Most cleaning company owners know what they're paying their cleaners. Very few know what those cleaners actually cost. The gap between those two numbers is your labor burden rate — and if you're not accounting for it in every bid, you're losing margin you didn't know you had.
What Goes Into the Burden Rate
Your burden rate is the total additional cost of employing someone, expressed as a percentage on top of their base wage. It includes:
- FICA (Social Security + Medicare): 7.65% of gross wages — mandatory, no exceptions.
- Federal Unemployment (FUTA): 0.6% on the first $7,000 of wages per year.
- State Unemployment (SUTA): Varies by state and your claims history. Typically 1–5%, but higher if you've had layoffs.
- Workers' Compensation: Cleaning is a high-risk classification. Expect 5–12% depending on your state and safety record.
- Paid Time Off: If you offer any PTO, those hours cost money without producing revenue.
- Health Benefits: If you contribute to employee health insurance, that cost belongs here.
- Training and Turnover: The cleaning industry has notoriously high turnover. Recruiting and onboarding costs are real labor costs even if you never put them on a pay stub.
How to Calculate It
Add up all your annual burden costs for a given employee, then divide by their annual base wages:
Burden Rate % = (Total Annual Burden Costs ÷ Annual Base Wages) × 100
For a cleaner earning $16/hr working 2,000 hours per year ($32,000 base wage), a typical burden might look like:
- FICA: $2,448
- SUTA/FUTA: $700
- Workers' Comp (8%): $2,560
- PTO (5 days): $640
- Training/Turnover: $1,200
Total burden: $7,548. Burden Rate: 23.6%.
That $16/hr employee actually costs you $19.77/hr. If you bid using $16, you left $3.77 per labor hour on the table — on every hour worked, across every contract.
Industry Benchmark
For commercial cleaning, a total burden rate of 25–35% is typical. If you're below 25%, double-check that you've included workers' comp and realistic turnover costs. If you're above 40%, look at your state unemployment rate — a history of layoffs drives that number up quickly.
What to Do With This Number
Once you know your burden rate, apply it to every bid. Your true hourly labor cost = base wage × (1 + burden rate). Use that number — not base wage — as your labor cost input when calculating what a contract needs to price at to hit your target margin. One number, correctly applied, fixes every future bid you write.