- Training and certifications — license renewals, continuing education, safety training
- Small tools and PPE — the stuff that doesn’t go on a tool list but shows up on every job
- Vehicle and fuel allowance — if you provide trucks or gas cards
These aren’t optional. They’re real costs that hit your bank account whether you account for them in your bid or not.
Step-by-Step: Calculating Your Actual Burdened Rate
Let’s walk through a real example. You have a 4-person electrical crew:
| Role | Base Wage | Hours/Year | Gross Wages |
|---|---|---|---|
| Lead Foreman | $42.00 | 2,080 | $87,360 |
| Journeyman | $35.00 | 2,080 | $72,800 |
| 2nd Year Apprentice | $22.00 | 2,080 | $45,760 |
| 1st Year Apprentice | $16.00 | 2,080 | $33,280 |
Total crew gross wages: $239,200/year
Now add up the burden costs for this crew over a full year:
| Cost Category | Annual Total | % of Gross Wages |
|---|---|---|
| FICA (7.65%) | $18,299 | 7.65% |
| FUTA (0.6%) | $1,435 | 0.60% |
| SUTA (2.7%) | $6,458 | 2.70% |
| Workers’ Comp ($12.50/$100 payroll) | $29,900 | 12.50% |
| General Liability (allocated) | $4,784 | 2.00% |
| Health Insurance (family avg) | $48,000 | 20.07% |
| 401(k) Match (3%) | $7,176 | 3.00% |
| PTO (10 days avg) | $18,400 | 7.69% |
| Training & Licenses | $3,200 | 1.34% |
| Small Tools & PPE | $2,400 | 1.00% |
| Total Burden | $140,052 | 58.55% |
Your labor burden is 58.55% — not 20%. That means your $35/hr journeyman actually costs you $55.49/hr when they’re on the job site.
How This Looks Per Employee
Take each crew member’s base wage and multiply by 1.5855:
| Role | Base Wage | Burdened Rate |
|---|---|---|
| Lead Foreman | $42.00 | $66.59 |
| Journeyman | $35.00 | $55.49 |
| 2nd Year Apprentice | $22.00 | $34.88 |
| 1st Year Apprentice | $16.00 | $25.37 |
That $35 journeyman doesn’t cost $35. He costs $55.49. If you’ve been bidding him at $42 (base + 20%), you’re underpricing your labor by $13.49 for every hour he works.
On a 400-hour commercial tenant improvement job with two journeymen, that’s $10,792 of uncosted labor. That’s your profit margin. Gone.
The Quick Method (If You Don’t Want to Build a Spreadsheet)
If pulling together all those numbers feels overwhelming, here’s a faster approach that gets you close enough:
- Add your tax lines — FICA + FUTA + SUTA = roughly 11% of gross wages for most states
- Add your insurance — Workers’ comp + general liability = 12-18% depending on your state and safety record
- Add your benefits — Health + retirement + PTO = 25-35% depending on what you offer
- Add your overhead per employee — Tools, training, vehicle = 2-4%
Add those up and you’ll land somewhere between 50-65%. That’s your burden multiplier.
For a crew with decent benefits in a state with moderate workers’ comp rates, 55% is a safe working number if you don’t have time to calculate the exact figure. But “safe” means “conservative” — you should still do the full calculation when you can.
How to Build This Into Your Bidding
Knowing your burdened rate is step one. Using it correctly in your bids is step two.
When you build an estimate, every labor line should use the burdened rate, not the base wage. If a conduit run takes 4 hours of journeyman time, the labor cost is $221.96 (4 x $55.49), not $140.00 (4 x $35.00).
This is where assembly-based estimating becomes critical. If you pre-build your labor assemblies with burdened rates baked in, you never have to think about it again. Measure the conduit, apply the assembly, and the labor cost is correct by default.
The Bottom Line
Labor burden isn’t a line item you can approximate. It’s 35-45% of your bid, and getting it wrong means either losing money on jobs you win or losing jobs you should have won.
The right way is to calculate your actual burden once a year, build it into your assemblies, and let your estimating system apply it automatically. No guesswork, no “adding 20% because that’s what we’ve always done.”
Your burdened rate is what it is. The only question is whether you know it or you’re guessing.
BidRok calculates burdened labor rates automatically based on your actual crew costs and benefits. Define your crew once, and every estimate uses the right number.