October 19, 2026 · Mitt Patel · 6 min read
You've got a journeyman at $42 an hour and an apprentice at $22 an hour on the same panel upgrade this week. When the job closes out and you look at the numbers, labor shows up as one blended number that doesn't match either of them. You shrug, move on, and bid the next panel upgrade the same way you bid this one.
Why this happens and what it costs you
Most shops track labor cost by taking total payroll for the week and dividing it across the jobs that got worked. It's fast. It's also wrong in a specific way: it assumes every hour on a job costs the same, when it doesn't.
A journeyman and an apprentice working side by side on the same job cost very different amounts per hour. If you charge both of their hours to the job at one average rate, the job's labor cost looks fine on paper even when the mix was expensive, or looks expensive even when the mix was efficient. Either way, you're looking at a number that doesn't reflect what actually happened.
The real cost shows up later, in decisions. You bid your next job off of history that was never accurate. You think a certain job type is profitable because the blended rate looked good, when really you got lucky with a cheap crew mix that time. You think another job type is a loser when it was really just staffed heavy with journeymen hours it didn't need. Over a year of bidding this way, your estimates drift further from what jobs actually cost, and you don't know why.
A worked example
Say you run a two-person crew on a service upgrade: one journeyman at $42 an hour and one apprentice at $22 an hour. The job takes 8 hours each, so 16 hours total.
Blended the simple way, you'd take (42 + 22) ÷ 2 = $32 an hour, times 16 hours, for $512 of labor cost charged to the job, which happens to match the actual total in this case.
Charged at actual rates, it looks like this:
- Journeyman: 8 hours × $42 = $336
- Apprentice: 8 hours × $22 = $176
- Total: $512
In this example the totals match, because the hours split evenly. But now say the next job uses the same two people for the same 16 hours, except the journeyman works 12 hours and the apprentice works 4, because the work needed more skill.
Blended at $32 an hour across 16 hours still shows $512. But the real cost is:
- Journeyman: 12 hours × $42 = $504
- Apprentice: 4 hours × $22 = $88
- Total: $592
That's $80 more than the blended number showed. If you bid your next similar job off the blended $512, your estimate will understate labor cost by $80 before you even account for materials or overhead. Multiply that gap across a year of jobs with uneven crew mixes, and your estimates can drift further from reality.
How to set it up
- List each person's actual cost rate, not their pay rate alone. Include base wage and, if you want a fuller picture, the cost of payroll taxes and any benefits you cover. Keep this list current as pay changes.
- Track hours by job, by person, not just by job. A simple time sheet or app that logs who worked which job and for how long is enough. QuickBooks Online has fields for this if you're already using it for payroll; you don't need separate software just to track hours by job.
- Charge labor to each job at the actual rate for each person, not an average. If a journeyman and an apprentice both worked a job, the job carries both of their real costs, added together.
- Compare actual labor cost to what you estimated for that job. If you estimated the panel upgrade at $500 in labor and it actually cost $592, you want to see that gap while the job is still fresh in your mind, not six months later.
- Feed what you learn back into future estimates. If service upgrades consistently run more journeyman-heavy than you planned for, adjust how you price that job type going forward.
The mistakes that undo it
Using one shop-wide labor rate for everyone. This is the whole problem restated. If you've got more than one pay rate in your crew, a single blended rate will always hide something.
Not updating rates when pay changes. If someone gets a raise and you keep charging their old rate to jobs, every job they touch after that looks cheaper than it really is.
Tracking hours by week instead of by job. If you only know that someone worked 40 hours this week, not which jobs those hours went to, you can't charge labor accurately no matter what rate you use.
Skipping the comparison step. Charging actual rates to jobs is only half the job. If you never compare the actual cost to what you bid, you're collecting good data and doing nothing with it.
Forgetting travel time, drive time, or shop time. If journeymen and apprentices split their day between a job site and other tasks, make sure the hours that actually belong to the job are the ones getting charged to it.
Monthly checklist
- Confirm the pay rate list is current for everyone on the crew.
- Spot-check a few job time sheets against payroll to make sure hours by job are being recorded, not just hours by week.
- Pull labor cost by job for jobs that closed out this month and compare it to the original estimate.
- Note any jobs where actual labor ran meaningfully over or under the estimate, and why.
- Flag any pattern across jobs, like a job type that's consistently running heavier on journeyman hours than estimated.
Common questions
Do I need special software to track labor by person and by job?
No. A basic time sheet, whether on paper or in an app, works as long as it captures who worked, which job, and how many hours. QuickBooks Online can handle this if you're already using it for payroll, since it lets you tag hours to a job.
What if I don't know each worker's exact cost rate?
Start with their pay rate and add a reasonable estimate for payroll taxes and benefits if you want more precision. A rough actual rate is still generally more accurate than one blended rate for the whole crew. You can refine it over time.
How far back should I compare estimates to actuals?
Do it as soon as a job closes out, while the details are still clear in your mind. Waiting until the end of the year makes it much harder to remember what went differently on a specific job.
What do I do if actual labor consistently runs higher than my estimates?
That's a signal to look at how you're building estimates, not just a one-time miss. It may mean your estimated hours are low, your crew mix assumptions are off, or certain job types need more journeyman time than you've been pricing for. The right fix depends on your specific jobs and crew, which is worth reviewing directly rather than guessing.
Setting this up once and keeping it current is exactly the kind of work North Hudson Bookkeeping does for electricians across North Jersey. Mitt Patel offers a free first call to look at how your crew's labor is currently being charged to jobs and what it would take to track it at real rates going forward.
