The Cost of Employment

A new company has moved into your town. All of the open job positions offer a comprehensive health care plan that would cost less than one percent of your paycheck, an on-site daycare facility, two weeks paid vacation starting the first year, and a month paid vacation after that, an employer-matched retirement plan, and 16 weeks of fully paid maternity/paternity leave. Imagine if the job market was so wide-open that job seekers could pick which jobs they wanted based on those incredible benefits. For the average American, those benefits are only a wild fantasy, and because they are, the cost of employment is soon surpassing the income that an employee earns.

A Little Background

The United States Census reports that the median household income for Americans in 2008 was $52,000, which implies that dual-income households, on average, earn less than $30,000 per person. With that said, the 2009 tax year stirred controversies over the astounding fact that just under 40 percent of Americans did not have to pay federal income taxes, because many of them earned less than $20,000 a year.

Armed with that information, it becomes clear that the cost of employment depends on the number of workers in a household, the number of children, and the need to commute to work. In many cases, a dual income-household may be as financially strained as a single-parent household. Single people may pay more in taxes or have a longer commute then their family oriented job competitors.

Costs of Employment

The following list includes some of the most common costs associated with working outside the home.

• Gasoline

• Car maintenance

• Childcare

• Professional clothing

• Work lunches

• Taxes

The USA Today reported that the average American Commute to work was about 25 minutes or around 16 miles each way in 2004. With gasoline prices not breaking the high marks at around $2.75 per gallon, the average American spends around $80 a month for gas.

Based on a calculator provided by Bikes at Work, Car maintenece costs between $300 to $600 a month, depending on whether a family has a car payment. In many cases, if one family member is not working, then that expense can be completely eliminated.

The National Association of Child Care Resource & Referral Agencies lists the average costs of pre-school and daycare costs per state. Somewhere in the middle, the average American would spend $460 a month for child care.

Clothing costs depend on the nature of work. Some employers require their employees to purchase certain uniforms, others require professional attire, and others require specialized shoes. Clothing shouldn't work out to a monthly expense; however, on average, Americans spend about 4 percent of their incomes on clothes for their families. At the minimum an adult spends one percent of her income, with the least amount spent on clothing being around $17 a month.

Work lunches can vary, especially if an employee has an extended lunch break too far from home to use her lunch hour with family. With adequate facilities, employees would be able to refrigerate foods from home, but most buy at least one lunch a week, generally at a fast food place. Some offices have those Friday meetings where an employee has to participate by buying her own lunch, which can run around $10 a week, at the very lowest of the scale, amounting to $43 a month.

Finally, most consider taxes to be an arbitrary work expense because every working person is subjected to some form of taxes, whether they are federal income taxes or the Social Security and FICA taxes. If someone doesn't work; however, he doesn't pay those taxes at all. The New York Times business contributor, Catherine Rampell, explains that the Congressional Budget Office posted the average American taxpayer's contributions, and that "The main findings: The overall effective federal tax rate (the ratio of federal taxes to household income) was 20.7 percent in 2006, with the highest quintile of American households paying 25.8 percent of their income in federal taxes." With a per-capita income of around $30,000, that would equate to around $500 a month.

The Monthly Math

Starting with $30,000, we have the following numbers:

• Gasoline/Car maintenance: $300

• Childcare: $460

• Clothes: $17
• Lunch: $43

• Taxes: $500

Cost of Working: $1320

Monthly Pay: $2500

Total Money Earned: $1180

This total figure is a very conservative figure, because childcare expenses can be even more expensive if a family has more than one child. This figure doesn't include the cost of car payments, nor more expensive professional attire (nursing shoes, scrubs, work boots and belts, Etc).