Work-to-Pay

Perhaps I use this concept to justify laziness. Or, I am on to something! Fine, I know this is not uncommon knowledge - but surely it is deserving of a diggigy dan blog entry... especially considering there are no qualifications for diggity dan blog entries.

So many variables. It behooves me to generalize. But generalizing is efficient, so screw it.

Generalizations:

• We work for money
• We use money to buy happiness (health, time, friends)
• All work is not equal in terms of effort

Ok, so my point is that when choosing a job, career, or new position take the above points into consideration. Consider the work you will be doing and the effort involved. My current job requires roughly half the effort of my previous job but pays the same. Effort can refer to the comfort level of the tasks that you have to perform, or it can refer to the amount of time you have to spend doing your job. This would include things like travelling or working at home.

For the sake of discussion, lets say you have a job making $50k/yr but it is a difficult job. You commute an hour each way, you spend 9 hours at the office, you have to deal with a bad boss, and you have to get dirty doing "field work'. Then you get offered a job for $40k/yr but the work place is 5 minutes from your house and you have a nice office. On top of that you get more vacation time, more holidays, nicer work vehicle, phone, pda, computer, etc and you get to work on things that are somewhat interesting most of the time.

So to estimate the overall work/pay ratio you need to estimate the "effort" variable. Since there is no standard way to quantify this, we can make something up (its ok, I do this all the time!). I propose taking the total number of hours worked the multiply that number by various "correction factors" in order to take into account everything that matters. For the $50k/yr job we had a 2 hour commute and a 9 hour work day, so we start with a base of 11 hours. Since the work involved a bad environment (boss, labor, etc) we can multiply it by a factor of 1.5 (this is actually several correction factors lumped into one for simplicity). This gives us the equivalent of 11(1.5) = 16.5 hours. Multiply this by the number of days worked in a typical week. In this case I will use 5.3 to account for some Saturday work...

16.5 x 5.3 = 87.45

Multiply this by 52 weeks = 52x87.45 = 4547.4 hours
Subtract vacation and holiday hours (8x10 + 5x8 = 120)
so, 4547.4 - 120 = 4427.4

Now divide this number by your annual salary in thousands = 4427.4 hrs / $50k = 88.55
This is sort of like the number of "effort" hours worked for $1000.

Now lets do this same thing for the $40k/yr job.

8.2 hours of work times a factor for a job that's easier than normal 0.7 = 5.74
Times the number of work days in a week 5.74 x 5 = 28.7 hrs
Times 52 weeks = 28.7 x 52 = 1492.4 hrs
Subtract holidays and vacation (168 hrs) 1492.4 - 168 = 1324.4 hrs
Divided by the salary = 1324.4 / 40 = 33.11

So the first job paid more but took the equivalent of 88.5 "effort" hours to earn each $1000 of pay.
The second job paid less but ended up only taking 33.11 "effort" hours to earn each $1000 of pay.

This should mean, in real terms, that the second job is more than 2.5 times better than the first job. It's quite amazing how all of these factors can really affect the value of a job.

Now obviously there is ambiguity in assigning "correction factors" to adjust the actually work hours into "equivalent effort hours" - but the adjustment needs to be done. How much you value a good boss, or easy/interesting work, etc is up to you. But it truly does benefit you to be honest in the assessment since the outcome of this exercise can tell you a lot.

Anyway, if you take away all of the numbers from the analysis all I have really said is that there is a lot more to a job than the pay. It behooves you as an individual, spouse, and/or parent to keep yourself in a position to make this assessment and act on it. In other words, it may not be best idea to get your first job out of school, then jam yourself up with so many bills and expenses that you are stuck having to make a certain salary at the expense of so many other things.

That's all for today.
War Eagle!