Ask a roofing owner what a laborer costs and you hear the hourly wage. The payroll tax bill, the workers' comp premium and the hours spent loading the truck or waiting out rain are paid anyway, but they rarely reach a job report. The wage is where labor cost starts, not where it ends.
What Sits on Top of the Wage
For each employee hour you pay for, the business also carries:
- Employer payroll taxes. The employer share of Social Security and Medicare is 7.65% of wages, before federal and state unemployment taxes.
- Workers' compensation. Roofing sits in a high-rated class in most states, and the premium is a percentage of payroll that varies by state, carrier and your experience mod.
- Other payroll-linked costs, such as paid time off, benefits and payroll service fees.
- Paid hours that are not job hours. Shop time, travel, weather delays, safety meetings and rework.
If these live in general expenses, job margin is overstated, and estimates built on the wage under-recover.
Building the Burden Rate
- Pull last year's payroll. Total the base wages paid to field crews.
- Add the linked costs. Employer payroll taxes, workers' comp premiums (after audit), and any benefits for the same people.
- Divide linked costs by wages. That is the burden percentage.
- Measure productive hours. Divide hours charged to jobs by total paid hours. Use the real figure from timesheets, not 100%.
- Compute the loaded hourly cost. Wage times (1 + burden), divided by the productive share.
Do this per crew type if wage levels differ. Update it every year and whenever the workers' comp premium changes.
Worked Example: A Two-Day Reroof
All figures are illustrative. Your workers' comp rate and unemployment rates will differ. A laborer is paid $28 an hour.
| Per paid hour | Amount |
|---|---|
| Base wage | $28.00 |
| Employer Social Security and Medicare (7.65%) | $2.14 |
| Workers' comp (illustrative 20% of wages) | $5.60 |
| Unemployment taxes (illustrative 3% of wages) | $0.84 |
| Burdened cost per paid hour | $36.58 |
That is a 30.6% burden. Now add the unproductive hours. If 90% of paid hours land on jobs, the cost of each job hour is $36.58 divided by 0.90, or about $40.65. Call it $41.
A four-person crew works a two-day reroof at 8 hours a day, or 64 job hours. At the $28 wage, labor looks like $1,792. At $40.65 it is $2,602. That is $810 missing from the job, or 6.1 points of margin on a $13,200 reroof. Across 120 jobs like it, $97,200 sits in overhead where no job report shows it.
Putting It in QuickBooks
- Keep payroll as it is. Wages, taxes and premiums stay in their normal accounts and are filed as usual.
- Charge hours to jobs. Use timesheets so each job carries the wage cost and the crew hours behind it.
- Add the burden by journal entry. Each month, multiply job wages by the burden percentage, debit a cost of goods sold account such as Labor Burden with the job tagged, and credit an offsetting account in the payroll expense section. Profit does not change. Cost moves from overhead to the jobs that used the labor.
- Review the variance. If the burden applied runs below the actual taxes and premiums, the rate is too low. Revisit it after the workers' comp audit.
Use It in the Estimate
Price crew hours at the loaded rate, not the wage. If your estimator still quotes labor at the wage plus a flat markup, compare the result against the loaded rate on a few closed jobs. For subcontracted crews paid on a 1099, there is no burden to add, but confirm they are properly classified. See 1099 subcontractors and workers' comp and your experience mod. For hours per square by crew, read labor hours per square, and for the full picture of what a job costs, the true cost of a roofing job.