Let’s take a look at a typical American worker — and figure out how much she earns.
Lisa starts prepping for her work day the night before, when she irons and lays out her clothes, packs lunch and cleans her car. She meets with clients throughout the day, so she must present a polished appearance.
Lisa’s alarm buzzes at 7 a.m. Bleary-eyed, she showers and blow-dries her hair, applies makeup, brews coffee and dresses up. Her high heels hurt her feet, but they’re essential for giving her a groomed appearance.
She knows she must not only “dress for success” but also “drive for success,” so her immaculate car is less than two years old. She washes it weekly.
She drives 30 minutes to her office and is sitting at her desk by 8:30 a.m. The rest of the day is a blur of client meetings, phone calls and showings. By the time she battles rush hour traffic back home, she’s exhausted.
The drive home takes 45 minutes, since afternoon rush hour is more treacherous than morning rush hour. She pulls into her driveway at 6:15, kicks off her her heels, and clicks on the TV, “vegging out” for an hour to recover from her day.
By 7:30, she’s thinking about heading to the gym but she’s hungry and tired. She’s too exhausted to cook, but she’s been ordering take-out too much lately. She swings by the grocery store to pick up a package of frozen ravioli, which she dumps into a saucepan, heats and eats in less than 10 minutes.
She starts a load of laundry, realizing that half her clothes need to be dropped off at the dry-cleaners. There’s no more time today. Maybe she’ll do that during her lunch break tomorrow. She’s a regular at the neighborhood dry cleaners, and Lisa likes to chat about baseball with the new teenager who staffs the register.
After checking her email and taking the dog for a late-night stroll around the block, Lisa launches her evening routine of laying out tomorrow’s clothes and packing lunch. She’s asleep by 11 p.m., ready for her alarm to buzz at 7 a.m.
How Much Time Does Lisa Spend Working?
To learn how much Lisa makes, we first need to figure out: How much time does Lisa work?
The simple answer is “Lisa works from 8:30 to 5:30 pm — that’s 9 hours, minus lunch.” But I think her workday runs deeper.
From the second Lisa’s alarm buzzes at 7 a.m., she’s doing work-related tasks: getting dressed, wearing makeup, battling rush hour. If we include “prep time” — the time Lisa gets ready for work, plus her commute — we can see that Lisa works from 7 a.m. to 6:30 p.m., plus an extra 30 minutes later in the evening. Lisa has a 12-hour workday.
Well, that’s a conservative estimate.
After Lisa returns home, she’s so exhausted that she needs to zone out in front of the television for an hour. I would argue that this is, indirectly, “time spent working” or “time that disappears as a result of working.” I believe Lisa loses 13 hours a day as a result of her job.
But let’s stick with the conservative estimate: we’ll say Lisa has a 12-hour workday, including prep time.
How Much Does Lisa Earn?
Lisa earns $50,000 a year for her efforts, with a 3 percent 401(k) match and full health coverage.
The 3 percent 401(k) match comes to $1,500 a year, and her health coverage would cost $250 a month ($3,000/yr) if she paid for an equivalent plan out-of-pocket. So Lisa effectively earns $54,500 annually.
This is her “gross” pay. We still need to subtract her “cost of working.”
Lisa’s commute is 30 miles roundtrip (150 miles a week). Lisa enjoys 3 weeks of vacation time, which means each year she commutes 7,350 miles.
The IRS estimates that each mile driven costs 55.5 cents, but let’s use the conservative estimate that each mile only costs 30 cents. This means Lisa spends $2,205 a year commuting.
She also spends $1,000 a year on work-related clothes and another $25 per month, or $300 per year, dry-cleaning her suits. This means Lisa’s “cost of working” is $3,505 per year. (Just wait until she needs childcare!)
I’m Ignoring Important Stuff
We’ll pretend Lisa never needs someone to walk her dog when she’s away on business trips. We’ll ignore that the reason she pays for a gym membership is because by the time she gets home, it’s too cold and dark outside to jog through the park. We’ll forget the fact that Lisa moved to a different city to take this job, which means she needs to fly home every Christmas.
We’ll disregard the cost of Lisa’s “look-successful-in-front-of-clients” weekly car wash. We’ll ignore the fact that at least once a week Lisa orders take-out or buys packaged foods.
If we ignore all these work-related expenses, and we subtract ONLY the cost of commuting and clothes, we see that Lisa earns $50,995 per year, before taxes. That’s a super-generous estimate.
Psst. If want to explore a less expensive alternative for car insurance, check out Metromile – car insurance that starts at $29/month + a few cents for every mile that you drive. Get a free quote – it’s risk-free. It’s great for those with short or no commutes, and it’s only available in CA, VA, WA, OR, IL, PA, NJ, and AZ.
What’s Lisa’s Hourly Rate?
Lisa loses 12 hours a day to her job, including prep time. She works 49 weeks per year, with 3 weeks of vacation time. This means Lisa devotes 2,940 hours per year to her job.
At $50,995, Lisa is trading her time at an hourly rate of $17 an hour before taxes. Whoa!
This is not even close to the amount Lisa thinks she earns. Her bartender friends earn more than that. Is this what her master’s degree is for?
More importantly, can Lisa justify giving up her dreams — backpacking through Europe or opening a clothing boutique — for $17 an hour? And what happens when Lisa has a baby? Can she justify paying $12 an hour for childcare?
The Bottom Line: Know how much you make. You might not earn as much as you think you do. Then list all the dreams, goals and values you’re sacrificing for the sake of your job. Is it worth it?
If your answer is yes, I applaud you. You’re in a great place in your life. But if the answer is no, it may be time to make a change.