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Home  > Article

Rising Gas Prices Reduce Take-Home Pay

By Maura Pallera Salary.com

As of July 1st, Americans were paying, on average, $4.09 per gallon for regular unleaded gasoline to fuel the vehicles they rely on to get to and from work everyday. This represents an increase of $1.14 over the same time last year.

Salary.com? set out to calculate just how much the escalating cost of commuting to work is eating into the average worker's take home pay. To accomplish this, we established some reasonable criteria.

The average worker travels, round-trip, 29 miles each day. Vehicle fuel economy varies, but we will assume an average fuel efficiency rate of 18.8 miles per gallon. We will also assume there are 235 commuting days per year for the average full-time employee (allowing for 10 holiday, 10 vacation, and 5 sick days). Taking these factors into account, the average employee incurs an annual "commuting gas" cost of $1,483 per year. This represents 3.6 percent of the national average annual salary, which is $40,690.

What if prices continue to increase? How much deeper will employees dig into their pockets to travel to and from work? The scenarios below use the same criteria listed above and project commuting costs based on various potential price-per-gallon amounts.

                                                                        Percent of Salary

Price per Gallon          Commuting Cost       Spent on Commute (Avg.)

$4.50                                       $1,632                         4.0%

$5.00                                       $1,813                         4.5%

$5.50                                       $1,994                         4.9%

$6.00                                       $2,176                         5.3%

 
The figures above represent average numbers and take into account commuting costs alone. Motorists log many additional miles on trips not associated with travel to and from their place of business. Depending on your total mileage per week, you may be spending a far greater percentage of your take home pay at the pump. Moreover, employees on the lower end of the pay scale are hit harder in the wallet further widening the wage gap.

Consider the effect that rising gas prices have on workers at different salary levels, especially those who earn less than the national average, again assuming an annual "commuting cost" of $1,483. Click on the job titles below to research salary information for each position.

Percent of Salary

Job Title                                 Spent on Commute (Avg.)

 

Retail Cashier                                       7.5%

Administrative Assistant I                    4.2%

Accountant                                              3.5%

Staff Nurse - RN                                    2.4%

 

How is this affecting travel and gas usage? The American Automobile Association reports that travelers are purchasing less at each fill-up, which results in a doubling of distress calls from drivers who have run out of gas. Cost-conscious websites have also sprouted up that track locations offering the highest and lowest gas prices as anxious consumers wonder how much more they will be asked to pay at the pump. Not surprisingly, the American Transportation Association reports that mass transit use was up 3.3% in the first quarter of this year as commuters look for alternative solutions to the rising cost of traveling to their jobs each day.

The Associated Press reports some employers are re-thinking the five-day workweek as a way to boost moral and save on overhead costs. Soaring gas prices are additional incentive for employers to rethink work schedules and ease the burden of gasoline expenses.

One option is to allow workers to telecommute from home for all or part of the work week. For workers who cannot telecommute due to the nature of their work, some companies offer benefits such as van-pooling and bike sharing to ease the burden of escalating gas prices.

In late June, the U.S. House of Representatives passed legislation requiring federal agency heads to assist qualified employees in reducing their weekly commutes. Beginning in August, Utah State employees will switch to a four day work week. This yearlong experiment which allows workers to work four ten hour days with Fridays off, is aimed at reducing the state?s energy costs and employee's gas expenditures.

As this situation lingers on, employees are beginning to consider more drastic approaches to curtailing their commute. The NPD Group, a provider of consumer and retail market research located in Port Washington, NY, reports that many consumers are actually looking to change jobs so they can live closer to work or move to a new home that is closer to their place of employment. It is also expected that many of the cost saving measures consumers are taking in reducing travel and limiting gas usage are likely to become long-term behavior modifications, forever changing how we live and work in the future.


Copyright 2000-2004 © Salary.com, Inc.






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