Labor Burden
You're hiring at $4k/month. But the real cost is higher. Labor burden is all costs associated with an employee beyond salary: taxes, benefits, payroll processing, training. Often 25–40% of salary. It's important for calculating true labor cost and for cost analysis and job costing—when you're deciding if a hire pays off, you need the full number.
Same salary, different total cost. $4k/month base might mean $5k–$5.6k all-in once you add employer taxes, benefits (if any), and payroll. When you're doing break-even analysis or ROI—"will this hire pay for itself?"—use the burdened cost. If you only count salary, you'll underestimate the return you need. Labor burden makes the math real. It's also a reminder that hiring is a real cost; design the role so the value they create exceeds that cost.
All costs of an employee beyond salary. Often 25–40%. Use it for real cost and ROI.
How to use it
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Calculate it. Add employer-side taxes (e.g. payroll tax), benefits (health, etc.), payroll processing, and a reasonable slice of training/onboarding. Divide by salary. That's your burden rate. E.g. $4k salary + $1.2k burden = 30% burden; all-in cost = $5.2k/month.
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Use burdened cost for decisions. When you're asking "will this hire pay for itself?" use the all-in cost. They need to free or generate at least that much value (your time back, or revenue they enable).
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Feed into job costing and ROI. Job costing and cost analysis should include labor at full cost when you're pricing or evaluating profitability. ROI on a hire uses burdened cost as the investment.