How do you calculate workers' comp cost per hour?

Divide the annual workers' comp premium by annual hours worked, then apply your normalization multiplier. With a $180,000 premium over 400,000 hours at a 1x multiplier, the cost is $180,000 / 400,000 = $0.45 per hour.

What is a good workers' comp cost per hour?

It varies enormously by industry and experience mod — a low-risk shop might run well under $0.50 per hour while high-hazard trades can exceed several dollars. The example's $0.45 per hour is modest; the real test is whether your quoted burden rate recovers it.

What does the normalization multiplier do?

It rescales the raw ratio to whatever basis you need. Leave it at 1 for a straight dollars-per-hour figure, or set it to 100 to express cost per 100 hours, so the number drops cleanly into your costing template.

Should I use actual hours or paid hours?

Use actual hours worked, consistent with how workers' comp premium is typically calculated on payroll. Mixing in vacation and holiday hours understates the true per-working-hour burden and misaligns with the premium base.

How does my experience mod change this number?

Your experience modification rate multiplies the manual premium, so a mod moving from 1.0 to 1.2 raises the premium — and therefore cost per hour — by about 20%. Recomputing after a mod change shows exactly how many cents per hour a claim history is costing you.

Why include comp cost in a burden rate at all?

Because it is a genuine cost of employing labor. If your fully-burdened rate omits the $0.45 per hour, every hour you sell silently gives back that margin; over 400,000 hours that is $180,000 of unrecovered cost a year.

Safety & Workforce calculator

Workers Comp Cost per Hour Calculator

Workers' comp cost per hour turns your annual workers' compensation premium into a per-labor-hour number so it can be baked into job costing, bid rates, and fully-burdened labor calculations. Estimators, controllers, and operations managers use it to make sure quotes actually recover the cost of comp insurance instead of eroding margin, and to see how experience-mod changes hit the bottom line per hour. It matters because comp is a real, variable cost of putting a worker on the floor — leaving it out of the burden rate quietly underprices every hour you sell. The normalization multiplier lets you express the result per hour, per 100 hours, or in whatever basis your costing model expects.

What this calculator does

Calculate workers' comp cost per labor hour for Safety & Workforce from annual premium and hours worked.
Use it to load workers' comp into a fully burdened labor rate in Safety & Workforce.
It computes the workers' comp burden per labor hour by dividing the annual premium by annual hours worked and applying a normalization multiplier.

Formula used

Workers' comp cost per hour = annual premium ÷ annual hours worked × normalization factor

Inputs explained

Annual workers' comp premium:
Annual labor hours worked:
Rate normalization multiplier:

How to use the result

Use it when building a fully-burdened labor rate, quoting a job, or evaluating how an experience-mod or premium change affects cost per hour.
It spreads one blended premium evenly across all hours, so it hides the fact that high-mod job classes (roofing, welding) carry far more comp cost per hour than low-risk office or assembly work; class-code-level rates are needed for precise pricing.

Current U.S. benchmarks

Manufacturing hourly earnings average $30.27 (BLS, Jun 2026), up 4.4% from a year earlier. Median machinist pay is $28.24/hr (OEWS 2025), with state medians on each state page. Manufacturers have 529k open positions nationally (BLS JOLTS).

Common questions

How do you calculate workers' comp cost per hour? Divide the annual workers' comp premium by annual hours worked, then apply your normalization multiplier. With a $180,000 premium over 400,000 hours at a 1x multiplier, the cost is $180,000 / 400,000 = $0.45 per hour.
What is a good workers' comp cost per hour? It varies enormously by industry and experience mod — a low-risk shop might run well under $0.50 per hour while high-hazard trades can exceed several dollars. The example's $0.45 per hour is modest; the real test is whether your quoted burden rate recovers it.
What does the normalization multiplier do? It rescales the raw ratio to whatever basis you need. Leave it at 1 for a straight dollars-per-hour figure, or set it to 100 to express cost per 100 hours, so the number drops cleanly into your costing template.
Should I use actual hours or paid hours? Use actual hours worked, consistent with how workers' comp premium is typically calculated on payroll. Mixing in vacation and holiday hours understates the true per-working-hour burden and misaligns with the premium base.
How does my experience mod change this number? Your experience modification rate multiplies the manual premium, so a mod moving from 1.0 to 1.2 raises the premium — and therefore cost per hour — by about 20%. Recomputing after a mod change shows exactly how many cents per hour a claim history is costing you.

Last reviewed 2026-05-12.