My Real Hourly Wage
Updated: Feb 27, 2022
Vicki Robin, crunchy godmother of FIRE, writes in Your Money or Your Life that money is simply something we trade our life energy for. Because work, especially for lawyers, is more than 9 to 5 (far, far more), it’s important we understand exactly how much money we are receiving in exchange for our precious, finite time.
I initially thought this would be an easy calculation – I make $190,000 a year, and I bill 2,000 hours a year. 190000/2000 = $95/hr. Pretty good.
But let’s be real, we all know the 2,000 hours billed is not a full representation of how much lawyers work. About 30 percent of an attorney’s working time can’t be billed. I’m fortunate that I work for a firm that actually counts my non-billable time towards my 2,000 annual hours, so that 30 percent is already accounted for in my calculation.
But there is so much more time and money spent towards maintaining our jobs beyond our billable and non-billable work. We pay (a lot of) taxes. We commute. We buy fancy work clothes. We collapse on the couch for an hour when we get home to decompress after a stressful day. We live in a high cost of living area, because that’s where our jobs are located. Etc. When we factor all the costs of having a job, our wages are a lot lower.
Calculating My Real Hourly Wage
Total Annual Income After Tax: $135,439.60
$150,000 base pay
After tax base pay: $107,607.52
After tax bonus pay: $27,832.08
2,000 billed hours
250 nonbillable hours
365 worrying hours
365 decompression hours
39 hours commuting
$7,200 annual downtown metro premium
$500 home office creation
Total pay - total work-related expenses → $135,439.60-$7,700 = $127,739.60
Total working and work-related hours → 3,019 hours
Real hourly wage → $42.31/hr
While I expected for this to feel shitty. I actually feel pretty neutral about it. This is just a number to keep in my mind when I decide if any given expense is really “worth it” to me. It also certainly incentivizes me to think about ways I can cut back on work-related time and expenses like worrying, commuting, and living downtown.