Free Industry Tool

The True Cost of a Construction Employee

Your employees cost a lot more than their hourly rate. Calculate the real, fully-burdened cost — including taxes, insurance, time theft, and hidden overhead — and find out how much you could save.

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Profit Leakage Audit

Tell us about your operation.

The more accurate your inputs, the more useful your audit. All calculations are based on verified construction industry benchmarks.

Total field workers tracking time

12 workers

Fully loaded rate per worker ($/hr)

$15/hr

Number of sites running simultaneously

3 sites

Hours your team spends weekly on timesheets & payroll

5 hrs/wk

Calculations based on 2024 construction industry benchmarks from APA, FMI, and AGC research on manual time tracking inaccuracy. Your actual results may vary.

Why Hourly Rate ≠ True Cost

If you're paying a construction worker $28/hour, you might assume they cost you $28/hour. They don't.

Once you factor in payroll taxes, workers' compensation, insurance, benefits, overtime premiums, and the hidden costs of time theft and payroll errors, that $28/hour employee actually costs you somewhere between $35 and $42 per hour.

This is called the fully burdened labor rate, and most contractors underestimate it by 20-40%. That gap between what you think you're paying and what you're actually paying is where profit margins disappear.

1.25–1.40×The typical burden rate multiplier in construction. A $28/hour worker actually costs $35–$39/hour when you account for all employer costs.

What Makes Up the
True Cost

Here's every cost category that sits on top of the base hourly wage. Most contractors only account for 2-3 of these.

7.65–15%

Payroll Taxes

FICA (Social Security + Medicare), federal unemployment (FUTA), and state unemployment (SUTA) taxes that the employer pays on top of every dollar of wages.

3–15%

Workers' Compensation

Construction carries some of the highest workers' comp rates. Rates vary by trade — roofers pay significantly more than office workers on the same policy.

10–30%

Benefits & Insurance

Health insurance, retirement contributions, paid time off, and other benefits. Even if you don't offer full benefits, state mandates may require minimum coverage.

2–5%

Time Theft & Payroll Leakage

Buddy punching, inflated hours, extended breaks, and rounding errors. The American Payroll Association estimates this costs employers $400 billion per year nationwide.

Variable

Overtime Premium

Every hour over 40 costs 1.5× the regular rate. Unmanaged overtime is one of the fastest ways to blow a project budget without realizing it.

2–5%

Administrative Overhead

The cost of processing payroll, managing timesheets, correcting errors, handling compliance, and resolving disputes. Time your office spends on payroll is time not spent on revenue.

The Costs Most Contractors Miss

Payroll taxes and workers' comp are obvious. What catches most contractors off guard are the soft costs — the ones that don't show up on a single line item but drain profit consistently.

Time Theft

The APA estimates that 75% of businesses are affected by time theft. In construction, it's even more common because crews work across scattered job sites.
Our research shows that even just 15 minutes of daily time inflation across a 10-person crew adds up to $17,500 per year.

Payroll Processing

If you're still using paper timesheets, you're spending 2-4 hours per week collecting, deciphering, calculating, and entering time data. If you value your time at $50-75/hour, that's $5,200-$15,600 per year in pure overhead opportunity cost.

Overtime Chaos

Unplanned overtime at 1.5× rates can shred a project budget. Without real-time visibility into who's approaching 40 hours, you only find out when it's too late — during payroll processing. GPS tracking lets you make staffing decisions proactively.

Industry Benchmarks

Use these benchmarks to gut-check your own numbers. If your burdened rate is significantly lower than 1.25×, you're probably missing costs.

1.25–1.40×

Average burden rate multiplier

$50–$150

Typical time theft loss per employee/week

2–4 hrs/week

Payroll processing time (manual)

$6–$30 per $100

Average workers' comp rate (construction)

What to Do With These Numbers

Once you know your true burdened labor cost, here's how to act on it:

1
Re-price your bidsIf you've been using the base hourly rate in estimates, you've been underbidding. Apply the burden multiplier to every labor hour in your estimates.
2
Eliminate time theftGPS-verified time tracking stops buddy punching, time inflation, and break abuse immediately. Most contractors recover $1,000-$3,000/month in the first month alone.
3
Automate payrollReplace manual timesheet processing with digital, automated time records. Cut payroll processing from hours to minutes and eliminate data entry errors.
4
Monitor overtime in real timeSet up alerts when workers approach 40 hours so you can make staffing decisions before overtime kicks in — not after.

Related Guides & Research

View all resources
⚖️Employee Time Theft in ConstructionLearn exactly what time theft is and how to stop it legally.📊GPS vs. Paper TimesheetsThe true ROI comparison of upgrading your tracking.💸5 Signs You're Bleeding PayrollHidden red flags that your payroll process is broken.
Carter Mitchell

Written by Carter Mitchell

Carter is the founder of Crewtrace. He built Crewtrace to help construction and field service companies eliminate payroll leaks, automate GPS time tracking, and protect their bottom line.

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