Price labor off your loaded cost per billable hour, never off the wage. The wage is about half the answer. The Bureau of Labor Statistics put construction-industry wages at $35.54 per hour worked in March 2026 and benefits at another $15.69 on top - 44 cents of cost on every wage dollar, before a single unbilled hour is counted. Take a carpenter at $30. Add payroll tax and workers' comp and he costs $35 to $45 an hour depending on which state you are standing in. Then divide by the hours you can put on an invoice, which is not 2,080. That $30 carpenter runs $44 to $57 per billable hour. Bill him out at $45 and in half the country you worked for free.
What does an hour of labor actually cost you?
Wage, then payroll tax, then workers' comp. Benefits sit on top of those if you offer any, and plenty of two-truck shops do not.
The tax layer is fixed and small. IRS Publication 15 for 2026 sets the employer's Social Security share at 6.2% up to a $184,500 wage base and Medicare at 1.45% with no cap. FUTA is 6.0% on the first $7,000, but if you pay your state unemployment in full and on time you take a credit of up to 5.4%, which drops the federal piece to 0.6% - about $42 a year per employee. State unemployment is the one that moves. New construction employers get rated high because the industry lays people off in winter, and your rate falls only after you build a claims history.
Workers' comp is the layer that decides the answer.
| Line | Basis | Georgia | Texas |
|---|---|---|---|
| Base wage | — | $30.00 | $30.00 |
| Social Security | 6.2% | $1.86 | $1.86 |
| Medicare | 1.45% | $0.44 | $0.44 |
| FUTA after state credit | 0.6% on first $7,000 | $0.02 | $0.02 |
| State unemployment | 3.0%, illustrative | $0.90 | $0.90 |
| Workers' comp, class 5645 | $38.79 / $6.40 per $100 | $11.64 | $1.92 |
| Loaded cost per paid hour | $44.86 | $35.14 |
Same carpenter. Same $30. A 49.5% burden in Marietta and a 17.1% burden in Fort Worth.
Why does workers' comp swing so hard by state?
Because each state prices its own injury losses, and residential carpentry is one of the widest spreads there is.
Oregon's Department of Consumer and Business Services publishes a premium rate ranking every two years that puts all 51 jurisdictions on the same class codes. In the 2024 edition, class 5645 - carpentry on dwellings not exceeding three stories - ran $38.79 per $100 of payroll in Georgia, $28.00 in Minnesota and $25.89 in New Jersey, against $3.68 in Wyoming and $4.78 in West Virginia. More than a tenfold spread for framing a house.
| State | Class 5645 rate per $100 | Cost on a $30 wage |
|---|---|---|
| Georgia | $38.79 | $11.64/hr |
| Minnesota | $28.00 | $8.40/hr |
| New Jersey | $25.89 | $7.77/hr |
| California | $8.41 | $2.52/hr |
| Texas | $6.40 | $1.92/hr |
| Wyoming | $3.68 | $1.10/hr |
Two things fall out of that table. A national labor-burden percentage you read in a magazine is worthless to you unless the writer names the state. And a contractor in Georgia is carrying $9.72 an hour more than a contractor in Texas on identical work - about $20,000 a year on one carpenter - which is most of the reason his prices look high to a customer who has been reading national averages online.
Those are calculated manual rates. Your actual premium moves with your experience modification and your carrier's deviation, so treat the table as the shape of the problem rather than your invoice.
How many hours can you actually bill?
Start at 2,080 and work down twice, because there are two separate leaks and most contractors only count the first.
Ten paid holidays and a week of vacation is 120 hours gone. That leaves about 1,960 hours worked. Now take out the hours he is on the clock and you cannot invoice anybody: the run to the supply house because the hinges were wrong, the dump trip, forty minutes of drive time each way to a job in the next county, the Thursday morning he spends back at a house you finished in April fixing a door that dropped. Fifteen percent is not pessimistic. Call it 1,650 hours you can bill.
That number is where the burden calculation stops being academic:
- Georgia: $44.86 × 2,080 paid hours = $93,309 a year, divided by 1,650 billable hours = $56.55 per invoiced hour
- Texas: $35.14 × 2,080 = $73,091, divided by 1,650 = $44.30 per invoiced hour
The $30 carpenter costs $56.55 an hour in Georgia. That is 88% above his wage, and the gap has nothing to do with him being paid well.
I should be straight about the 1,650. No agency publishes billable utilization for residential trades - BLS measures hours worked, not hours invoiced, and the numbers floating around contractor forums are guesses. Pull your last twelve months of job costing and count. If you have never tracked it, use 1,650 and fix the assumption before you fix anything else.
What do you charge for that hour?
Take the cost per billable hour and divide by one minus your target gross margin. NAHB's Cost of Doing Business Study put the average remodeler's gross margin at 29.9% for fiscal 2024, so the divisor is 0.701.
Georgia: $56.55 ÷ 0.701 = $80.67. Texas: $44.30 ÷ 0.701 = $63.19.
Divide, do not multiply. Adding 29.9% to $56.55 gives $73.46 and a 23% margin, which is the arithmetic error covered in markup vs margin and the most expensive mistake on this page.
One honest caveat: gross margin belongs to the whole job, not the labor line. If you margin labor at 29.9% and then margin materials and subs at the same rate, you are fine. If you margin labor and pass materials through at cost because it feels fair, you have quietly cut your own margin, and the bigger the material package the worse it gets.
What gets missed at the comp audit?
Uninsured subs. This is the bill that arrives in March and ruins a good year.
Your workers' comp premium during the year is an estimate against projected payroll. At the audit, the carrier reads your books - and any subcontractor who cannot produce a valid certificate of insurance covering the dates he worked gets reclassified as your employee and charged to you at your class code. In Georgia at $38.79 per $100, a $40,000 tile sub with a lapsed certificate is roughly a $15,500 addition to your premium on a job you already closed out.
Collect the certificate before he starts, not before he invoices. Check the expiration date against your schedule, because a policy that expires in week three of a six-week job leaves you holding half of it.
The other one is payroll classification. If your books do not separate a man's hours between framing and finish work, most carriers will rate all of his payroll at the higher class. Splitting it is legitimate when the records support it and indefensible when they do not.
What this misses
The state unemployment rate in the table is a placeholder. Rates vary by state and by your own claims history, and construction sits at the top of most state schedules. Use the rate on your own notice.
Benefits are not in the $44.86. BLS's 44% figure includes health insurance, retirement contributions and paid leave that many small contractors do not offer. Add a health plan and your burden climbs well past 50%. The legally required floor - payroll tax plus comp - is $4.36 per hour worked across the construction industry, or about 12% of wages, and none of it is optional.
Overtime is not a straight multiple. Payroll tax applies to the whole check, but in most states the premium portion of overtime is excludable from workers' comp payroll if - and only if - your records show it separately. Contractors who book overtime as a lump hourly figure pay comp on money they never owed it on.
Every number here depends on knowing what a man actually costs before you quote, which is the part that gets skipped when you are standing in somebody's kitchen with a tape measure. That is the same failure behind an estimate that leaves out half the scope and behind the free estimate you never should have given away. BidWalk prices labor off your loaded rate while you are still in the house, so the burden is in the number before the customer hears it.
