What is labor cost?
Labor cost is the total amount a business spends to employ its staff, including not just wages but also payroll overhead such as employer payroll taxes, benefits, and insurance.
How this calculator works
Enter the hourly wage, hours worked per week, weeks worked per year, number of employees, and an overhead percentage that represents taxes and benefits on top of base wages. The calculator computes each employee’s base annual wages, adds the overhead percentage to get a fully loaded cost, then multiplies by headcount.
Actual overhead percentages vary by location, industry, and benefits package — a common general planning range is 20% to 40% on top of base wages. This tool is for general budgeting purposes only.
Last reviewed August 2026