CAREER
LESSON 10: BENEFITS AND PAYCHECKS
"We forget what gives money its value that someone exchanged work for it."
Neal O'Hara
I.
Literacy Objective: The students will be able to calculate deductions that are commonly
subtracted from earnings and interpret an earnings statement.
II.
Materials for Lesson:
"Take-home Pay Quiz"- handout
"Nancy's Earnings Statement"- handout
"Pat's Earnings Statement"- handout
"Earnings Statement Practice Sheet"- handout
"Don't Overlook Benefits"- handout
"End of Unit Evaluation"- handout
III.
Suggested Readings:
Where Do I Go From Here With My Life
John C. Crystal & Richard N. Bolles
The Seabury Press
815 Second Ave
New York, NY 10017
IV.
Notes to Instructor: There will be many opportunities for expanding and supplementing
this lesson depending on the skill of your students. Tailor the lesson to the level of your
students and make it as relevant as you can. You many need to review basic
mathematical principles or provide "background" information such as how to turn a
decimal number into a percentage, or how to "round-off" numbers, or how to calculate
the number of hours worked in a day. Help your students strengthen these "real life"
math skills.
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Journal Entry:
What makes a job satisfying or dissatisfying?
Review:
Ask the students to read and discuss their views on one of the work ethic
statements.
INITIAL INQUIRY
Write the word "TAXES" on the board and ask the students to list as many services or things as
they can think of that are paid for by tax money. Make sure that the list includes:
Police services
Garbage collection
Firefighting services
Postal services
Military services
Public water supply
Public roads
Social Security
Unemployment insurance
Public libraries
Public schools
Public parks
Public hospitals
Public buildings
Educational grants
Job training services
Food stamps
Public housing
Continue the discussion by asking the following questions:
1.
2.
3.
4.
Do you think the services provided by tax dollars are adequate?
Why or why not?
Would you be willing to pay more taxes in order to have more services?
Before public assistance, who took care of the poor, orphaned,
handicapped, and elderly?
What all is taxed in this country to provide all of these services?
Use the following reference information to outline where tax dollars come from:
1.
Income tax levied on salaries, rent, interest,
dividends, etc.
2.
Real estate tax on the assessed value of land, houses, and
buildings owned by individuals and companies.
3.
Property tax on personal property.
4.
Inheritance tax paid on money or property left to a person by
someone who has died.
5.
Corporation tax paid on the earnings and profits of certain
companies.
6.
Sales tax on things you buy.
7.
Tax on individual things you buy such as gasoline, cigarettes,
liquor, automobiles, etc.
LEARNING ACTIVITY
Ask the students to complete the "Take-Home Pay Quiz". Go over the correct answers and
discuss each of the terms.
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TAKE-HOME PAY QUIZ
Match the following words and definitions:
A.
Deduction __10____
B.
Gross pay __5____
C.
Net pay __8____
D.
Allowance __6____
E.
Credit Union __9____
F.
Disability insurance __4____
G.
H.
I.
J.
K.
1.
The money you pay from your salary to the
treasury of your state.
2.
A plan that helps pay your medical bills.
3.
A plan that makes support
payments to older people.
4.
A plan that pays employees who can't work
because they are injured or sick.
5.
Amount of salary earned.
6.
A reduction in your tax for each person you
support, including yourself.
7.
The money you pay from your salary to the
treasury of the United States.
8.
Amount of salary received after deductions
have been taken.
9.
A savings and loan business that serves
company employees.
10.
An amount subtracted from gross pay for a
tax, benefit, service, or membership.
11.
The check stub attached to your paycheck
listing gross pay, deductions, and net pay.
Federal Income Tax __7____
Social Security (FICA) __3____
State tax __1____
Earnings Statement __11____
Health insurance __2____
Discuss how other deductions can be taken from salaries to pay for taxes, benefits, services,
and memberships. Each workplace has their own list of deductions. Deductions can include tax
shelter annuities, retirement plans, union dues, or charitable contributions.
Discuss how federal income tax deductions are not the same for everyone. It depends on the
amount you earn and the number of allowances you claim on your taxes. A tax allowance is
usually the number of people you support, including yourself.
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Read and discuss Nancy's Earnings Statement making sure that the students understand all
of the categories and mathematical calculations.
NANCY'S EARNINGS STATEMENT
Nancy works for a T-shirt company and earns $6.75 an hour. She works 40 hours a week which
brings her $270 a week. She gets paid $1080 a month ($270 x 4 weeks in a month). Her
monthly earnings statement looks like this:
Gross
pay
Federal Tax
1080
119
Note that:
State
Tax
FICA
Health
Insurance
Disability
Insurance
Optional
Retirement
Credit
Union
82.10
14.25
4.60
25.00
10.50
Union
Dues
Net
Pay
$824.
55
Nancy lives in a state that does not withhold state tax.
Nancy chooses to contribute $25 a month toward a personal retirement plan.
Nancy is repaying a loan at the credit bureau.
QUESTION 1: What percent of her gross pay does Nancy get to take home?
ANSWER:
Net pay divided by gross pay = % take-home pay, then round off to the
nearest hundredth.
$824.55 divided by $1080 = .7634722 = Round off to 76% takehome pay
QUESTION 2: What percent of Nancy's gross pay goes to deductions?
ANSWER:
Add up all of the deductions and divide the amount by the gross pay, then
round off to the nearest hundredth.
All Nancy's deductions add up to $255.45
$255.45 divided by $1080 = .2365277 = Round off to 24%
QUESTION 3: What percent of her gross pay does Nancy contribute to Federal Income Tax
and FICA?
ANSWER:
Add Nancy's Federal Tax and FICA contributions, then divide the amount
by the gross pay, then round off to the nearest hundredth.
$119 + $82.10 = $201.10
$201.10 divided by $1080 = .1862037 = Round off to 19%
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Then distribute Pat's Earnings Statement and ask the students to provide the answers.
PAT'S EARNINGS STATEMENT
Pat works for Belaire Electrical Contractors. She gets paid $11.50 an hour for electrical
installation in new homes. She works 8 hours a day for 40 hours a week.
QUESTIONS: 1.
What would be her monthly gross salary? = $1840.00
(To get daily rate:
Multiply hourly rate x 8 hours a day
To get weekly rate: Multiply hourly rate x 40 hours a week
To get monthly rate:
Multiply daily rate x 20 working days,
OR
Multiply weekly rate by 4 weeks in a month)
2.
If she paid 12% Federal Tax, what would be deducted from her pay
check?
(Multiply gross salary x .12) = $220.80
3.
If she paid 8% FICA, what would be deducted from her pay check?
(Multiply gross salary x .08) = $147.20
4.
If she paid 11% Health Insurance, what would be deducted from her pay
check?
(Multiply gross salary x .11) = $202.40
5.
If no other deductions were taken out of Pat's pay check, what would be
the total of all of her Federal Tax, FICA, and Health Insurance
deductions? = $570.40
6.
What would be Pat's Net Pay? = $1269.60
7.
How would you fill in the following Earnings Statement for Pat?
Gross
Pay
Federal
Tax
$1840
220.80
State
Tax
FICA
Health
Insurance
147.20
202.40
Disability
Insurance
Optional
Retirement
Union
Dues
Net Pay
1269.60
8.
What percent of her gross pay does Pat get to take home?
(Net pay divided by gross pay = % take-home pay, then round off to the
nearest hundredth.) = 69%
9.
What percent of Nancy's gross pay goes to deductions?
(Add up all of the deductions and divide the amount by the gross pay, then
round off to the nearest hundredth.) = 31%
Distribute the Earnings Statement Practice Sheets to the students and have them develop
questions for their classmates to answer. Of course they must provide some necessary
information such as salary and percentage rates in the categories.
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Self-paced Activities
Activity 1.
Ask these students to multiply everything on Nancy's Earnings Statement by 12
and provide an end of year summary for how much she earned and how much
was deducted in each category.
Activity 2.
Ask these students to summarize what they have learned about deductions and
earnings statements.
Activity 3.
Ask these students to develop a bar graph depicting Nancy's Earnings Statement.
LANGUAGE EXPERIENCE
Write the question: "What makes some people work harder than others?" on the board. Either in
small groups, large group, or individually, ask students to write a response to the question.
Discuss the responses and compose a group list of the ideas presented.
Self-paced Activities
Activity 1.
Ask these students to answer the following questions.
How do you figure personal income?
What is net pay? How do you calculate it?
What are deductions? Why are they taken out of paychecks?
Would it be better to use gross income or net income when you figure your
budget? Why?
Can the net pay ever be higher than the gross pay? Why?
Activity 2.
Ask these students to provide a written rationale for each of the deductions made
on an individual's pay checks.
Activity 3.
Ask these students to write an answer to the question: "Why do some people
work even if they don't need the money?"
READING IN CONTEXT
Pose the question: "Is money the most important benefit to a job, or are there other benefits
equally important?" Ask the students to state their opinions either verbally or in writing.
Distribute the "Don't Overlook Benefits" handout and read it aloud making sure that the
students understand all of the concepts. Let the students rank order the benefits and discuss
their choices.
Comprehension Questions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
What are the main points made by the author?
What are benefits?
Do all jobs have benefits?
Why do some jobs have better benefits than others?
Do all employees have the "right" to expect benefits?
Are there some benefits that all employees should have?
Are benefits related to "values"? Why or why not?
What mental images did you get from the reading?
What other benefits would you add to the list?
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PERSONAL DICTIONARY
Review the lessons and activities contained in this unit and then administer the End of Unit
Evaluation.
HOME ASSIGNMENT
Tell the students to imagine that they have been offered two jobs. One involves very interesting
work but at a minimum wage, the other offers very high pay but involves very uninteresting work.
Ask them to choose between the two jobs and explain in writing why they made that choice.
ADDITIONAL ACTIVITIES
1.
Overtime is the amount of time you work beyond the time you are scheduled to work.
The hourly rate for overtime is often 1.5 times your regular hourly wage. Ask the
students to calculate the overtime pay in the following scenario by multiplying the number
of hours the person was scheduled to work by the 1.5 overtime wage.
Adriana worked overtime 8 hours last week on her job as security guard. Her salary is
$7.50 an hour.
a.
What is her overtime hourly wage? ($7.50 x 1.5 = $11.25)
b.
How much extra money did she make?
($11.50 - $7.50 = $3.75 extra an hour)
$3.75 x 8 hours = $30 extra for the week)
What would be the answers to "a" and "b" if her wage was $8.65 an hour? $5.25?
$11.20?
What would be the answers if overtime pay was 1.75 times the regular wage? Twice the
regular pay?
2.
Put this anonymous poem on the board and ask the students to write their own "I am
work" poem.
I am Work
I am the foundation of all businesses.
I am the source of all prosperity.
I am the parent of all genius.
I am the salt that gives life its savour...
Loved, I make life sweet, purposeful, and fruitful...
All progress springs from me.
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TAKE-HOME PAY QUIZ
Match the following words and definitions:
A.
Deduction
______
B.
Gross pay
______
C.
Net pay
______
D.
Allowance
______
E.
Credit Union
F.
Disability insurance
G.
H.
I.
J.
K.
Federal Income Tax
1.
The money you pay from your salary to the
treasury of your state.
2.
A plan that helps pay your medical bills.
3.
A plan that makes support payments to
older people.
4.
A plan that pays employees who can't work
because they are injured or sick.
5.
Amount of salary earned.
6.
A reduction in your tax for each person you
support, including yourself.
7.
The money you pay from your salary to the
treasury of the United States.
8.
Amount of salary received after deductions
have been taken.
9.
A savings and loan business that serves
company employees.
10.
An amount subtracted from gross pay for a
tax, benefit, service, or membership.
11.
The check stub attached to your paycheck
listing gross pay, deductions, and net pay.
______
______
______
Social Security (FICA)1 ______
State tax
Earnings Statement
Health insurance
______
______
______
Source: Adapted from Fearon's Practical Mathematics by Carol Staudacher and Steve Turner
1FICA
stands for Federal Insurance Contribution Act.
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NANCY'S EARNINGS STATEMENT
Nancy works for a T-shirt company and earns $6.75 an hour. She works 40 hours a week which
brings her $270 a week. She gets paid $1080 a month ($270 x 4 weeks in a month). Her
earnings statement looks like this:
Gross
pay
Federal Tax
1080
119
Note that:
State
Tax
FICA
Health
Insurance
Disability
Insurance
Optional
Retirement
Credit
Union
82.10
14.25
4.60
25.00
10.50
Union
Dues
Net
Pay
$824.
55
Nancy lives in a state that does not withhold state tax.
Nancy chooses to contribute $25 a month toward a personal retirement plan.
Nancy is repaying a loan at the credit bureau.
QUESTION 1: What percent of her gross pay does Nancy get to take home?
ANSWER:
Net pay divided by gross pay = % take-home pay, then round off to the
nearest hundredth.
QUESTION 2: What percent of Nancy's gross pay goes to deductions?
ANSWER:
Add up all of the deductions and divide the amount by the gross pay, then
round off to the nearest hundredth.
QUESTION 3: What percentage of her gross pay does Nancy contribute to Federal Income
Tax and FICA?
ANSWER:
Add Nancy's Federal Tax and FICA contributions, then divide the amount
by the gross pay, then round off to the nearest hundredth.
CAREER p.9
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PAT'S EARNINGS STATEMENT
Pat works for Rebecca's Electrical Contractors. She gets paid $11.50 an hour for electrical
installation in new homes. She works 8 hours a day for 40 hours a week.
QUESTIONS: 1.
Gross
Pay
What would be her monthly gross salary?
(To get daily rate:
Multiply hourly rate x 8 hours a day
To get weekly rate: Multiply hourly rate x 40 hours a week
To get monthly rate:
Multiply daily rate x 20 working days,
OR
Multiply weekly rate by 4 weeks in a month)
2.
If she paid 12% Federal Tax, what would be deducted from her pay
check?
(Multiply gross salary x .12)
3.
If she paid 8% FICA, what would be deducted from her pay check?
(Multiply gross salary x .08)
4.
If she paid 11% Health Insurance, what would be deducted from her pay
check?
(Multiply gross salary x .11)
5.
If no other deductions were taken out of Pat's pay check, what would be
the total of all of her Federal Tax, FICA, and Health Insurance
deductions?
6.
What would be Pat's Net Pay?
7.
How would you fill in the following Earnings Statement for Pat?
Federal
Tax
State
Tax
FICA
Health
Insurance
Disability
Insurance
Optional
Retirement
Union
Dues
Net Pay
8.
What percent of her gross pay does Pat get to take home?
(Net pay divided by gross pay = % take-home pay, then round off to the
nearest hundredth.)
9.
What percent of Nancy's gross pay goes to deductions?
(Add up all of the deductions and divide the amount by the gross pay, then
round off to the nearest hundredth.)
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EARNINGS STATEMENT PRACTICE SHEET
Gross
Pay
Federal
Tax
State
Tax
FICA
Health
Insurance
Disability
Insurance
Optional
Retirement
Union
Dues
QUESTIONS:
CAREER p.11
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Net Pay
DON'T OVERLOOK BENEFITS
Generally, salary is the prime benefit most people look for. But fringe benefits are not just a
minor attraction. They represent a considerable, if hidden, part of your pay. Health care, for
example, can include dental and vision care, in addition to medical/hospital care. Many
companies, especially smaller ones, find it a struggle to offer health benefits. Many cannot offer
them at all or only the bare minimum. As the cost of health care skyrockets, medical expenses
can put a family deep into debt.
Paid holidays, vacations with pay, child care and education subsidies, use of a company car,
expense accounts, and car phones are just a few of the benefits offered by some companies.
Some offer benefits "cafeteria style" and allow employees to choose whichever combination
suits them.
Rank order the following benefits according to what you would choose if offered a cafeteria style
choice in benefits. Put #1 by your first choice, #2 by your second choice, etc.
______ Salary
______ Medical/dental
______ Fitness facilities
______ Life/disability insurance
______ Vacations/holidays
______ "Business of living" time1
______ Maternity/paternity leaves
______ Child care
______ Profit sharing
______ Moving/travel expenses
______ Flextime2
______ Retirement benefits
______ Travel benefits
Source: Adapted from Coming Alive From Nine to Five by Betty Neville Michelozzi
1Refers
to the necessary tasks people must attend to, such as going to the bank, going to the
dentist, picking up a child at school, or taking a class to upgrade your skills.
2Allows
workers to work for any eight hours between specified times, such as 7 a.m. to 8 p.m.
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END OF UNIT EVALUATION
Student's Name: ________________________________ Date _________________
Instructor Name: ______________________________________________________
1. What have you learned about this theme?
2. Give some examples of how you used this information outside of the class.
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3. Do you think your ability to learn has improved?
a. [ ] very little
b. [ ] some
c. [ ] very much
What makes you feel that your learning ability has or has not improved?
4. Do you think your reading has improved?
a. [ ] very little
b. [ ] some
c. [ ] very much
What makes you feel that your reading has or has not improved? (What can you do or
still not do now?)
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5. Do you think your writing has improved?
a. [ ] very little
b. [ ] some
c. [ ] very much
What makes you feel that your writing has or has not improved? (What can you do or
still not do now?)
6. Check the kinds of things you like about this class:
a.
b.
c.
d.
e.
[ ] the time it meets
[ ] the other students in the class
[ ] the things we are learning
[ ] the things we read
[ ] the things we write
f.
g.
h.
i.
[ ] the teacher
[ ] the way we work in class
[ ] the help I get from
instructor/tutor
[ ] other things (write
here)__________________
7. What suggestions do you have to make this class better for you?
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