This week I have discussed how much people are actually working versus how much they are being told they are working. The forty-hour workweek is largely a myth, unless, of course, you work “30 hours” a week!
But, while we spend a large portion of our waking hours chained to our desks, we are able to make a living, earning tens of thousands of dollars a year. It represents our livelihood, and our ability to make ends meet, and to raise our children. Right? Maybe. Have you ever thought that you might be underpaid, especially for the amount of effort and time you are selling away to your employer? Chances are good that you are correct.
The Math
When you started working at your current job, they gave you a salary. Let’s say, for the purposes of this article, that you are being paid a nice sum of $60,000 per year. That comes out to $28.84 per hour. So, each hour that you work hard and sell away to your boss, you are making almost $30, right?
Try again.
First, you lose a lot of this to taxes. We will pretend that you live in a state that has a medium-level income tax and see what you end up “taking home.” This website gives you the info. If you live in Virginia, and you take two witholdings and one $70 monthly deduction for health care, you will end up with $761.02 per week.
Next, let’s divide this figure by the number of hours each week that you work. Wait. Remember when I talked about the forty-hour myth? You work more than you may think. Let’s instead say that you work 53 hours and 45 minutes per week, factoring in transportation, preparing for work, and “lunch breaks” that are unpaid. (For an explanation of how I arrived at this figure, see this post.)
$761.02 / 53.75 = $14.15.
You make just over $14 an hour for your work. There is reality. And actually, if you factor in the cost of gas to get to and from your job, it will be even less than this. At some point I would like to include a calculator on this website that will let you know your real wage for the hard effort you put in every day. In the meantime, think about how many hours you are really putting in on your job, getting there and taxes, and then do the math.
You’ll probably be shocked and appalled. $60,000 a year seems like a lot, but in the end, you only end up with about two-thirds of this total. And you are actually working a lot more for what you are getting back. No wonder so many of us are in debt. Many of us don’t have a budget, and don’t live in reality. This is a deadly combination, but is also for a later post.
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Just remember, if you start your own business, you will work a hell of a lot more hours/week than that, as well as have the risk of your business failing and losing everything. Be able to endure sweatshop wages for a while
But you’d be working for YOURSELF. In addition, you can always work for somebody else, a business you work for can go under (think massive lay offs) For example, the apartment complex where I live was bought out by another company – every employee there was canned and I have no clue if they got hired at another location. Yet, every business for which you have and will work for was at one point a person starting their own business….The payoff of starting your own business can be tremendous and in this scenario you make all the rules.
Scott and Victoria both have very good points.
Regarding Scott’s comments about self-employment, it is true that if you are afraid of work, self-employment is not for you. You have to put up with litle pay and long hours when you begin. (Usually, unless you have a low startup cost and can maintain your venture on the side.)
The whole point of self-employment is flexiblity, freedom, and your direct connection to your earnings. What you make is no longer necessarily an houly thing, but you have a direct connection to it based on what you do. You are not longer making money for someone else, but instead for yourself. And, as Victoria says, the payoff at the end can be hugely rewarding.
Failure starting your own business is much worse than failure working for someone else.. the latter won’t bankrupt you. I’m not afraid of work, i Just don’t want to work anymore than 40 hours. Even that can be too much.
And there is no such thing as working for yourself. If you are self-employed you are working for your customers. They decide your fate.
Self-employment is not for everyone. However, not all businesses that fail bankrupt their owners.
You are working for your customers, but unlike with regular employment you can fire your customers if they are not working out for you. You also have control over when you work, control over the kind of work you do, who you take on, and your income is far more related (in the long run) to what you do. Definitely not for everyone though.
When you can customize your work in this way and you are not making money for a company or making money for your boss, then you are definitely working for yourself. It’s a big difference.
In some ways I feel that self-employment is actually less risky today than regular employment, which is a topic I’ll delve into later on.
You can’t necessarily fire your customers because you need them to stay in business (as well as their good reviews that they will give to others). All you are doing is replacing one boss with many.
I think you should look into what pct. of startup businesses succeed, in various industries. A big problem is you need what the owners in society have – capital.
You can’t fire all your customers, but you can fire the ones that are high-maintenance. Sometimes letting go of one troublesome vendor is worth it: you may get 2 better ones as replacements, and increase your income while working with better people.
A small percentage of startups succeed. I’ve read anywhere from 10% to 30% last more than a couple of years.
It isn’t easy, but the results are worth it.