The idea of February 29th is a cute concept in some ways. It's quadrennial appearance has notoriety, and is a date often targeted by expectant mothers and fathers who think they can keep their children artificially young, by limiting the number of birthdays over their lifetime. But if you think about it, if you're a salaried employee, the very fact we have a February 29th this year means your employer gets this day for free. In fact, every single paycheck you get this year is less because of February 29th, and they never even asked your permission to dock your pay!What do I mean by this? Well, in 2007, we had 365 days, in 2008, we have 366, and next year, we will have 365. Yet you're paid the same this year, if you're on salary, even though you put in the extra effort!
To make the math easy, let's pretend your salary is such that you take home exactly $73,000 a year. Under this scenario, in 2007, you would take home $200.00 even per day, but in 2008, for the same amount of work, you'd only be taking home $199.45. And those 55 cents can add up. Over the 366-day calendar, your employer has taken away a full day's pay from you. If instead you take home $109,500, that number jumps to $300 in lost pay for similar productivity! (See below chart)
Over time, a few cents a day starts to add up...
And you can see this in every single one of your paychecks. If you get paid over a 14-day pay period, at the $73,000 rate noted above, you would see only $2,792.30 coming home every two weeks, instead of the $2,800.00 you would have received in either 2007 or 2009. That's messed up, right? You think we want to be reminded 26 times this year that employers worldwide have asked us to come into the office and work for free?
I propose that from now on, all salaried employees should have the option of taking February 29th off. After all, if we aren't getting paid, why show up?
I don't think this is necessarily true for most employees. I'm salaried, and my "annual salary" is really 1/26th that salary per 2 week period. I actually get paid for 1 more day per year (2 in leap years) than the naive estimate would be.
ReplyDeleteI forwarded this post to my dad and this was his responce:
ReplyDelete"Cute, but not accurate. First of all you don't work 365 days a year. It's probably closer to 220. Obviously you take out 104 days for Saturdays and Sundays, another 5 or 6 Monday holidays, and 2 or 3 weeks of vacation. The principle is the same, but the numbers are bigger. For example at $73,000/year and only 220 works days, you actually make $331.81/day, not $200.
And I sure employers don't dock people for the time they play on the Internet, talk about football and NCAA pools, smoke cigarettes, etc.
All this is a moot point however because the definition of salary is you get paid to work to get the job done, you are not paid for the number of days or hours you work. That would be an hourly employee!
Just a few comments from an "old school" cost accounting type person!"
I'm not sure how tongue-in-cheek you're being here, Louis. (grin) It's certainly possible that an employer might take your salary and divide it by the number of working days in that year, normally 260 excluding weekends. So if 2008 had 261 working days and they divided it that way, your math would be right and an employee of that company would be working one day for free.
ReplyDeleteHowever, I think many, if not most, employers (and especially those that use providers like Paychex to process payroll) calculate annual salaries as an hourly rate that's then applied to a 40- or 80-hour pay period (or whatever other pay period they use). So as alex said, someone in that situation would get paid for one extra day in 2008 (one extra 8-hour period). Salaried, or exempt, status has more to do with the restrictions on overtime than a fixed annual amount paid out over X number of days.
Of course, you may be trying to turn Leap Day into an extra April Fools' Day. :) With the snow here today, I could use an extra April (or even better, June!) day about now!
Ah, no wonder we got Feb 18 (President's Day) off when we usually didn't, to make up for the additional day in Feb.
ReplyDeleteInteresting point of view. Thanks, Louis.
This was definitely part real and part tongue in cheek, as noted. A good number of companies do divide a total salary by two-week pay periods and make that the going rate, not driven by the calendar per se. In this event, the $73,000 wage earner will get something more like $73,200 in 2008 vs. 2007. But I'm sure there can be exceptions to the new rule.
ReplyDeleteYour dad is wrong; you get paid to get a job done for a set amount of time. If you get paid on the 15th and the last day of the month, you are getting the job done for a longer period of time this February than in a normal February.
ReplyDeleteRetirees typically get paid once a month, so they are having to play shuffleboard for free every leapday. Retirees really get the short end of the stick anyhow - no days off, no weekends, no holidays, not even a lunch hour or a coffee break. When's the last time you heard of a retiree cutting out early on a Friday? It's just not fair!
I'd like leap day to come in the middle of summer, perhaps June. It costs too much to heat houses in February.
You've missed the real scam, though, which is Daylight Savings Time. They take an hour of time away from you in the spring, worth at least $8 at burger-flipper rates, and return it in the fall. Do they compensate you for loss of use of that time for those six months? No.
And if you scour GAO records, you can find no record whatsoever of where that time is going. Obviously, it's a case of graft. I used to think it was somebody's brother in law, but these days, I think it's Halliburton that's getting it.
And the real scandal is people who die during that six months. They end up dying an hour earlier. Wouldn't that really brown you off, if that happened to you? And they don't return that hour of time to the estate, either, they just *keep* it.
This is a really dangerous situation; we don't want an uprising of the dead.
I get paid on a per-hour basis, so its all good.
ReplyDelete