$12.50 Can Translate to $4.23 per Hour: Are You Burdened by Job Overhead? 12/5/2005 8:52:47 AM
Teena Rose is a columnist, public speaker, and certified/published resume writer
with Resume to Referral. She’s authored several books, including "20-Minute Cover Letter Fixer" and "Cracking the Code to Pharmaceutical Sales."
Here comes a pill you probably didn’t know you’d swallow today: you’re probably working for nothing. Well, nothing is probably too harsh. From our calculations, however, you may be working for an amount just higher than all-you-can-eat peanuts and lower than minimum wage.
Overhead is a term commonly used to identify business expenses, such as office rent, employee salaries, equipment rental, and so on. However, this term can also apply to other facets of our personal, everyday lives where expense is incurred such as landing a new job.
Individuals may not realize that when they become employed they take on overhead. Personal, job-related expenses generally include daycare, additional fuel purchases, restaurant lunches, and dry cleaning — items that wouldn’t be incurred during unemployment.
Let’s review a full-view example of how job overhead can affect a person’s yearly income. I offer this scenario so you can view how a decent salary can dwindle away. I challenge you to apply this experiment to your own situation, using your yearly salary and expenses. Note, however, that this example is fictitious and is not absolute.
We’ll take a secretary working for an hourly rate of $12.50 for 40 hours per week. At this rate, the secretary will work approximately 2,080 hours per year (we have not factored in unpaid vacation, sick days, or other variables) bringing in approximately $26,000 in gross salary per year. Let’s also say — for the sake of this example — that she’s claiming married with zero deductions.
She’s making a fair wage; however, Medicare and Social Security along with state and federal taxes will take a nice chunk, leaving our secretary with approx. $20,000 in net salary or $9.62 per hour. We’ve only just begun our experiment and already our secretary has lost $2.88 per hour from taxes.
A huge expense for parents is daycare. Valdemar Ramos and his wife found out just how quality daycare can chip away at a salary when they placed their 5-year-old son in daycare at $10,000 per year. If our secretary were paying an equivalent amount, she would now be making $10,000 per year or $4.81 an hour — less than minimum wage.
Another large expense that employees incur actually includes all the little things that go along with employment. If you total additional gas requirements, fast food lunches, and evening takeouts (because our secretary and her family are too tired to cook), she will likely spend an additional $100 to $300 per month on miscellaneous expenditures. Of course, we didn’t factor in business clothes, office birthday clubs and gambling pools, and the need to purchase fundraising items from the flyer circulating around the office. Using the conservative amount, our secretary is now making in the neighborhood of $4.23 per hour or $8,800 a year.
If this scenario applies to your situation, then you’ve quickly realized that you’re making a small dollar amount for your time commitment and dedication to your employer. The bad news is that an 8-hour day would secure a net wage of $33.84 or $169.20 per week. That isn’t much, is it?
What a two-income family probably hasn’t considered is that there are circumstances where one person in the household could comfortably leave his or her position without hurting the family’s finances. Each added expense whittles away at even the most favorable salary, so the goal is to limit or eliminate these expenditures in order to benefit from your full earning power. Start by taking a long and thorough look at your income and outgo. I’m sure you’ll be shocked with the findings!
