The Contractor Fight with Tom Reber TCF1088: Labor Burden: The Number That’s Bleeding You Dry
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Jan 5, 2026 Discover how many contractors mistakenly calculate labor costs based on wages, ignoring the hidden labor burden that truly affects profits. Learn what's included in that burden, from payroll taxes to unbillable hours. Tom shares a stark example of how a $25 wage can balloon to $36-$40 per hour in real costs. He emphasizes the importance of pricing accurately to avoid cash crises and offers three powerful strategies to reclaim profit. Finally, overcome the fear of price resistance by understanding that pricing realistically is crucial for survival.
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The Two-Person Payroll Image
- "You think you're paying one guy 25 bucks an hour, but your bank account is paying for two people."
- Tom uses this image to show hidden costs silently double your payroll burden.
Labor Burden Is The Real Cost
- Labor burden is the full cost of an employee, not just their wage; it includes taxes, insurance, benefits, downtime, and unbillable hours.
- Ignoring labor burden turns apparent profit into an illusion and chokes your cash flow.
Fantasy Math Eats Your Profit
- Many contractors bid using 'fantasy math' by pricing off wages and ignore payroll and overhead hits.
- That mismatch explains months with no profit despite hard work.