Money and Work From Home. Is It Worth It?

 

At least a couple of decades ago I read a book about the true hourly wages a person takes home. In his explanation, the author pointed out that the net hourly wage had to factor in some often overlooked costs. If a person was paid for 8 hours of work, but had a 2 hour commute each day, it was really a 10 hour work day. That reduced the hourly wage by 20%. For example if your hourly rate is $25/hr and you are paid for 8 hours you would receive $200 minus taxes. But you spent 10 hours including the commute, so the hourly rate dropped to $200/10 or $20/hr minus taxes.

Is there more?

But we’re not done. How about the money spent on gasoline and car maintenance for that 2 hour commute? And do you eat takeout or restaurant food rather than prepare food at home? That costs extra. Do you have to maintain a larger and more costly wardrobe for the job in order to be appropriate? More expense. Nan and I have found that we only need one car because we both work at home.

I believe this is why many people are opting for online or hybrid jobs. It may also be the reason why many employers are accepting the change if the job fits the WFH model. The employee actually may be happier working at home and keeping more of their wages, even if they miss the camaraderie of the workplace. And the employer’s office space requirement may be reduced, saving them associated costs.

 Is it all gain?

Of course there may be some trade-offs. Your utility bills may be higher if you work from home, and you are using your own toilet paper. There may be distractions that are very hard to ignore. It may be difficult to make the shift from home life to work schedule. There may be temptations to be too flexible or not as diligent with no one monitoring the work as closely. Or for the workaholics, keeping a reasonable work/life balance might be a challenge since the home and office are the same. And then there are the extroverts who start to become depressed with too much alone time. They need people time -- face to face. 

Although some may be fortunate enough to find a suitable workspace at a walking distance from home  (that doesn't require $5 coffees and expensive sandwiches), most probably won't. But think of those extra commute hours that are now all yours. How will you use the extra time? More sleep? More time with family, friends or recreation? Eased conflict getting the kids ready for, or to school? Less stress with a one minute walk to your home office? Maybe even a tax break for having a home office?

Dollars or hours?

As an aside, the author of the above mentioned book also suggested that the readers convert their purchases into hours worked for an item or experience. For example if after having subtracted taxes, gasoline etc. and come up with a true net-per- hour wage of say $16/hr (from our original $20/hr calculation above) – a sweater costing $160 including sales tax would take 10 hours of work to purchase it. He said to consider whether it would be worth 10 hours of your life to own that sweater. Maybe it would be, maybe not. It is an interesting perspective. I wonder how many hours of work it takes to buy a new car including taxes and interest? No, I don’t think I want to go there – too depressing.