Topic ID #1859 - posted 9/15/2007 12:54 PM
grabast
How much does it cost to work?
grabast
I have worked many years as an employee. I don't anymore. I really enjoy the independence of contracting or working short-term gigs. I like working this way for many reasons, but working this way successfully requires a person to be careful about what they accept and what it cost.
Most people are concerned about how much a job pays, rather than how much a job cost. Generally, we think this issue is important only the CRM contractor. What is often not considered, regardless of IRS opinion, is the fact that individually we are each contractors. The CRM company contracted the overall job, but I contracted to do a piece of that job for x dollars per hour. I think everyone knows that the CRM company has certain costs, wage, insurance, equipment and the such. But few employees consider their cost associated with working. So the answer to this question is critical to the broader issue, that is: How much did I make?
If at the end of the month, I've deposited a paycheck, paid the bills, replaced/repaired damaged tools, bought groceries and have nothing left, then I made nothing, and simply traded a month of labor for month of life and the privilege of being taxed for it.
Whether you are a project contractor or an employee, analyzing job cost should be a critical step before accepting a job or project, especially if it is likely to be followed by a short unemployed period while you are searching for your next job. Most people, particularly young folks, consider a job offer in simple terms. Such as, the job pays x, my rent is y, so I'll make z dollars. Of course, that is over simplified.
I would like your Ideas, opinions and assessment on this topic. I think the discussion might cause many of us to reconsider accepting some part-time jobs. Here is a scenario:
You live in an apartment in San Jose, California. The rent for your 1-bedroom apartment is $900 per month. You drive a financed 2005 Jeep Wrangler. You are offered a six-week job in the Sierra foothills, 45 miles southeast from Fresno, California (the nearest town). The job offers $12.50/hour plus $45/day per diem. You must drive to a remote base camp in the Sierra foothills where you will remain for the next six weeks (with weekends free). You must provide all of your own camping equipment and food. Each day you will drive your 4WD vehicle 15 – 20 miles for which you are compensated at .485 per mile.
How much does this job cost you?[/list]
Most people are concerned about how much a job pays, rather than how much a job cost. Generally, we think this issue is important only the CRM contractor. What is often not considered, regardless of IRS opinion, is the fact that individually we are each contractors. The CRM company contracted the overall job, but I contracted to do a piece of that job for x dollars per hour. I think everyone knows that the CRM company has certain costs, wage, insurance, equipment and the such. But few employees consider their cost associated with working. So the answer to this question is critical to the broader issue, that is: How much did I make?
If at the end of the month, I've deposited a paycheck, paid the bills, replaced/repaired damaged tools, bought groceries and have nothing left, then I made nothing, and simply traded a month of labor for month of life and the privilege of being taxed for it.
Whether you are a project contractor or an employee, analyzing job cost should be a critical step before accepting a job or project, especially if it is likely to be followed by a short unemployed period while you are searching for your next job. Most people, particularly young folks, consider a job offer in simple terms. Such as, the job pays x, my rent is y, so I'll make z dollars. Of course, that is over simplified.
I would like your Ideas, opinions and assessment on this topic. I think the discussion might cause many of us to reconsider accepting some part-time jobs. Here is a scenario:
You live in an apartment in San Jose, California. The rent for your 1-bedroom apartment is $900 per month. You drive a financed 2005 Jeep Wrangler. You are offered a six-week job in the Sierra foothills, 45 miles southeast from Fresno, California (the nearest town). The job offers $12.50/hour plus $45/day per diem. You must drive to a remote base camp in the Sierra foothills where you will remain for the next six weeks (with weekends free). You must provide all of your own camping equipment and food. Each day you will drive your 4WD vehicle 15 – 20 miles for which you are compensated at .485 per mile.
How much does this job cost you?[/list]
Post ID#3546 - replied 9/16/2007 5:46 AM
Jennifer Palmer
Webmaster
Within the past few years, I have held a number of low-paying field tech jobs in PA, NY and NJ. With 13+ years in CRM, I am qualified to be working as a field director, but at times you have to take what you can get, and permanent employment at a "good" firm close to home has been sadly difficult for me to come by.
Unfortunately my field vehicle is presently a large, gas-guzzling SUV (which, of course is my own fault, and is soon to be sold). I found myself working several "local" projects for which hotel and per diem were not provided, and I was expected to drive 2 hours+ each way to the project area (of course sometimes this turned into a much longer drive with traffic, construction, inclement weather, etc.). As is standard with most companies in this neck of the woods, no drive time, mileage, nor any kind of reimbursement were offered for my "commuting" to the particular project. Between my loss of an extra 4-5+ hours of uncompensated drive time per day, the gas, tolls, wear and tear on my vehicle, and loss of per diem for meals, I once figured that I ended up making somewhere along the line of $20 per week for my efforts, all for the pleasure of putting in what was essentially at least a 12-13 hour (or longer) day.
It was a hard lesson to learn, but since then I have been very reluctant to take on such "local" projects because it just doesn't end up being worth it. In my case, working on projects much closer to home, or being hired for an away project with hotel and per diem have been the only way to go. I haven't actually figured out how much it costs to work on these latter type of projects, but it seems to feel at least a little less painful to bear than the "local" gigs.
Unfortunately my field vehicle is presently a large, gas-guzzling SUV (which, of course is my own fault, and is soon to be sold). I found myself working several "local" projects for which hotel and per diem were not provided, and I was expected to drive 2 hours+ each way to the project area (of course sometimes this turned into a much longer drive with traffic, construction, inclement weather, etc.). As is standard with most companies in this neck of the woods, no drive time, mileage, nor any kind of reimbursement were offered for my "commuting" to the particular project. Between my loss of an extra 4-5+ hours of uncompensated drive time per day, the gas, tolls, wear and tear on my vehicle, and loss of per diem for meals, I once figured that I ended up making somewhere along the line of $20 per week for my efforts, all for the pleasure of putting in what was essentially at least a 12-13 hour (or longer) day.
It was a hard lesson to learn, but since then I have been very reluctant to take on such "local" projects because it just doesn't end up being worth it. In my case, working on projects much closer to home, or being hired for an away project with hotel and per diem have been the only way to go. I haven't actually figured out how much it costs to work on these latter type of projects, but it seems to feel at least a little less painful to bear than the "local" gigs.
Post ID#3586 - replied 9/18/2007 11:06 PM
grabast
Greetings Jennifer, a good SUV or other useful field vehicles are all gas-guzzlers. I just acquired a 96 Ford pickup and I’m selling my 89 Jeep Cherokee. I'm not sure which one gets worst mileage. I hate giving up my Jeep, but the advantage of the pickup is that it can haul my equipment and Rokon. For remote or rural site mobility, the Rokon has super good mileage and very low environmental impact.
Commuting 4-5 hours a day would be a killer. I couldn't do that regardless of the pay; I'd be a useless zombie everyday.
I brought this question up because, in my experience, I have noticed that many folks don't always evaluate their actual cost of being employed very well. You added another critical issue – that of commute time.
In the example I conjured, at $12.50/ hour, after tax pay is probably around $9.00. Therefore, total take after thirty workdays is about $3,510. Now subtract the obvious cost:
Rent during job = $1,350
Car payment (estimated $300) = $450
Food on assignment (40 days, estimated $25/day) = $1,000
Gas to and from assignment = $70
Vehicle insurance = $60
On-site travel reimbursed = -$45
Vehicle Maintenance (est.) = $94 (based on 10 per mile)
Subtotal = $2979
That leaves about $530 to cover the wear & tear on clothing, tools and equipment, plus the time it takes to find another job. This person is only a few days away from being upside down financially. Working like this would never accumulate enough to get beyond survival mode and taking such a low pay job is only slowly digging a person deeper into debt.
Of course, these estimates are purely speculative, but I don’t that they are too unreasonable. Just my rough opinion on it. I am sure their other ideas.
Commuting 4-5 hours a day would be a killer. I couldn't do that regardless of the pay; I'd be a useless zombie everyday.
I brought this question up because, in my experience, I have noticed that many folks don't always evaluate their actual cost of being employed very well. You added another critical issue – that of commute time.
In the example I conjured, at $12.50/ hour, after tax pay is probably around $9.00. Therefore, total take after thirty workdays is about $3,510. Now subtract the obvious cost:
Rent during job = $1,350
Car payment (estimated $300) = $450
Food on assignment (40 days, estimated $25/day) = $1,000
Gas to and from assignment = $70
Vehicle insurance = $60
On-site travel reimbursed = -$45
Vehicle Maintenance (est.) = $94 (based on 10 per mile)
Subtotal = $2979
That leaves about $530 to cover the wear & tear on clothing, tools and equipment, plus the time it takes to find another job. This person is only a few days away from being upside down financially. Working like this would never accumulate enough to get beyond survival mode and taking such a low pay job is only slowly digging a person deeper into debt.
Of course, these estimates are purely speculative, but I don’t that they are too unreasonable. Just my rough opinion on it. I am sure their other ideas.
Post ID#3593 - replied 9/19/2007 6:19 AM
Jennifer Palmer
Webmaster
You bring up a good point about the practicality of having an SUV or truck for the CRM lifestyle. Of course the downside is paying more for gas (unfortunately a lot more lately), but you can't beat the storage capacity of these vehicles, and the offroading/4WD abilities driving directly to a project area or in inclement weather have been a blessing for me personally through the years. My previous field vehicle was a Toyota 4WD pickup with a covered cap, and that was fantastic for locking away cargo, or sleeping in the back in a pinch.
Another factor is having to pony up for accomodations on the weekend if you are on an "away" job, and your employer does not provide for 7-day hotel. Some people have found theselves in this situation - several states away from home, needing a place to crash for the weekend, and having to either pay for a hotel out of pocket or staying at a campground. The cost of umcomfortably sharing a hotel room with several people or paying for a campground has usually been around the same, in my expererience. I've tried to avoid the type of extended out-of-state jobs that don't provide 7-day hotel. Even better is 7-day hotel AND per diem, but that seems to be a rarity these days. In fact, what I and many other people have noticed is an increasing shift of companies wanting to hire "local" crews altogether. Have you noticed how many jobs aren't offering hotel and per diem these days?
I think what a lot of people end up doing to make their dollars stretch is to consider per diem as part of their income, and not necessarily allocated for food as it is supposed to be. There are some firms (and clients) which require everything to be receipted, and this tends to put a spanner in the works, but some still get around it with phantom receipts and accounting. When I first started out in CRM, I was still based out of my parents house, and hadn't yet accumulated a ton of bills, and spent every penny of my per diem on food and/or entertainment while on away projects. As my situation has changed, these days I've found myself trying to make per diem stretch by eating on the cheap in the hotel room with hot pot in hand, rather than blowing $20 on dinner every night.
Yes, the commute time to projects can be a killer. I live in an area where "extreme commuting" is the norm rather than the exception. Many folks who live in my county ride a bus or drive 1 1/2 - 2 1/2 hours+ each way to work every day. Most of these people are earning high wages at non-archaeology jobs in NJ or NYC, however, and justify their long days by how far their income can stretch in PA. Personally I justified my "local" commuting by the fact that I really do enjoying working in field archaeology, and loved the diversity of projects that I participated in. And some point, however, when I crunched the numbers, it seemed more like I was "volunteering" to work for these firms... and I do enough real volunteering on the side, as it is. In my case, I'm not sure what I am going to do over the next few years... still trying to figure out the logistics! :?
Another factor is having to pony up for accomodations on the weekend if you are on an "away" job, and your employer does not provide for 7-day hotel. Some people have found theselves in this situation - several states away from home, needing a place to crash for the weekend, and having to either pay for a hotel out of pocket or staying at a campground. The cost of umcomfortably sharing a hotel room with several people or paying for a campground has usually been around the same, in my expererience. I've tried to avoid the type of extended out-of-state jobs that don't provide 7-day hotel. Even better is 7-day hotel AND per diem, but that seems to be a rarity these days. In fact, what I and many other people have noticed is an increasing shift of companies wanting to hire "local" crews altogether. Have you noticed how many jobs aren't offering hotel and per diem these days?
I think what a lot of people end up doing to make their dollars stretch is to consider per diem as part of their income, and not necessarily allocated for food as it is supposed to be. There are some firms (and clients) which require everything to be receipted, and this tends to put a spanner in the works, but some still get around it with phantom receipts and accounting. When I first started out in CRM, I was still based out of my parents house, and hadn't yet accumulated a ton of bills, and spent every penny of my per diem on food and/or entertainment while on away projects. As my situation has changed, these days I've found myself trying to make per diem stretch by eating on the cheap in the hotel room with hot pot in hand, rather than blowing $20 on dinner every night.
Yes, the commute time to projects can be a killer. I live in an area where "extreme commuting" is the norm rather than the exception. Many folks who live in my county ride a bus or drive 1 1/2 - 2 1/2 hours+ each way to work every day. Most of these people are earning high wages at non-archaeology jobs in NJ or NYC, however, and justify their long days by how far their income can stretch in PA. Personally I justified my "local" commuting by the fact that I really do enjoying working in field archaeology, and loved the diversity of projects that I participated in. And some point, however, when I crunched the numbers, it seemed more like I was "volunteering" to work for these firms... and I do enough real volunteering on the side, as it is. In my case, I'm not sure what I am going to do over the next few years... still trying to figure out the logistics! :?
Post ID#4435 - replied 11/12/2007 7:50 PM
Jim Christensen
[quote:="grabast"]
In the example I conjured, at $12.50/ hour, after tax pay is probably around $9.00. Therefore, total take after thirty workdays is about $3,510. Now subtract the obvious cost:
Rent during job = $1,350
Car payment (estimated $300) = $450
Food on assignment (40 days, estimated $25/day) = $1,000
Gas to and from assignment = $70
Vehicle insurance = $60
On-site travel reimbursed = -$45
Vehicle Maintenance (est.) = $94 (based on 10 per mile)
Subtotal = $2979
That leaves about $530 to cover the wear & tear on clothing, tools and equipment, plus the time it takes to find another job.
I guess I see your points here, but there are a couple of other things to consider.
First, if your food is not being compensated as per diem, then you might be getting ripped off. I do not know, but as you indicated that the IRS views you as a "contractor", you may well be a 1099 employee. If that is the case, sure, you have to pay for your own food and all that good stuff (as well as all your taxes because the company is not doing any witholdings for you), but you better be making WAY more than $12.50 an hour for the pleasure of being your own boss.
Even if you are not getting reimbursed for meals, you still have to eat.
Additionally, there's the issue of fixed expenses. These are the things that you have to pay regardless of whether or not you are working, whether or not you are an archaeologist or a gym teacher. Things like rent and car insurance, actually, are the cost of just being for most of us. These fixed expenses are not really a consequence of being a shovelbum. They are important for figuring out your family budget, however, and might very well factor into your decision to NOT be a shovelbum, or to be one of the many with no rent, but these sorts of things are not a cost of being an archie.
So, that seems like nearly $2400 of your subtotal should rightfully be reimbursed, or should not really be considered as part of the cost of doing business as an archaeologist. Of course, the balance in your account at the end of the month is realy, really low and should be alarming.
However, assuming that you are a private consultant in the eyes of the IRS...get a tax consultant! If you are a private consultant, almost everything on here is tax deductible. 100% of the meals, actually. The gas is written off at IRS rates. A percentage of your car payment, actually, based upon miles. Hell, even that percentage of your home that is devoted to use as an office!
Even if you are not a 1099 employee, there are still percentages of these categories that can be written off.
I think there's a lot more complexities we could put toward this whole scenario; however, if the moral is archaeologists do not make enough money, I doubt you'd find many here who would disagree.
In the example I conjured, at $12.50/ hour, after tax pay is probably around $9.00. Therefore, total take after thirty workdays is about $3,510. Now subtract the obvious cost:
Rent during job = $1,350
Car payment (estimated $300) = $450
Food on assignment (40 days, estimated $25/day) = $1,000
Gas to and from assignment = $70
Vehicle insurance = $60
On-site travel reimbursed = -$45
Vehicle Maintenance (est.) = $94 (based on 10 per mile)
Subtotal = $2979
That leaves about $530 to cover the wear & tear on clothing, tools and equipment, plus the time it takes to find another job.
I guess I see your points here, but there are a couple of other things to consider.
First, if your food is not being compensated as per diem, then you might be getting ripped off. I do not know, but as you indicated that the IRS views you as a "contractor", you may well be a 1099 employee. If that is the case, sure, you have to pay for your own food and all that good stuff (as well as all your taxes because the company is not doing any witholdings for you), but you better be making WAY more than $12.50 an hour for the pleasure of being your own boss.
Even if you are not getting reimbursed for meals, you still have to eat.
Additionally, there's the issue of fixed expenses. These are the things that you have to pay regardless of whether or not you are working, whether or not you are an archaeologist or a gym teacher. Things like rent and car insurance, actually, are the cost of just being for most of us. These fixed expenses are not really a consequence of being a shovelbum. They are important for figuring out your family budget, however, and might very well factor into your decision to NOT be a shovelbum, or to be one of the many with no rent, but these sorts of things are not a cost of being an archie.
So, that seems like nearly $2400 of your subtotal should rightfully be reimbursed, or should not really be considered as part of the cost of doing business as an archaeologist. Of course, the balance in your account at the end of the month is realy, really low and should be alarming.
However, assuming that you are a private consultant in the eyes of the IRS...get a tax consultant! If you are a private consultant, almost everything on here is tax deductible. 100% of the meals, actually. The gas is written off at IRS rates. A percentage of your car payment, actually, based upon miles. Hell, even that percentage of your home that is devoted to use as an office!
Even if you are not a 1099 employee, there are still percentages of these categories that can be written off.
I think there's a lot more complexities we could put toward this whole scenario; however, if the moral is archaeologists do not make enough money, I doubt you'd find many here who would disagree.
Post ID#4437 - replied 11/13/2007 12:17 AM
scottyj432
Additionally, there's the issue of fixed expenses. These are the things that you have to pay regardless of whether or not you are working, whether or not you are an archaeologist or a gym teacher. Things like rent and car insurance, actually, are the cost of just being for most of us. These fixed expenses are not really a consequence of being a shovelbum.
I agree with with the above statement. I work in this field and pay all those things out of my paycheck. When I am in the field my motel lodging and food per diem are paid for, but when I am at "home", that is my expense, not the employers. The "wear and tear" on my clothes is just part of working, no different than those who work as plumbers, teachers or business managers.
I guess I am confused....are you a "tech" or a "subcontractor/consultant"?? If you are not a tech, then 12.50/hr is totally cheap. Generally, a "subcontractor/consultant" is paid a lump sum per day that covers pay, housing, per diem, gas and many other expenses...and no taxes are taken out of it as you are a "self-employed entity" and must pay the taxes yourself which must be done 3 or 4 times a year. If that is the case, then you are in a 1099 sitch.
The scenario you, Grabast, have described sounds more like a typical field tech job (hourly rate plus daily per diem) and that is something entirely different from being a "subcontractor/consultant". An entirely different set of tax rules applies to the latter.
I agree with with the above statement. I work in this field and pay all those things out of my paycheck. When I am in the field my motel lodging and food per diem are paid for, but when I am at "home", that is my expense, not the employers. The "wear and tear" on my clothes is just part of working, no different than those who work as plumbers, teachers or business managers.
I guess I am confused....are you a "tech" or a "subcontractor/consultant"?? If you are not a tech, then 12.50/hr is totally cheap. Generally, a "subcontractor/consultant" is paid a lump sum per day that covers pay, housing, per diem, gas and many other expenses...and no taxes are taken out of it as you are a "self-employed entity" and must pay the taxes yourself which must be done 3 or 4 times a year. If that is the case, then you are in a 1099 sitch.
The scenario you, Grabast, have described sounds more like a typical field tech job (hourly rate plus daily per diem) and that is something entirely different from being a "subcontractor/consultant". An entirely different set of tax rules applies to the latter.
Post ID#4451 - replied 11/13/2007 6:42 PM
AMB
[quote:="Jim Christensen"]If you are a private consultant, almost everything on here is tax deductible. 100% of the meals, actually. The gas is written off at IRS rates. A percentage of your car payment, actually, based upon miles. Hell, even that percentage of your home that is devoted to use as an office!
Even if you are not a 1099 employee, there are still percentages of these categories that can be written off.
Write-offs are not reimbursements. Writing things off your taxes just means that you don't pay taxes on that part of your income used to pay for that item. If you make $400 in a day and have a $20 meal write-off you only pay taxes on $380 of income. You still spent $20 of your cash on that meal and don't see any break in that cost till next year's taxes.
Write-offs need something to be written off against. You need to have made more money than you are claiming in write-off for there to be an effect. There are also a ton of rules for write-offs, most things only get a percentage written off or the write off occurs over time.
Even if you are not a 1099 employee, there are still percentages of these categories that can be written off.
Write-offs are not reimbursements. Writing things off your taxes just means that you don't pay taxes on that part of your income used to pay for that item. If you make $400 in a day and have a $20 meal write-off you only pay taxes on $380 of income. You still spent $20 of your cash on that meal and don't see any break in that cost till next year's taxes.
Write-offs need something to be written off against. You need to have made more money than you are claiming in write-off for there to be an effect. There are also a ton of rules for write-offs, most things only get a percentage written off or the write off occurs over time.
Post ID#9221 - replied 6/26/2008 12:20 PM
Jennifer Palmer
Webmaster
The message thread on What if gas cost $10/gallon? gives this one a whole new twist. I haven't done fieldwork in awhile as I'm taking off time right now to be a stay at home mom, but I don't imagine that I'd be as willing now to drive to some of the far-off projects that I used to...
Jennifer
Jennifer
Post ID#9233 - replied 6/26/2008 1:58 PM
Mick
I dont do projects that dont pay 7 days lodging and per diem. With a house mortgage, a truck payment, insurance, an unemployed wife in grad school, ny financial budget would be difficult if not impossible. Im going to the Rio Grande next week for 10 days, and perdiem is paid up front as well as 50 cents per mile down and back.
Post ID#11769 - replied 11/13/2008 12:06 PM
grabast
Echo what AMB stated! /thumbsup2/
Write-offs and deductions are not compensation. Write-offs are losses and deductions only help you reduce your tax obligation. It is really simple math – if you are not paid more than it is costing you, then you are either losing money or donating labor to your employer.
Write-offs and deductions are not compensation. Write-offs are losses and deductions only help you reduce your tax obligation. It is really simple math – if you are not paid more than it is costing you, then you are either losing money or donating labor to your employer.
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