Is A Second Job Worth Taking - G. Vogt, Oct. 1999

AgDM newsletter article, October 1999

Taking a second job off the farm

By Gary Vogt, extension farm management specialist

As farm families turn to additional off-the-farm employment during this period of low farm income, they need to realize that there are "costs" as well as benefits in taking that second job. Some costs such as travel and clothing expenses, babysitters, etc. have obvious monetary value. Other costs like taking time away from children and spouse or changing the daily routine have a subjective value and vary with each family's situation. The costs and benefits of the job such as salary, health insurance, psychological boost, social contacts need to be analyzed and discussed by the family before deciding on a second job.

Worksheet

The accompanying worksheet helps you focus on whether taking a job off of the farm will be worthwhile. It encourages the family to gather information and provides a basis for family discussion before taking the off-the-farm job. By using the worksheet you will have an estimate of the net gain or loss from an additional off-the-farm job. Working through the worksheet is an exercise that should be completed several times by analyzing the costs and benefits of several different full-time and part-time job opportunities.

Worksheet for Computing Benefits from Taking a Second Job

*Income:*
Gross pay from second job	$__________
Value of employer’s contribution to:
Retirement plan	__________
Health & disability insurance (self, family)	__________
Life insurance	__________
Gifts, bonuses, etc.	__________
Savings on dependent insurance coverage	__________
Other monetary benefits (tips, meals, etc.)	__________
(A) Total gross income from second wage-earner	$__________
Expenses (not tax deductible):
Additional tax on family income (federal, state, local):
When both parties are employed	$__________
Subtract taxes paid when one party employed	__________
Equals additional taxes paid	__________
Additional Social Security Tax paid	__________
Extra cost of convenience food for home consumption	__________
Extra cost of meals eaten away from home	__________
Extra expense for general-wear clothing, including maintenance	__________
Extra personal care expenses	__________
Transportation to and from work, including parking	__________
Employee clubs, gifts, flowers, etc.	__________
Work-related parties and special meals	__________
Extra expense of hired help:
Household help	__________
Child and dependent care costs minus any tax credits	__________
House repairs & maintenance you will no longer do	__________
(B) Total Expenses (not tax deductible)	$__________
Expenses (tax deductible)
Specialized work clothing & maintenance	$__________
Transportation on the job, not reimbursed	__________
Dues to union, professional, and business organizations	__________
Tools, licenses, and supplies for the job	__________
Professional & business meetings, conferences, etc.	__________
Educational expense of maintaining and increasing skills	__________
Professional and business publications	__________
Other specific expenses of producing income	__________
Contributions to an IRA (from second job)	__________
TOTAL	$__________
After tax computation
100% less tax rate on second earners income times total expenses if itemize
deductions * (e.g. 100% – 15% = 85% x expenses)	__________%
(C) Total Expenses (tax deductible) (multiply total by percent)	$__________
Net economic gain from second wage-earner’s employment
(D) Total gross income (A)	$__________
(E) Total expenses related to income production (B + C)	__________
(F) Net economic gain from second job (D – E)	$__________
Subjective value (loss or gain) in family activities
(G) Value of family activities, one partner employed	$__________
(H) Value of family activities, both partners employed	__________
(I) Possible value loss/gain in family activities (G – H)	$__________
Net value gain from second wage-earner’s employment
(J) Net income from second wage-earner’s job (F)	$__________
(K) Possible value loss in family activities (I)	__________
Net family gain or loss from second wage-earner’s employment (J – K)	$__________

* Married: income less than $6,450 = 0%, $6,450 to $47,499 = 15%
Single: income less than $2,650 = 0%, $2,650 to $27,1299 = 15%, $27,300 to $58,499 = 28%

The job related expenses and the income and fringe benefits for each employment opportunity should be considered, as well as which spouse has the greater net earning potential job due to special skills or past training.

Some expenses such as lunches or household help may be reduced when working only part-time. However, other expenses such as travel, special clothing or tools often take a larger part of the income from a part-time job. Parents with young children usually have higher work-connected expenses than parents with older children. If work hours can conform to the child’s school day or at a time when the other spouse can do the childcare, working part-time may eliminate the need for childcare. Another thing to consider are the employee benefits such as paid vacation, health insurance, and pension credits that are not extended to part-time employees.

The total economic, social, and psychological changes to the family environment need to be part of the worksheet exercise and discussion. The human conflicts that can result when time is divided among family, homemaking responsibilities, and the job activities need to be discussed with all family members.

Questions to stimulate discussion

The following questions can provide direction for the family's discussion concerning the non-economic costs and benefits of the second job.

Taking a second job off the farm

Net family gain or loss from second wage-earner’s employment (J – K)

$__________