Which cost category includes taxes and insurance costs paid by the employer on behalf of laborers?

Which cost category includes taxes and insurance costs paid by the employer on behalf of laborers?

• A. Fringe Benefits
• B. Labor Burden
• C. Labor Rates
• D. Health Insurance

Answer: (B)

When you evaluate what it costs to employ someone, you account for more than just the wage. The employer must cover additional expenses tied to labor, such as payroll taxes, workers’ compensation, unemployment taxes, and employer-paid insurance and benefits. This whole set of extra costs is called the labor burden. It represents the true economic cost of labor to the company, beyond the base pay. Health insurance is one component of these benefits, but the broader category that includes taxes and various insurance costs is labor burden. While labor rates (the amount charged for labor) can include this burden, the category itself is labor burden.

When you evaluate what it costs to employ someone, you account for more than just the wage. The employer must cover additional expenses tied to labor, such as payroll taxes, workers’ compensation, unemployment taxes, and employer-paid insurance and benefits. This whole set of extra costs is called the labor burden. It represents the true economic cost of labor to the company, beyond the base pay. Health insurance is one component of these benefits, but the broader category that includes taxes and various insurance costs is labor burden. While labor rates (the amount charged for labor) can include this burden, the category itself is labor burden.