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![Page 1: Objectives: -List and discuss types of earned income, such as wages, salaries, tips, and commissions. -Discuss the advantages and disadvantages of self-employment.](https://reader036.fdocuments.net/reader036/viewer/2022082517/56649e415503460f94b332fd/html5/thumbnails/1.jpg)
LESSON 2-1 EARNED INCOME AND BENEFITS
Objectives: -List and discuss types of earned income, such as wages, salaries, tips, and commissions.-Discuss the advantages and disadvantages of self-employment.-Describe employee benefits and their role in employee compensation.
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PAST ASSIGNMENTS
Occupational Handbook Assignments Late Will accept if handed
in by Friday (tomorrow)
Resume Update Due Monday, Jan. 19
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EARNED INCOME
Working for an hourly wage Working for an annual salary Tips and Commissions Self-employed – work for themselves All earned income is subject to income
taxes and social security taxes A tax is a required payment to support
the government
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MINIMUM WAGE Minimum wage is the lowest pay rate allowed by
law New employees usually begin at minimum wage
because they lack the experience and education Federal Minimum Wage is $7.25 – hasn’t been
raised since 2009.
Nebraska Minimum Wage is $8.00 (as of Jan. 1, 2014) Jan. 1, 2016 – will go to $9.00
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$8.00 Federal Minimum Wage
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OVERTIME PAY
Overtime pay is received for hours worked in addition to regular hours (usually 40 hours a week).
By law, employers must be paid at least 1 ½ times the regular rate for overtime pay. Ex. If regular pay is $10 overtime pay
would be ___ $15
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SALARY PAY
A Salary is a fixed annual or monthly rate that is the same regardless of the hours worked.
Do not keep time cards or count hours worked.
Have flexibility in the times they work than do hourly workers.
Do not receive overtime pay for working more that 40 hours a week.
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TIPS
A tip is a gift of money Often a percentage of the total bill Given to a person that performs a service Usually based on the quality of services
provided Tips are subject to taxes May have to share tips with co-workers
What kind of workers receive tips
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COMMISSION
A commission is a set fee or a percentage of a sale paid to an employee instead of or in addition to salary or wages.
A commission is only earned when a sale is made
Some jobs pay commission only Some jobs pay a base salary plus
commission
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SELF-EMPLOYMENT Self-employment is working for yourself An entrepreneur is a person who takes the risks
of being self-employed and owning a business Advantages
Get to make all the decisions Set your own hours – when and how long you work Get to keep all profits from the business
Disadvantages If the business fails, it’s your money you lost. Many time you have to use your own personal
credit Often have to put in long hours – can’t always afford
to pay others to work for you.
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DO YOU HAVE WHAT IT TAKES TO BE AN ENTREPRENEUR?
Read together pg. 44
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EMPLOYEE BENEFITS Benefits are forms of pay other than salary or wages. Examples:
Paid vacation and holidays Sick leave and personal leave Educational benefits Health insurance and other insurance Retirement plans Profit sharing plans or Stock option plans
Benefits increase the overall value a worker receives from a job
Benefits can increase disposable income – money available to spend or save after taxes have been paid.
Benefits add to our standard of living and most of them are not taxable.
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PAY WITHOUT WORK
Pay without work refers to times when an employee who is not working will be paid.
Examples: Paid vacation Paid holidays Paid sick leave Paid personal leave
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EDUCATIONAL BENEFITS
Some employers provide plans that will pay for, share the cost of, or reimburse money spent on education.
Employees can add to their general employability and skill set in addition to becoming more valuable to their current or future employer.
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INSURANCE Health insurance – in the past, many employers paid
the full premium for employees. Because the cost of health care has risen rapidly, the cost
of health insurance has also risen. Today, many employers pay only a portion of the health
insurance Life insurance – some employers offer group life
insurance to its workers. Disability insurance – provides payments to replace
income lost when illness or injury prevents the employee from working.
Worker’s compensation – insurance plan required by law for employers to provide. It pays medical and disability benefits to workers who are
injured or contract diseases on the job.
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RETIREMENT PLANS
A retirement plan is an account into which employees contribute a portion of their earnings for their retirement; employers may match these contributions.
Two types: 401(k) plan allows employees to make tax-
deferred contributions, which may be matched by employers
Pension plans are paid entirely by the employer
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PROFIT SHARING PLANS AND STOCK OPTION PLANS
A profit-sharing plan allows employees to share in the profits of the business The bonus may be paid in cash, or it may be
added to a retirement account. Profit sharing plans help motivate employees
to achieve company goals Some companies allow employees to buy
stock in the company at a reduced price. Companies may also issue stock as a bonus
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HEALTH SAVINGS ACCOUNTS
A health spending account (Flex 125 plan) allows employees to set aside money (pre-tax) to pay for qualified medical expenses. Employees can set aside pretax dollars to pay for
deductibles and copays. A health savings account (HSA) can be used be
employees who have high-deductible health insurance plans. Employer also can contribute to the HAS Increasingly popular high-deductible insurance plans
have cheaper premiums. Part of the premium savings can be put into an HSA, and employees can contribute with pretax dollars to cover their out-of-pocket costs for medical care.
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ASSIGNMENTS
Due Monday, Jan. 19 – question 1-21 on pg. 49
Also due Monday – updated resumes Read Lesson 2-2 pg. 51-58 for Monday
Tomorrow – Friday, you will complete the Higher Education Module in Everfi.com