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Thursday, March 08, 2012

Do the Benefits Math (Please!)

I've wanted to write this brief post for years but it has not been the right time until now.  Every year when benefits go up you hear, "My paycheck isn't keeping up with my benefits" because pay goes up at, say, 3% and insurance goes up maybe 5%. 

This year our insurance isn't going up at all so I can stick a pin in this fallacy without seeming like I am being defensive.

Okay so let's do the math.  The lowest allowable pay for any position is $7.25/hr. With 2,080 working hours in a year, assuming no overtime, anyone reading this post and working full time is making at least $15,080/yr. Assuming a 3% increase (which appears to be close to the market for this year) that person will receive an increase of $452. 

Now let's move on to Benefits.  Medical insurance is going to cost the average family about $4,500/yr in premiums. Let's assume a 5% increase, which again is pretty typical, and you come up with an increase of $225.  So while the annual wage increase was largely eaten-up by increases in insurance, in no way did it fail to keep up.

So since 95% of employees make more, often substantially more, than minimum wage the gap between wage increase and benefits increases is equally substantial.

So please, please, in the name of all things holy, the next time you hear that you got 2.5% increase and insurance went up by 5%, don't say, "I'm going backwards!" because you aren't.  Those percentages are applied to numbers of vastly different size.

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