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.

1. Will the amount of money made or the job itself satisfy the reasons for going to work?
2. Will the amount of money earned meet individual or family expectations?

3. What adjustments will other family members need to make if one person accepts employment in the non-farm labor force?  Example are

4.Will the money or other job benefits compensate for the necessary family adjustments?

5. Are there long-term benefits that have not been evaluated; for example, increased Social Security benefits, retirement income, improved insurance protection, improved job skills obtained, or training for independent living?

Getting started

Going to work for the first time or starting over again nearly always provides special personal meaning.  As the new worker’s earnings increase, the family unit may begin to show increased financial gains, increasing the family’s sense of security and personal comforts.  With some financial pressures lessened, couples may be able to plan their lives more creatively and to feel in control of their future.

 

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