Labor Burden for Landscaping Businesses: Why Your $25/hr Employee Actually Costs You $42/hr
Most landscaping owners price jobs using an employee's wage — and underprice by 40% without knowing. Here is how labor burden actually works.
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Ask a landscaping owner what their lead crew member costs per hour and you’ll usually get one number: their wage. “Mike makes $25 an hour.”
But Mike doesn’t cost you $25 an hour. Mike costs you closer to $40. And if you’re pricing jobs based on that $25 figure, you’re underpricing every single job by a meaningful amount — quietly, every week, all season long.
This is labor burden. It’s the gap between what you pay an employee and what it actually costs to have that employee on your payroll. In landscaping, labor burden runs anywhere from 35% to 75% on top of the base wage depending on how you’re set up. Ignore it and you’ll spend years wondering why you’re busy but broke.
Here’s what’s actually in there, how to calculate your true loaded rate, and what to do with the number once you have it.
The gap between wage and actual cost
If you’ve never done this math, it’s eye-opening. Let’s take Mike — a crew lead making $25/hour, working a typical landscaping schedule (roughly 40-hour weeks in season, some overtime, paid holidays and a week off).
Here’s what Mike really costs:
1. Gross wage. Baseline: $25/hour × 2,080 hours/year = $52,000. But that’s billable hours only if he’s working every one of them. Keep reading.
2. Payroll taxes. You pay the employer side of FICA (7.65%) plus federal unemployment (FUTA — small, roughly 0.6% on first $7K of wages) and state unemployment (SUTA — varies widely, usually 1-6% on first several thousand of wages). Blended, expect around 8-10% added. On Mike’s $52K: $4,200-$5,200.
3. Workers’ compensation insurance. Landscaping work comp rates vary by state and class code, but typically run $4-$12 per $100 of wages. Call it 8% as a midpoint. For tree care or hardscape class codes, this jumps higher — sometimes 15%+. On Mike’s wages: $3,500-$6,000.
4. Liability insurance (employee-attributable portion). Your general liability policy has a cost that scales roughly with payroll. Allocate 2-4% of wages. On Mike’s wages: $1,000-$2,000.
5. Health insurance and benefits. If you provide health coverage, you’re paying $400-$900 per month per employee on the employer side — $4,800-$10,800/year. Retirement match (if any), uniforms, boot allowance, phone stipend, training — add another $500-$2,000/year. On the higher end: $12,000.
6. Paid time off. If Mike gets one week of vacation and 6 paid holidays, that’s 9 days of paid-but-not-billable time. At $25/hour × 8 hours × 9 days = $1,800.
7. Non-billable hours during work days. This is the biggest one most owners miss. Of the 2,080 annual working hours, how many actually produce billable work?
- Shop time / loading trucks in the morning: ~30 min/day
- Drive time between jobs: ~1 hour/day average
- Weather days (not worked but often paid to retain crew): ~3-5 days/year
- Training, safety meetings, equipment maintenance: varies
- Slow shoulder-season days with partial work
Realistic non-billable percentage for a landscaping crew is 15-25% of paid hours. Meaning Mike is on the clock 2,080 hours but actually producing billable work for 1,600-1,750 hours. The other 330-480 hours are paid overhead.
The total:
| Category | Cost |
|---|---|
| Base wage | $52,000 |
| Payroll taxes | $4,700 |
| Workers’ comp (8%) | $4,200 |
| Liability (3%) | $1,560 |
| Health + benefits | $9,500 |
| PTO | $1,800 |
| Total annual cost | $73,760 |
On 2,080 total paid hours, that’s $35.46/hour total cost. But only 1,700 of those hours produce billable work. True loaded cost per billable hour: $43.39/hour.
Your $25/hour employee costs you $43/hour. That’s a 72% markup on wages.
Even at a conservative setup — no health benefits, cheaper work comp state, lower non-billable ratio — the loaded rate for a $25/hour landscaping employee is almost never below $34/hour. The range is $34-$48/hour depending on how you’re set up.
Why this matters for pricing
When you bid a job, you’re figuring out how long it’ll take and multiplying by a labor rate to cover cost, then adding margin. If your labor rate assumption is off by $15/hour, a 30-hour job is off by $450.
Do that across 150 jobs a year and you’ve left $67,500 on the table.
That’s not a pricing mistake. That’s the entire difference between a profitable landscaping business and a break-even one.
Worse, most owners don’t see it directly. The P&L shows labor costs as a lump in Cost of Goods Sold. The bank account shows money coming in and going out. Unless you do job costing with the loaded rate, you never see which specific jobs are underwater because of labor.
How to calculate your actual loaded rate
Don’t use my example numbers. Your numbers are different. Work through this once a year, in January, with your accountant’s help if you don’t have access to all the figures.
Step 1: Get total labor cost from your P&L
Pull last year’s P&L. Total labor cost includes:
- All wages paid (gross, before withholding)
- Employer payroll taxes
- Workers’ comp premiums
- Health insurance paid by the company
- Benefits (retirement match, etc.)
- Liability insurance allocable to labor
Don’t include your own owner’s draw/salary — that’s handled separately in overhead. Also don’t include subcontractors; they’re not employees.
Let’s say your total comes to $285,000 for a 4-person field crew plus a part-time foreman.
Step 2: Get total paid hours
Add up every hour you paid wages on last year. Include all regular hours, overtime hours, holiday pay, and PTO hours. Do not include unpaid time.
Example: 4 full-time crew at 2,080 hours + 1 part-time foreman at 1,040 hours = 9,360 paid hours.
Step 3: Estimate billable hours
Of those 9,360 hours, how many produced billable work? The honest answer requires tracking — which is the real argument for using a field service app with time tracking.
If you don’t have that data, use a reasonable estimate:
- Small operation with tight routes: 82-85% billable
- Average landscaping operation: 75-80% billable
- Long drive times, lots of weather impact, growing team: 68-75% billable
Let’s estimate 78% billable: 9,360 × 0.78 = 7,300 billable hours.
Step 4: Divide
$285,000 ÷ 7,300 = $39/hour true loaded rate.
That’s the number you should use when pricing jobs. When you estimate a project takes 24 crew hours, it’s not $600 of labor cost (at $25/hour base) — it’s $936 of labor cost.
What to do with the number
Use it in every bid
Every job estimate should calculate labor cost as estimated crew hours × loaded rate. If you’re using estimating software, configure it with your loaded rate, not your wage rate. If you’re using a spreadsheet, same thing.
This doesn’t mean prices go up 50% overnight. It means your cost basis is honest. You can still decide where to set margin on top of that — but you’re building margin on a real number, not an underestimate.
Use it to find underwater jobs
Once you have the loaded rate, start job costing every job for a season. You’ll find some categories of work that looked fine on paper are barely breaking even when labor is properly accounted for. Common culprits:
- Small residential cleanups where drive time eats the crew hours
- Bed maintenance visits where the scope creeps but the price doesn’t
- “Favor” work for commercial clients — the five minutes here and there that add up
- Irrigation checks bundled into maintenance contracts without specific labor budget
Some of these you’ll reprice. Some you’ll drop. Some you’ll streamline. Either way, you’re operating with real data.
Recalculate when anything changes
The loaded rate moves when:
- You raise wages
- Health insurance premiums change (usually annually)
- Work comp rates adjust (usually annually)
- You add benefits
- Your non-billable ratio changes (new shop location, different route density, etc.)
A January recalculation as part of your annual planning is the right cadence for most operations.
The loaded rate traps
A few things to watch for once you start working with loaded rates:
Owner/operator confusion. If you’re still running a crew day-to-day, your own hours are part of labor cost. Pay yourself a real wage, include employer taxes, and add your hours to the loaded rate calculation. Owner-operators who don’t do this show artificially good margins that hide the fact that they’re working for free.
Per-employee vs. crew average. Some operators calculate per-position loaded rates (foreman, crew lead, laborer) and apply them by who actually works each job. Others use a crew-average rate. Both work; per-position is more accurate for mixed crews, average is simpler. Don’t mix and match.
Overtime. Overtime hours cost 1.5x the base wage, which means the loaded rate for an OT hour is roughly 1.4-1.5x the regular loaded rate. If you run significant OT in season (most landscaping companies do), either separate OT hours in your calc or use a blended rate that accounts for typical OT percentage.
Seasonal shifts. Loaded rates often shift through the year — non-billable ratio is worse in shoulder seasons. If you want precision, calculate a summer rate and a shoulder-season rate separately. For most small operations, a blended annual rate is fine.
The bigger picture
Labor burden is not the only gap between running a landscaping business and running it profitably. But it’s one of the few where the math is concrete, the number is knowable, and the impact shows up on every single bid.
The owners who quietly make money in landscaping are not the ones charging the most — they’re the ones whose cost basis is accurate. They know exactly what their labor costs, they know exactly how many billable hours they have, and they price with that knowledge instead of guessing.
The gap between “Mike makes $25 an hour” and “Mike costs us $43 an hour” isn’t a rounding error. It’s often the entire profit of the business. Close that gap and every other decision — what to charge, which jobs to take, whether to grow — gets easier to make.
Do the math once. Use the number every day. That’s the whole practice.