| Your pension, and all your benefits in fact, are part of | | | | burdened rate. |
| your hourly salary. Yes, even though it may not appear | | | | So for every part you make or piece of paper you |
| on your pay stub, it is in fact part of your hourly wage. | | | | handle, your company must charge the customer |
| Here's how: | | | | $36.00. If you work on an assembly line and make 6 |
| When companies price their product, they include all | | | | parts per hour it takes you 10 minutes per part and just |
| the production costs for the product or service and | | | | your labor costs the company $3.60 per part. |
| then add profit. The production cost includes your | | | | When they figure out what to charge the customer, |
| "burdened rate" which is the cost of your actual hourly | | | | they add that $3.60 to each and every part. Wait, that |
| salary plus the cost of your benefits, plus the cost of | | | | number included the money to pay your future pension! |
| your share of heat, lights, your desk, computer, and | | | | The company isn't giving you anything; the customer is |
| any other tools or factory space, divided by the actual | | | | paying today, as part of the purchase price for each |
| number of hours you work (usually 1800 hours). | | | | part you made, money the company won't pay until |
| Wait you say, 40 hours a week times 52 in a year is | | | | you retire. |
| 2080 hours! True, but you have to subtract the two | | | | If the company already collected that when they sold |
| weeks vacation, one week sick time and about 11 | | | | the product, how come you keep hearing talk from |
| holidays. That's 80 hours vacation, 40 hours sick leave, | | | | your elected officials and the press about the huge |
| and 88 hours holiday for a total of 208 hours you get | | | | legacy cost of autoworkers pensions? Because, either |
| paid for but don't actually work. Subtract that from | | | | the person speaking or writing has no clue where and |
| 2080 leaves you with 1872 working hours. Rounding | | | | how pensions are paid for or they have a vested |
| that to 1800 makes for simple calculations and includes | | | | interest in lying to you. |
| a little cushion for unexpected time off. | | | | Back in the mid 1960s the government "borrowed" |
| Burdened rate = (((employees salary + cost of | | | | from the social security fund to pay for social |
| employees bennies) + employees share of | | | | programs called the Great Society. They expected to |
| infrastructural costs) / 1800 annual work hours). I stole | | | | pay the money back later. This mixing of funds |
| this equation from Wiki What do the parts of the | | | | worked so well for the government that business |
| above equation mean? Your salary is the actual rate | | | | lobbied for the same privilege. |
| of pay you earn each hour, say $18.00 just to pick a | | | | If you saw the movie Wall Street, you should |
| number. If you pay $200 a month (fifty bucks a week) | | | | remember that Gordon Geko didn't want to buy the |
| for health care you can figure your company pays | | | | airline Charlie Sheen's father worked for to run it, he |
| about $200 a month also (your total health care cost is | | | | wanted to close out the pension fund, distribute the |
| really about $400.00 a month). Take $200 times 12 | | | | cash and arrange to pay the future pensions from |
| months and you get $2,400 a year and divide by 1800 | | | | future income. Now, the character in the movie really |
| hours and you get $1.34. Your company adds that to | | | | knew that there wouldn't by any money when those |
| your hourly rate. Do the same thing for your pension | | | | pensions came due, but since he expected to sell the |
| benefits and any other perks your company provides. | | | | company long before then, what did he care? |
| If they give you a cell phone that cost is calculated into | | | | The automakers did the same thing, collected money |
| the hour rate and added to find your total cost to the | | | | for future pensions as each car was sold and then |
| company. Your burdened rate also includes the part of | | | | didn't put that money in a separate account, they used |
| your social security that your employer pays. | | | | it to cover current expenses. Now as the bill is coming |
| Suppose your pension after 25 years works out to | | | | due, and the companies have to actually pay the |
| $1,000 a month, your company starts paying at 65 and | | | | pensions, they are poor mouthing about "legacy costs". |
| you are expected to live to 85 then the company will | | | | It's not the actual cost of the pensions that is the |
| pay $1,000 for 240 months (12 months times 20 years) | | | | problem; it is years of bad money management by the |
| or a total of $240,000. Divide that total by the number | | | | automaker's senior management that's the problem. |
| of years you worked, say 30 then divide by 1800 | | | | The right way to look at it is that your real salary is the |
| hours. | | | | sum of your hourly rate PLUS all the benefits your |
| (240,000 / 30 = 8,000) / 1800 = $4.45 per hour | | | | company pays. If you had to buy them yourself, you |
| I know I'm over simplifying the equation since the | | | | would have to make that total wage. Just using your |
| company doesn't just put the cash in a vault. They | | | | hourly rate of $18.00 plus your pension cost of $4.45 |
| invest in something that pays them interest so that the | | | | your total hourly wage should be $22.45 and you buy |
| actual hourly cost is much lower, but this will work for | | | | your own pension; your company is off the hook. |
| our simple purpose. | | | | So, if you have a pension now and your employer |
| If you make $18.00 an hour, your actual cost to the | | | | says "We are cutting pensions next year because it's |
| company is $22.45 per hour. You still have to add in | | | | just too expensive" where dose that $4.45 per hour |
| the employer's contribution to social security, health | | | | they used to pay go? Why into the companies profit |
| insurance, workers comp, heat, lights, tools, etc. As a | | | | of course! |
| rule of thumb, those costs are at least equal to your | | | | So if you now have to buy your own pension and pay |
| hourly rate or a total of $36.00 per hour. If your | | | | that $4.45 times 40 hours, you will have ($4.45 x 40) |
| company provides generous benefits then you might | | | | $178 a week less take home pay. Most honest people |
| figure three times your hourly rate or $54.00 per hour | | | | would call that a pay cut. |