· TradeBid editorial team

How to Calculate Labor Cost for a Construction Bid

Calculate labor cost for a construction bid: loaded labor rate, labor burden, production rates and crew hours, with a worked example.

The short answer: Labor cost = hours needed × loaded labor rate. You get the hours from your quantities and your crew's production rates. The loaded rate is the wage plus labor burden: payroll taxes, workers' comp, insurance, benefits and paid time off. Most bidding mistakes come from using the bare wage or from production rates that don't match the job.

Step 1: Find your loaded labor rate

Start with the hourly wage, then add everything you pay because that person works for you.

Labor burden usually includes:

  • Employer payroll taxes (Social Security, Medicare, federal and state unemployment).
  • Workers' compensation insurance (often the biggest item for trades).
  • General liability insurance tied to payroll, if your policy works that way.
  • Health insurance and other benefits.
  • Paid time off and holidays.
  • Retirement contributions, union fringes, training and small tools, if they apply.

Example (use your own numbers):

  • Wage: $30.00/hr.
  • Payroll taxes: 8% = $2.40.
  • Workers' comp: 10% = $3.00.
  • Benefits and PTO: $4.50.
  • Loaded rate: $39.90/hr, about 33% above the wage.

Get your real rates from your payroll provider, insurance policies and accountant. Burden varies a lot by state, trade and company.

Paid hours vs. productive hours: if a worker is paid 40 hours but spends 4 of them driving, at the shop or in meetings, spread that cost over the 36 productive hours, or carry it in overhead.

Step 2: Build production rates

A production rate is how much work one worker or crew installs per hour (or hours per unit).

  • Pull past jobs where you tracked hours and quantities.
  • Divide hours by quantity: for example, 120 hours to hang 6,000 SF of drywall is 0.02 hr/SF.
  • Note the conditions: height, access, weather, finish level, crew experience.
  • Keep a short table of rates by task and condition.

If you don't have job records yet, start tracking now. Even rough daily logs of hours and quantities will improve your bids within a few months.

Step 3: Calculate hours from the takeoff

Hours = Quantity × hours per unit, adjusted for conditions.

Example:

  • 6,000 SF of drywall hanging × 0.02 hr/SF = 120 hours.
  • Ceilings at 12 ft need lifts, so add 15% for that area.
  • The occupied building limits work hours, so add 10%.

Step 4: Multiply by the loaded rate

120 hours × $39.90 = $4,788 labor cost for hanging, before overhead and profit.

If crews mix rates (foreman, journeyman, apprentice), use a blended crew rate: add up each person's loaded rate and divide by the crew size.

Step 5: Add what's easy to forget

  • Mobilization and demobilization.
  • Setup, layout and cleanup each day.
  • Supervision, if it isn't in your crew rate.
  • Travel time and per diem on out-of-town jobs.
  • Overtime premiums if the schedule needs them.
  • Weather and learning-curve allowances for new types of work.

Step 6: Mark it up correctly

Labor carries more risk than materials, so many subs use a higher markup on labor. Make sure you know the difference between markup and margin. See markup vs. margin.

Check your work after the job

Compare estimated hours to actual hours on every job. If you're consistently over or under on a task, update that production rate. This one habit makes your bids more accurate than any software alone.

How TradeBid handles labor

In TradeBid, each line in a bid has editable labor next to quantities and materials. You set your own rates and adjust hours to the job, then export a branded PDF proposal. See the sample bid.

FAQ

What's labor burden in construction? It's the cost of employing a worker on top of their wage: payroll taxes, workers' comp, insurance, benefits and paid time off.

How do I calculate a loaded labor rate? Add the hourly wage and all burden costs per hour. Use your payroll and insurance numbers.

What's a production rate? How much work gets installed per labor hour, or hours per unit, based on your own past jobs.

Should I include travel time in labor? Yes, either in the job's labor or in overhead, but don't leave it out.

What does TradeBid cost? Apprentice is $149/month (up to 5 bids), Journeyman is $300/month and Master is $850/month, or $100 for a single bid. Every plan starts with a 7-day trial. See pricing.

Put your real labor rates into your next bid. Start for $0.00.

Start for $0.00