Pricing Labor: Crew Rates, Productivity, and Prevailing Wage

Why Labor Cost Is the Hardest Line to Get Right

Materials have a price tag. Labor does not—at least not a simple one. When you hire a carpenter for a framing task, you pay far more than the hourly wage printed on the pay stub. You also pay mandatory payroll taxes, insurance, and sometimes union fringes. Miss those extra costs and your bid will lose money before the first nail is driven. This lesson shows you exactly how to build an all-in crew labor cost from first principles, how to read a published cost database, and when federal prevailing wage law changes the numbers entirely.

The Bare Wage vs. the All-In Rate

The bare wage (sometimes called the straight-time wage) is the dollar-per-hour amount the worker takes home before any deductions. The all-in rate (also called the loaded rate or fully burdened rate) adds every employer cost on top of that wage. The difference between these two figures is called labor burden.

Labor Burden Components

| Component | What It Is |

|---|---|

| FICA (Social Security & Medicare) | Employer's share of Federal Insurance Contributions Act taxes—currently a fixed percentage of gross wages up to applicable wage bases. |

| Federal Unemployment Insurance (FUTA) | Federal tax on the first portion of each employee's annual wages; funds the federal unemployment system. |

| State Unemployment Insurance (SUTA) | State-level unemployment tax; rate varies by state and by the employer's claims history. |

| Workers' Compensation Insurance | Covers medical and wage-replacement costs for job-related injuries; rate varies dramatically by trade classification—roofing carries a much higher rate than office work. |

| Fringe Benefits | Health insurance, retirement contributions, paid vacation, sick leave, and any other negotiated or voluntary benefits. On union projects these are set by the collective bargaining agreement (CBA); on open-shop projects they vary by company. |

| General Liability (sometimes included) | Some estimators add a share of general liability insurance here; others treat it as overhead. Know your company's convention. |

A typical labor burden in US commercial construction runs roughly 30–50 % above the bare wage, though the exact number depends on trade, state, and whether the project is union or open-shop. Always use the actual rates for your project and jurisdiction; never guess.

Converting bare wage to all-in rate:

> All-in hourly rate = Bare wage × (1 + Burden %)

For example, if a journeyman's bare wage is $28.00/hr and total burden is 38 %, the all-in rate is $28.00 × 1.38 = $38.64/hr.

Crew Composition and Published Cost Databases

Most construction tasks are not done by a single worker; they are done by a crew—a defined mix of skilled journeymen, apprentices, and equipment operators. Published databases such as RSMeans Building Construction Costs list standard crew compositions (e.g., Crew C-2: 1 carpenter foreman + 4 carpenters) along with the crew's daily output and unit cost.

Key Database Terms

• Crew Daily Output: How many units (SF, LF, EA) the crew can install in an 8-hour day under normal conditions.
• Labor Hours per Unit: The reciprocal of output; tells you how many labor-hours each unit of work consumes. (Labor hrs/unit = Total crew labor hrs per day ÷ Daily output.)
• Bare Labor Cost per Unit: Database figure before burden; useful for comparing locations.
• Total In-Place Cost: Includes material, labor (burdened), equipment, and the database's built-in overhead and profit.

When you use RSMeans for estimating, note the City Cost Index (CCI) or Location Factor for your project city. The database is based on a national average; multiply by the local factor to adjust for regional wage and material differences.

Calculating Total Crew Labor Cost for a Task

Follow these steps for any task:

1. Identify the quantity of work (SF of formwork, LF of framing, SF of drywall, etc.).

2. Look up the crew and its daily output in your cost database.

3. Determine labor-hours per unit (or use the database figure directly).

4. Calculate total labor-hours: Quantity × Labor hrs/unit.

5. Apply the all-in crew rate: Total labor-hrs × All-in crew hourly rate = Total labor cost.

Always double-check units. A productivity figure stated per 100 SF must be divided by 100 before multiplying by square footage—a common arithmetic error on estimates.

Prevailing Wage and the Davis-Bacon Act

On federally funded or federally assisted construction projects (federal buildings, federally assisted highways, HUD-funded housing, etc.), the Davis-Bacon Act requires that workers be paid the prevailing wage for their trade and locality. Prevailing wage rates are set by the U.S. Department of Labor and are published in wage determinations specific to the county and type of work.

Prevailing wages often—but not always—exceed open-shop market wages. When Davis-Bacon applies, you must use the wage determination rate (including required fringe benefits) rather than your company's normal rates. Failure to do so is a federal violation that can result in back-pay liability, contract debarment, and civil penalties.

How to determine if Davis-Bacon applies:

• The project is constructed under contract with a federal agency, or
• The project receives federal financial assistance above the applicable threshold (check the specific assistance program).
• State and local "little Davis-Bacon" laws may apply to state-funded projects; always check.

Safety Note

Labor-cost decisions affect how many workers are on a crew and how long a task takes. Never reduce crew size below safe minimums to cut cost. On any job site where you are present:

• Follow all lockout/tagout (LOTO) procedures before work on energized equipment.
• Wear required PPE (hard hat, safety glasses, hi-vis vest, steel-toed boots as a minimum on most sites).
• Comply with the applicable OSHA 29 CFR 1926 (construction) standard for the hazard at hand.

An estimator who has earned OSHA 30 understands that cutting corners on crew safety is not a cost savings—it is a liability.