My reading has suggested total labour burden should not exceed 38% in a labour oriented industry.
So by that token at $100/billable hour, a production (variable cost) employee could be paid $38/hr............oooorrr, not.
Many are not aware of the concept of payroll overhead. (took me a while to realize and nail down the value)
For example, a large, local municipality trying to deal with our ice storm, offered $140/hr for 2 workers + 3t chipper truck + chipper. Or $160/hr for 3 workers+ 3t chipper truck + chipper. Thats $20/hr for the 3rd worker.
IF your paid that worker 15/hr AND you added payroll overhead (4% vacation pay, employer contribution for employment insurance, employer contribution for canada pension plan deduction, WSIB worker disability coverage etc) which equals about 22% dependant of bennies. The worker costs $18.30/hr. Who then contributes a whopping $1.70 to overhead (Direct expenses) and profit.
Anyone who took that latter offer is stunned, and would have been better off sending two 2 man crews.
Around here a $30/hr worker costs about $38/hr the company.
You can reverse the math on that for your own review as a worker.
Billable Rate Labour Burden Hourly Wage
$100.00 $38.00 $31.15
$95.00 $36.10 $29.59
$90.00 $34.20 $28.03
$85.00 $32.30 $26.48
$80.00 $30.40 $24.92
$75.00 $28.50 $23.36
$70.00 $26.60 $21.80
$65.00 $24.70 $20.25
$60.00 $22.80 $18.69
$55.00 $20.90 $17.13
$50.00 $19.00 $15.57
Now; to muddy the waters, lets talk about applied and unapplied hours. And introduce anarchy with the variable of accurate job estimation.
