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Understanding Labor Costs in the Construction Industry

Learn about the six components of labor cost in construction, including wages, benefits, and insurance. Explore sources of labor costs for union and non-union workers.

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Understanding Labor Costs in the Construction Industry

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  1. Labor CostandSources of Labor Cost DR. Nabil Dmaidi

  2. LABOR COST Six Components to the Labor Cost: 1. Wages 2. Worker's Compensation Insurance 3. FICA Tax, Federal Insurance Contribution Act 4. Unemployment Compensation Tax/Insurance 5. PL&PD- Public Liability and Property Damage Insurance 6. Fringe Benefits DR. Nabil Dmaidi

  3. LABOR WAGES Vary Considerably with Locations and Type of Crafts, and union vs. op shop. Agreements Such as Union / Open-Shop / Prevailing Wage The Above Wage Rates are Known as Base Wage Rate Compensation for 40 hr/week ( 8 hr/day for 5 days ) For Work Over 8 hr/day Or Weekends the Base Rate is 1.5-2 Times Average Wage Rate Considers S.T. and O.T. = B.W.Rate * (40 + 1.5 * O.T.) (Actual Hours Worked per Week) DR. Nabil Dmaidi

  4. WORKER'S COMPENSATION INSURANCE Insurance Paid by Employers Covers Employees in Accidents or Death Caused by Work Premium Rate is Specified in $s per $100 of Base Wage Discounts are Given Depending on Company's Records in enforcing Safety Programs. ( Experience Modification Rate, EMR ) EMR can be > 1, With Bad Safety and Accident Records DR. Nabil Dmaidi

  5. Federal Insurance Contribution Act -FICA (Social Security) Federal Government Requires Employers to be taxed for providing retirement benefits for employees The Rate = 7.51% of Total Earnings (Avg. Wage) up to $45,000/Year of Employee wage The Employee Contributes an Equal Amount Through the Employer DR. Nabil Dmaidi

  6. UNEMPLOYMENT COMPENSATIONTAX/INSURANCE A Tax Collected by the State to Provide Unemployment Insurance. Paid by Employers Approximately 3% of Total Earnings (Avg. Wage) of the Employees. DR. Nabil Dmaidi

  7. Public Liability and Property Damage Insurance(PL&PD) An Insurance Protecting the Contractor from Liabilities Involving Damage to a Third Party and Public Property Caused by Contractor's Employee During Construction Premium is Specified in $s per $100 of Base Wage DR. Nabil Dmaidi

  8. FRINGEBENEFITS Employers often Pay Benefits in Terms of : Paid Vacations Pension Plans Training Programs, etc. Others Rate Ranges From 0.75 to 2.1 $/hr DR. Nabil Dmaidi

  9. Union Labor Rates • Means Labor Rates for the construction industry • Provide annual hourly union wages for 46 buildings construction trades in major U.S. and Canadian cities. • The Richardson Report • Provides quarterly union wages for 16 crafts in 120 U.S. and Canadian cities. • The Construction Labor Research Council (CLRC) • Provides construction union labor cost for 17 crafts in 300 cities (average of 3000 projects) DR. Nabil Dmaidi

  10. Sources for Non-Union Labor Costs • Means Open Shop Building Construction Labor Costs, R.S. Means • Employment and Earning, Bureau of Labor Statistics DR. Nabil Dmaidi

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