You pay for eight hours, but not all eight reach the job. Loading, driving, staging, waiting on materials, and redoing work are all paid time that produces nothing billable — and they quietly raise the cost of every hour that does.
Paid hours are not productive hours
If part of a paid day is nonproductive, the real cost of a productive hour is higher than the wage suggests. Multiplying wage by a small percentage understates it; the clearer method divides paid-hour cost by the productive share.
A worked number
Take a $28 wage with roughly 15% combined payroll tax and workers’ comp and $4.50 of hourly benefits: paid-hour cost is about $36.70. If only 92% of paid time is productive, divide by 0.92 — about $39.89 for one productive hour. Estimating that job at $28, or even $36.70, understates it.
Where the nonproductive time comes from
Drive and load time, site setup and cleanup, waiting on a delivery or another trade, and rework after a mistake. None of it is laziness; it is the normal overhead of doing real work, and it belongs in the labor rate.
What to do with it
Estimate labor at a burdened, productivity-adjusted rate rather than the wage. Track where nonproductive hours actually go, because the biggest ones — travel, waiting, rework — are often the ones you can reduce.
Frequently asked questions
What is nonproductive labor?
Paid time that produces no billable work: loading, drive time, setup and cleanup, waiting on materials, and rework.
How does it change the labor rate?
It raises the cost of each productive hour. Dividing paid-hour cost by the productive share (for example 0.92) gives the real cost.
How do I reduce it?
Track where nonproductive hours go. The largest ones, like travel, waiting, and rework, are often the ones you can cut.
What to do next
Starting points: IRS Publication 15 for payroll taxes; your own payroll and insurer records for the rest.