You probably know how much you earn per hour gross, on paper. Even if you're salaried this is usually easy to calculate: take your annual salary and divide by 2,080 work-hours per year. But is that really what your hard work is bringing home? Not even close. Here are some additional factors you need to put into your formula.

  • Taxes. You only pay taxes because you have income, so they're a direct subtraction from your gross.
  • Work-related expenses. These are other expenses that you only pay because you're working. Subtract these from your annual salary. This category includes things like:
    • Child care
    • Gas and depreciation on your car due to commuting
    • Eating out at lunch
    • Work clothes
    • Lawn care or housekeeping that you pay someone else to do
  • Now increase the number of hours in your denominator from 2,080 by including the amount of non-paid time you spend on work. This includes things like:
    • Getting dressed and prepped for work each morning
    • Driving to and from work
    • Dropping kids off and picking them up from childcare
    • Time spent away from home due to work travel
    • Unpaid overtime

Say you earn a great salary: $104,000 per year! By normal calculation that would be $50/hour. Not bad, right? But let's incorporate some of the adjustments above.

  • Taxes: 15% for state and federal, since you probably have some deductions. Could be higher. -$15,600
  • Work-related expenses:
    • Child care: $500/month (only one kid??) -$6,000
    • Gas and car: $0.55/mile (national average) for 16 miles one-way is $17.60 per day, for 50 weeks per year. -$4,400
    • Lunch: $30/week. -$1,500
    • Work clothes: Who knows... -$2,000
    • Lawn and housekeeping: You are cheap and do it yourself!
  • Work-related time:
    • Getting dressed and prepped for work: 30 minutes per day. 125 hours
    • Commuting: 25 minutes each way. 208 hours
    • Child care driving: Who knows... 10 minutes per day. 42 hours
    • Work travel: Zero, right?
    • Unpaid overtime: Zero, right?

So what's the net? Actual annual pay: $74,500. Actual work-related time cost: 2,455. Actual pay per hour: $30.34.

If you make $52,000 salary per year and have similar expenses and time-sinks you might only be taking home $14/hour or less.

Please note that these calculations assume no unpaid overtime, no work travel, only one child in paid care, no reduction in income due to Social Security or Medicare, etc.

So, how much do you enjoy your job now?

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