The Hidden Paycheck

In a previous blog I wrote about the importance of knowing and understanding your income. A part of being able to understand your income is to know and be aware of your "Hidden Paycheck." A hidden paycheck includes your hourly wages or salary along with the other benefits that your employer provides.

The past 2 companies/organizations that I have worked for have been very transparent with the benefits and the costs associated with those benefits. In my previous job, we would receive annual "Hidden Paycheck" statements that would outline what our total compensation is worth for that year. In my current job a couple years ago, we received a Benefits Statement that outlined all of our benefits, including cumulative benefits that we have received over the length of our employment.

As an employee, this is beneficial to me because although sometimes it seems that the pay isn't that great, when you see all the other compensation that you are receiving, makes you realize that your employer is taking more care of you than you think. For employers, it is beneficial because it shows your employees the amount of money that is spent on each employee above the traditional paycheck.

The following is a list of some of the benefits that are included in a Hidden Paycheck:

The list continues of different benefits that you can receive from an employer. The ones listed above are some of the common one's and one's that I have personally received over the course of my employment at different companies/organizations.

To illustrate let me provide an example:

Let's say your hourly wage is $14.00/hour. Which means your annual base salary is $29,120.00.

In addition to that your employer pays 100% of your medical insurance premium which costs $290.00 per month. They also cover 50% of your dependants costs for medical insurance premium which costs the company $145.00 per month. This totals $5,220.00 that your employer pays for your medical coverage.

Your employer also provides life insurance that has a coverage of 2.5 times your annual salary if you were to die unexpectedly. Your coverage would total $72,800 and the yearly premium costs the company $150.00 a year.

Your employer contributes 5% of your wages into a pension plan for you regardless of whether you make personal contributions or not. The company pays out $1,456.00 a year on your behalf towards your retirement plan.

To keep this example simple, we will leave the company sponsored benefits to these three areas. So although your paycheck will say Gross Pay = $29,120.00 the company is actually spending a total of $35,946.00 a year to keep you as an employee. When you calculate this to an hourly wage you are actually making $17.28.hour.

When you look at your income from this point of view, it looks a lot better. You may feel less taken advantage of by your employer or it may reveal that you truly are not being paid the amount that you should be based on your experience, education and skill set.

Keep in mind that not all employers will be transparent about all the benefits that they provide, but there are ways you can estimate your Hidden Paycheck. Take some time to figure out your "Hidden Paycheck" this can help you evaluate if you are being compensated enough or too little and can help you make decisions especially when thinking about finding another job. Your next job may pay you $16.00/hour but not provide any benefits, meaning although it looks like you are getting a raise by changing jobs, in reality you are taking a pay cut because you are losing out on other benefits that are paid for on your behalf.