A Journeyman Electrician's prevailing wage rate of $89/hr is not what hiring that worker costs you. By the time you add fringe benefits, payroll taxes, insurance, and tools, the real number is closer to $130–$145/hr. Understanding each component of labor burden is essential for accurate bidding and project financial control.
Labor cost in construction has three tiers. Each tier is mandatory — you cannot opt out of any of them on a prevailing wage project:
The prevailing wage schedule covers Tiers 1 and 2. Tier 3 is the responsibility of the employer and varies by trade, experience rating, and insurance carrier. Here is each component explained:
The employer matches the employee's FICA contribution: 6.2% for Social Security (on wages up to the annual wage base, $168,600 in 2025) plus 1.45% for Medicare (no cap). The employer share is 7.65% on base wages only — fringe benefit contributions are generally exempt from FICA.
Employers pay 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% net after the state unemployment tax credit. At 0.6% net, this is a relatively small number but must be accounted for.
New York imposes state unemployment insurance on the first $12,500 of wages per employee (2025 taxable wage base). Rates range from 2.1% to 9.9% based on the employer's experience rating. Construction employers with high turnover typically carry higher rates.
This is the largest variable in Tier 3. Workers' comp is priced per $100 of payroll and varies dramatically by NCCI class code (trade). In New York, electrical work (class 5190) runs roughly $9–$14 per $100 of payroll. Roofing (class 5551) can exceed $50. Mechanical insulation, ironwork, and demolition are similarly high-rate trades.
GL insurance for specialty contractors is typically priced as a percentage of payroll or as a per-project rate negotiated with the GC. Typical ranges: 2–4% of labor payroll for mechanical/electrical, 5–8% for demo/civil. Owner Controlled Insurance Programs (OCIP) or Contractor Controlled Insurance Programs (CCIP) may shift this cost to the project owner.
Many estimators include a small tools allowance of $1–$3/hr per worker to cover consumable tooling, PPE, and hand tools that are not reimbursed by the owner. This is not a statutory cost but is a real expense that belongs in the fully burdened rate.
| Trade | Base | Benefits | Package | +Burden | Burdened |
|---|---|---|---|---|---|
| Electrician | $89.24 | $48.50 | $137.74 | ~$20 | ~$158 |
| Plumber | $91.38 | $52.30 | $143.68 | ~$22 | ~$166 |
| Laborer | $52.10 | $38.40 | $90.50 | ~$28 | ~$119 |
| Ironworker | $68.70 | $44.20 | $112.90 | ~$32 | ~$145 |
| Carpenter | $63.45 | $40.80 | $104.25 | ~$18 | ~$122 |
* Illustrative figures based on approximate NYC prevailing wage rates. Burden varies by carrier, experience rating, and project type. Use WageHound's Labor Burden Calculator for project-specific calculations.
On large projects (typically $50M+ construction value), owners or GCs often implement a controlled insurance program (OCIP/CCIP). Under these programs, the owner procures workers' comp and GL insurance for all enrolled contractors, eliminating those costs from the subcontractors' burden.
For prevailing wage projects with an OCIP/CCIP: