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Recently, we've seen some employers forced to raise their employees' wages to $15 an hour. But how much is that per year including taxes? And is $15 a living wage?
After all, it's great for increasing your income.But it's also good to know what you get here.
So this article will be your crash course on what to do with that new paycheck you might be on the verge of receiving. This includes whether it's good to make $15 an hour and some jobs to consider in that salary range.
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$15 an hour is how much is a year?
A full-time worker earning $15 an hour earns $2,600 a month before taxes. That comes to $31,200 a year. However, this number is subject to change based on other factors such as overtime and less than 40 hours a week.
for example strongDepartment of Labor Statistics, the average part-time worker works just 5.58 hours a day. That's just 27.9 hours a week.
Working that many hours would mean a weekly paycheck of just $418.50 at $15 an hour. That means the average part-time worker earning $15 an hour for that many hours has an annual income of about $21,762, more than a third less than a full-time worker earning the same hourly rate.
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How much is $15 per hour per year after tax?
Since the average single American contributes 29.8% of his income to IRS, Medicare, and Social Security, his average annual $15-an-hour earnings after taxes is $21,902.40. However, the exact number depends on the state you live in.
That is, while 29.8% can beaverage rate, each state has its own laws and regulations about how much your net income is taxed. So let's calculate $15 an hour using a state average of what Americans pay in taxes.
EmNebraskaFor example, the average person pays 6.84% income tax every time they receive a paycheck. You also have to consider federal income tax, which in this case would be a 12% tax liability.
Let's take a look at what this means for our full-time and part-time employees mentioned above.
Our full-time $15 employee earned $31,000 pre-tax, but after federal and state taxes, the actual amount earned would drop to approximately $25,039. That's about 20% less take-home pay.
That means $15 an hour really isn't. After tax, it's closer to $12 an hour.
Our national average of a part-time worker is in the same tax bracket as a full-time worker and has the same tax liability (i.e. 12%). His annual net compensation would be reduced by the same percentage, coming to around $17,830.
It is important to remember that these are just average cases and most people will experience different results. Things like tax deductions, credits, and other personal factors can increase the amount of money you get back on your tax return.
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$15 per hour how much is per month?
A full-time employee working 40 hours a week at $15 an hour would earn $2,600 a month. However, this is the amount of tax supported. Based on the average single American tax rate of 29.8%, a monthly wage of $15 an hour would be approximately $1,825 a month.
However, these amounts depend on where you live and how many hours you work per month.
For example, if you work closer to the national average of 27.9 hours a week, your pre-tax net monthly income drops to $1,813.50. After calculating the average tax burden, this monthly salary is closer to $1,273.
Knowing your actual monthly income is useful for creating a budget, many of which are created monthly. This means that aligning your payment cycle and your budget makes it much easier to determine how much to spend and where.
However, this also means that for those who are paid weekly, it might be useful to drill down even further.
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How much is $15 an hour for a 40 hour week?
Someone earning $15 an hour and working 40 hours a week makes $600 a week before taxes. Looking at the average single American who pays a tax rate of 29.8%, for a person earning $15 an hour, net income is $421.20, your actual weekly wage.
As mentioned above, each state has different income tax rules and regulations. This means that a person in Arizona earning $15 an hour can take home more or less than a person earning the same hourly wage in Delaware.
Other factors can change this number. If your $15 an hour job requires you to own and maintain a personal vehicle, uniforms, or other work-related supplies, your actual take-home pay will change accordingly.
This begs the question: Is $15 an hour a living wage?
Is $15 a living wage?
MIT found that the minimum wage in the United States is $16.54 per hour, or $68,808 per year before taxes for a family of four, where a minimum wage is defined as the approximate income needed to meet basic needs of a family. This means that an hourly wage of $15 is not a living wage.
You can see more informationHereon MIT findings, including some startling calculations of how many different people have to work based on the current US minimum wage.
To extend the meaning of "living wage" a little further, it usually refers to how much money a person or family would need to comfortably earn to meet all of their needs. That includes housing, food, clothing, medical care, and money left over to save and, well, enjoy life.
If that sounds hard to convert into numbers, that's because it is. There are different approaches to these calculations. However, MIT has developed aToolThis allows people to see what a "living wage" would look like in your community based on the number of people you support.
Using their minimum wage tool, we can see that for an adult without children, $15 would be minimum wage in Omaha, Nebraska, but not in Chicago, Illinois. This also assumes that the person earning $15 works full time.
Another complication arises when children are introduced to mathematics. Even having a child means that $15 is no longer a living wage. Even in the most affordable communities, the minimum wage with a child is closer to $30.
Is $15 an hour good?
While $15 an hour is a huge boost for anyone earning the federal minimum wage of $7.25, it's nowhere near what the minimum wage would have been had it kept up with inflation. Earning a living wage is also not enough for most people.
Inflation is the increase in the general price of an economy over time. When we hear people talk about the $7.25 minimum wage being more than enough "back then," it's important to remember that theaverage costfor a house in 1970 it was only $17,000. If the minimum wage had been reachedpace with inflation, would be closer to $30 an hour today.
During moves like thisfight at 15pressure for a new federal minimum wage is still not half of what it would be if it had kept pace with inflation, profits and productivity.
You might also be interested in:Is $10,000 a lot of money? (+11 tips on what to do with it)
$15 an hour jobs
Many companies are responding to ongoing union efforts and changing economic conditions by raising their minimum wages to $15 an hour. Here are some great companies that pay $15 an hour and some jobs that pay at least $15.
- Amazonas—AmazonasAnnounceda minimum wage of $15 in 2018 and is using his higher starting salary as a strategy against one of his biggest competitors: Walmart.
- Costco-- Costco had a starting salary of $15 in 2019 and has sinceincreased to $16.
- meta- Target has pledged to raise its minimum wage to $15 by 2020 andachieved this goala month before.
- integral food— This popular supermarket chain wasacquiredby Amazon in 2017 for $13.7 billion and is now part of Amazon's company-wide minimum wage policy.
- Walmart- Walmart is one of the few large retailers still surviving on a starting wage of $11 an hour, but has increased its "average hourly rate" to $15.
- Other jobs $15 an hour— In response to this growing movement for a higher minimum wage, jobs in transportation, warehousing, logistics and a myriad of other industries have also shifted to a minimum wage of $15 or more.
How to Live on $15 an Hour
Living on $15 can be a big adjustment for people who have worked the state minimum wage of $7.25, but it can also be challenging. Here are some tips to help you make the most of your new income:
- Budget- Write down your expected monthly expenses, and when you get your paycheck, set aside money for essentials like rent, utilities, and groceries. you should tootrack your billsto keep an eye on your spending.
- spend wisely— If you've never made $15 an hour, don't spend it all at once. Make more money slowly, so keep yourpersonal financial planand do not spend beyond your income.
- Create an emergency savings fund— If you can save six months of your budget, it will help you in an emergency.
Related: 12 rent bills you need to pay
Final Thoughts on Making $15 an Hour
While earning $15 an hour might be an improvement if you're working for a much lower minimum wage, there are many good arguments why that might not cut it, especially if your goal is to make it.Financial freedom.
Still, it's a solid goal right now, especially for organizations struggling to make that the overall minimum wage.
And when you make $15 an hour, knowing how much you make in a year or even a month can really help you figure out your budget.
From there, all you have to do is keep it. That's definitely doable at this rate, although careful money management is required to ensure you're spending within your means.