body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-container {
background: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 30px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-title {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.form-group {
margin-bottom: 20px;
}
.form-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.form-group input {
width: 100%;
padding: 12px;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.form-group .help-text {
font-size: 12px;
color: #6c757d;
margin-top: 5px;
}
.calc-btn {
width: 100%;
padding: 15px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: bold;
cursor: pointer;
transition: background-color 0.2s;
}
.calc-btn:hover {
background-color: #0056b3;
}
.results-area {
margin-top: 30px;
border-top: 2px solid #dee2e6;
padding-top: 20px;
display: none;
}
.result-box {
background: #ffffff;
border: 1px solid #dee2e6;
padding: 15px;
border-radius: 6px;
margin-bottom: 15px;
text-align: center;
}
.result-label {
font-size: 14px;
color: #6c757d;
text-transform: uppercase;
letter-spacing: 1px;
margin-bottom: 5px;
}
.result-value {
font-size: 28px;
font-weight: 700;
color: #28a745;
}
.result-value.cost {
color: #dc3545;
}
.article-content {
margin-top: 50px;
background: #fff;
}
.article-content h2 {
color: #2c3e50;
margin-top: 30px;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
}
.article-content h3 {
color: #34495e;
margin-top: 25px;
}
.article-content ul {
padding-left: 20px;
}
.article-content li {
margin-bottom: 10px;
}
@media (min-width: 600px) {
.input-row {
display: flex;
gap: 20px;
}
.input-row .form-group {
flex: 1;
}
}
How to Calculate an Employee's True Hourly Rate
When hiring employees or analyzing payroll, looking at the gross annual salary only tells half the story. The "True Hourly Rate"—often called the fully burdened labor rate—includes all the hidden costs associated with employing a staff member. Understanding this number is critical for setting prices, determining profitability, and managing budgets.
1. Simple Hourly Wage vs. Burdened Rate
The Simple Hourly Wage is the figure most employees see on their pay stubs. It is calculated simply by dividing the gross annual salary by the total number of working hours in a year.
Formula: Annual Salary / (Hours per Week × Weeks per Year)
The Burdened Hourly Rate, however, represents the actual cost to the business for every hour that employee works. This includes the employer's portion of taxes, insurance, benefits, equipment, and overhead.
2. Components of the Fully Burdened Cost
To use this calculator effectively, you should understand the inputs required:
- Base Annual Salary: The agreed-upon gross yearly pay.
- Employer Taxes: This is not income tax withheld from the employee, but taxes paid by the employer. In the US, this typically includes Social Security (6.2%), Medicare (1.45%), Federal/State Unemployment taxes (FUTA/SUTA), and Workers' Compensation insurance. A safe estimate is usually between 10% and 15%.
- Benefits: Costs for health insurance premiums, dental, vision, life insurance, and retirement plan contributions (like 401k matching).
- Overhead: The cost of the tools required for the employee to do their job. This includes laptop depreciation, software subscriptions, office rent allocation, and utilities.
3. Why This Calculation Matters
If you bill your clients based on your employee's simple hourly wage, you will likely lose money. For professional services, a common rule of thumb is a "3x multiplier"—meaning your billable rate should be three times the employee's hourly wage to cover the burden, overhead, and profit margin.
Using the Employee Hourly Rate Calculator above allows you to see exactly how much revenue an employee must generate per hour just to break even.
Example Calculation
Let's say you hire a developer for $75,000 per year.
- Standard Hours: 2,080 hours/year (40 hrs × 52 weeks).
- Simple Wage: $36.06 / hour.
- Add Taxes (12%): +$9,000.
- Add Benefits ($500/mo): +$6,000.
- Add Overhead ($200/mo): +$2,400.
- Total Annual Cost: $92,400.
- True Hourly Cost: $44.42 / hour.
In this example, the employee costs the company $8.36 more per hour than their base pay rate suggests.
function calculateHourlyRate() {
// 1. Get Input Values
var salary = parseFloat(document.getElementById('annualSalary').value);
var hoursWeek = parseFloat(document.getElementById('hoursPerWeek').value);
var weeksYear = parseFloat(document.getElementById('weeksPerYear').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var benefitsMonthly = parseFloat(document.getElementById('benefitsMonthly').value);
var overheadMonthly = parseFloat(document.getElementById('overheadMonthly').value);
// 2. Validate Inputs
if (isNaN(salary) || salary <= 0) {
alert("Please enter a valid Annual Salary.");
return;
}
if (isNaN(hoursWeek) || hoursWeek <= 0) {
hoursWeek = 40; // Default fallback
}
if (isNaN(weeksYear) || weeksYear <= 0) {
weeksYear = 52; // Default fallback
}
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(benefitsMonthly)) benefitsMonthly = 0;
if (isNaN(overheadMonthly)) overheadMonthly = 0;
// 3. Perform Calculations
// Total working hours per year
var totalHours = hoursWeek * weeksYear;
// Annualized costs
var annualTaxCost = salary * (taxRate / 100);
var annualBenefits = benefitsMonthly * 12;
var annualOverhead = overheadMonthly * 12;
// Total Cost to Company
var totalAnnualCost = salary + annualTaxCost + annualBenefits + annualOverhead;
// Rates
var simpleHourlyRate = salary / totalHours;
var burdenedHourlyRate = totalAnnualCost / totalHours;
// 4. Update UI
// Helper function for currency formatting
function formatMoney(amount) {
return '$' + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
document.getElementById('simpleHourly').innerHTML = formatMoney(simpleHourlyRate);
document.getElementById('burdenedHourly').innerHTML = formatMoney(burdenedHourlyRate);
document.getElementById('totalAnnualCost').innerHTML = formatMoney(totalAnnualCost);
// Show results area
document.getElementById('resultsArea').style.display = 'block';
// Scroll to results
document.getElementById('resultsArea').scrollIntoView({behavior: 'smooth'});
}