Instead of a living wage, I got a huge bonus and it cost me a lot

Instead of a living wage, I got a huge bonus and it cost me a lot

  • My $40,000 salary was barely enough to live on, but when I received a $5,000 bonus, I suddenly felt rich.
  • My bonuses were sometimes as large as $20,000 and I received them twice a year.
  • When the bond disappeared without warning one year, I realized that it was being exploited.

When I took a job with an annual salary of $40,000 in 2014, I thought I was rich. I was a year out of college and my first “adult” job had paid $25,000 with no benefits, and I was fired after six months.

Even living in Birmingham, Alabama, I quickly realized how little my $40,000 a year paycheck really was. Despite living with a roommate and having my dad foot my cell phone bill, I still ate mostly ramen, spaghetti, and crackers and cheese from Aldi for lunch and dinner. I would skip breakfast entirely.

A year later, I got my first bonus: $5,000 that I had no idea was coming. It was mid-December, just before the company closed for the week of Christmas and New Years, that my boss called me to say that my next paycheck would have a Christmas surprise.

I felt rich when I got my first bonus

“A Christmas bonus?” I said, amazed. “You mean what Clark Griswold got in ‘Christmas Vacation’?”

“Yeah,” he laughed before explaining that bonuses were awarded based on company performance and financial condition, something that, as a private company, employees at my level were unaware of. I was less concerned with how much the company earned overall than with my performance as an employee; only one of them was under my direct control.

When that $5,000 hit my bank account, which was more like $3,600 after taxes, Really he felt rich. For the first time in a long time, I was able to save money and pay for the graduate program I was enrolled in part-time without having a full-blown panic attack.

I worked for that company for six and a half years and received bonuses usually twice a year, ranging from $5,000 to $20,000. When bonus time rolled around, usually towards the end of summer and just before winter break, I felt like I had won the lottery. While my $40,000 base salary wasn’t much, especially after taxes, suddenly making $60,000 or $80,000 a year made a huge difference to my overall take-home pay. Before I knew it, I had dropped out of graduate school and started considering buying a house.

When the bonuses were handed out, it was done with a reminder that we should feel lucky to work for a company that gives us bonuses when so many employees never receive them; we should be grateful for the generosity that has been given to us. Giving employees a bonus comes with the feeling that doing so is not only generous but ethical in a world where workplaces often make headlines for immoral and unethical practices that actively harm employees. It was a reminder that we weren’t peeing in bottles working a fulfillment center floor or having regular hours of less than 20 hours a week to be denied health insurance.

My bonus stopped feeling generous when it disappeared

For years, I thought I had. Then came the year we got no bonuses. While I hadn’t become a spendthrift in the intervening years, the bonuses had come with such regularity that I came to expect them.

That year, getting a bonus made all the difference to being able to pay to fix a broken sewer line that burst in our backyard, causing sewage to back up in our basement every time it rained. There was only one toilet in the house and we couldn’t flush the toilet paper. We were told to turn the chain down as little as possible to avoid straining the system which was already broken so our house would literally smell like shit until we could fix it.

Although our home warranty would cover part of the cost of a repair, it wouldn’t cover all of it, and we’d still have to put the money up front and wait to find out later how much we’d be reimbursed. All of which is to say that it was a big expense, one that a $5,000 bonus could have wiped out with money to spare.

It was not clear why I had lost my voucher.

I started to wonder if my performance was the problem. I felt like I had been working harder than ever, putting in more hours, taking on more responsibilities, and coming up with initiatives to increase profitability. It didn’t seem likely that the company was suffering: we’d seen an interview where the boss was being interviewed about making eight figures, and there were only about two dozen full-time employees at the company. Something was wrong, and I couldn’t help but wonder if everyone had received a bonus except me.

I scheduled a meeting with my manager to review my performance, and in preparation for that meeting, I took notes on how much of a difference bonuses made to my total take-home pay. Digging into the numbers, I realized that taxes were withheld from bonuses at a much higher rate than a normal paycheck (more than 35-40% depending on the amount), which meant we were taking home a lower percentage of that money than if the bonus had been spread out gradually over the year like a regular paycheck.

My bonus wasn’t really a bonus, but a necessity.

I realized the company was using bonuses to pay us a living wage, when that’s not what a bonus is supposed to be. The base salary must be a living wage. A bond should be just that: a cousin for going further. No employee should have to rely on a bonus to do a desperately needed home repair.

It shouldn’t have felt like a luxury to be able to fix a health hazard in my home. If I had actually received a paycheck that was the same total amount that I got with my base salary and bonuses, I would have been able to keep more of that money and have been able to save a portion of each paycheck to top up my emergency fund.

Having a boss appear in an interview about making eight figures while I was struggling to fix a broken sewer line was a slap in the face for subordinates like me. I couldn’t find a good reason not to pay $60,000 to even the lowest ranking employee in the company when it seemed like she could afford it instead of having bonuses hanging over our heads.

At first, I thought the bonuses were an incredible gift, but half a decade later I came to see them for what they really were, at least in the context in which my boss used them: a form of psychological abuse. These days, I don’t want a bonus unless I’m already being paid a living wage.

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