• Margaret Curtis, MD

Calculating Your Hourly Wage

Updated: Nov 11, 2019

You may have heard this logic: "I get paid $150 per hour as a physician, so it doesn't make sense for me to mow my own when I can pay someone $15 per hour to do it". You may have even used this logic yourself. There are two problems with this line of reasoning:

The first problem is that it is a short, slippery slope between paying $15/hour for gutter cleaning and paying $160 for a cut, color and blow-out that takes two hours. These expenses add up fast and before you know it you are digging a hole.

The second problem is that the math is faulty. Let's figure out your actual hourly wage:

If you are a family physician making $225,000 per year (about the national average), working 32 hours per week your hourly wage is $145.63. Of course you probably work more than that, so your hourly wage is actually lower, but we will start there.

Now subtract your taxes. If you max your contribution to a 401k or 403b, your taxable income will be 205,000 (taxes are also more complicated than this, but bear with me). We will estimate 24% federal (a moderate estimate), 5% state (low to moderate) and payroll tax: Social Security tax is 6.2% on the first $128,700 of income and Medicare tax is 1.45% of entire salary. That gives us:

Federal tax $49,440

State tax $10,3000

Social Security $8,240

Medicare $2987

Grand Total $70,967

Your after-tax hourly wage is $84.40. Fingers crossed you don't have to pay the Alternative Minimum Tax.

Do you have student loans? Paying these is obligatory, and paying off the average medical school debt of $200,000 at 4% interest over 10 years will cost roughly $2000 per month. You are down to $69.40 per hour.

Now subtract out those doctor-specific expenses: CME, MOC, occupation-specific disability insurance, extra childcare when you are on-call. What you have left is what you can use to buy food and pay for housing. Mowing your own lawn is starting to look better and better.

As time goes on you will be able to save more of what you earn, and you might decide to start outsourcing more chores. Or you might not. At least you will know your math is right.


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