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American Workers Pour 2005 Salary Increases Down Gas Tank

October 27, 2005

By Dan Malachowski, Salary.com (Reprinted courtesy of Salary.com. Look for a sampling of salaries of driving and driving-related jobs based on Salary.com data in the November/December issue of Business Fleet.)Americans are now paying an average of $2.81 per gallon to fuel the sedans, sports cars, SUVs, and pickup trucks they depend on everyday to get to work. Commuting to and from work is all of a sudden having a substantial impact on the pocketbooks of the majority of American workers, with no end in sight. This has led the compensation experts at Salary.com to put a salary dollar value on the rising cost of the American commute. The results may surprise you.Escalating gas prices have left many American workers wondering how they will continue to afford their commute. Eliana Tasca, a Boston sales manager, makes the long commute from Rhode Island to Boston everyday. "I feel like my gas expenses are now taking a noticeable chunk out of my paycheck", notes Tasca. "My commuting costs are starting to feel somewhat like an effective pay cut." Luckily, dedicated workers like Eliana can expect a merit salary increase. Assuming that individual and company goals are met, employees can expect a salary increase of about 3.7% this year. They can also expect to pour 3.3% of their salary down the gas tank, virtually wiping out that increase. In fact, while salaries are rising 3.7% year over year, commuting costs have risen 50% in the last year, as gas prices have risen from $1.91 to $2.81 per gallon.At the current gas price level and average fuel economy of 17.8 miles/gallon, average American workers, who earn the national average salary of $40,409, spend 3.3% of their paychecks ($1,341 per year) on gas needed to commute to and from work. "And that's the average worker," says Bill Coleman, Senior VP of Compensation at Salary.com. "Consider workers making the national minimum wage of $5.15 an hour ($10,712 per year) who are currently spending 11.3% of their salary on commuting gas.""Furthermore, $3.00, $4.00, even $5.00 per gallon gas prices no longer seem out of the question," continues Coleman. "If gas prices happen to rise to $5.00 per gallon, workers can say good-bye to all of that yearly salary increase, plus more." A gas price rise to $5.00 per gallon would cost the average worker $2,384 per year, a whopping 5.9% of their salary.
National Average Gas Price/Gallon
Commute Cost ($s/year)
Effective Gas Price Salary Cut (avg.worker/year)
$2.81*
$1,341
3.3%
$3.00
$1,430
3.5%
$4.00
$1,907
4.7%
$5.00
$2,384
5.9%
*current price, Sept 22, 2005
In fact, some commuters, particularly in parts of upstate New York and south Texas, are already spending up to 4.6% of their salary on gas to get to and from work. Salary.com calculated the effective gas price salary cut that workers are taking (by city) as a percentage of the average salary of that city. Some of the highest gas prices in the nation, coupled with above average commute times, landed the upstate New York towns of Rochester and Albany into the top 5. The Texas city of Brownsville showed up at #1, mostly due to the fact that wages are not keeping up with rising gas prices. Employees in some U.S. metropolitan areas may soon be forking over nearly 10% of their salary for gas needed to commute to and from work. If gas prices were to reach $5.00 per gallon, workers in a place like Brownsville, TX will be surrendering 8.7% of their salary for commuting gas. Check out Salary.com's list of the most expensive cities in which to commute. You may need a raise if you have one of these costly commutes. Click on your city to learn how to negotiate a raise, see what you are worth in your metro, and view cost-of-living data.
City
Gas Price Salary Cut at Current Price (avg.worker/year)
Gas Price Salary Cut at $5.00 per Gallon (avg.worker/year)
1 Brownsville ,TX
4.6%
8.7%
2 Rochester, NY
4.5%
7.5%
3 Honolulu, HI
4.4%
6.5%
4 Riverside, CA
4.4%
7.3%
5 Albany, NY
4.3%
7.2%
6 New York, NY
4.1%
6.9%
7 Springfield, MA
4.1%
7.0%
8 Orlando, FL
4.1%
7.4%
9 Richmond, VA
4.1%
7.4%
10 Pensacola, FL
4.0%
7.3%
Source: Salary.com October 2005
Click here for the full list of the most expensive cities in which to commute. See where your gas price salary cut ranks relative to your fellow commuters in different cities.What Can Be Done?Chances are that your Human Resource department is not going to give you a raise to cover your rising commuting costs. And not all American workers have a company car. So is there anything you can do, aside from taking the train, riding your bike, or putting your name on the list to buy a hybrid vehicle? According to Bill Coleman, Senior VP of Compensation at Salary.com, "Human Resource managers definitely empathize with their employees when they are forced to use parts of their total rewards package, like their annual merit increase, to cover things like rises in commuting costs." However, your employer is unlikely to be able to increase every employee's compensation to cover the cost of gas. Coleman notes, "a more effective approach to ask for a raise would be to focus on your individual contributions and accomplishments- these are what an employer values and are where you can differentiate yourself. Proving that you are worth more in the marketplace is the best argument for a raise." One way to find out if you are being paid what you are worth is to fill out Salary.com's salary negotiation tool, the Personal Salary Report. The Personal Salary Report will help you determine your value, based on job title, industry, geography, company size, education, experience, and other personal factors. Now may be the best time to try to secure a raise to perhaps cover those extra dollars you are spending at the gas tank.Salary.com MethodologyTo calculate the effective gas price pay cut per metropolitan area, Salary.com used average commute time data from the US Census and the 2004 Urban Mobility Study by the Texas Transportation Institute. Average fuel economy was assumed to be 17.8 miles per gallon, based on the Texas Transportation Institute study. Fuel prices are based on regular grade gasoline as of September 22, 2005, as reported by the American Automobile Association (AAA) Fuel Gauge Report. It is assumed that commuters purchase gas in the city in which they work. Average salary by metro was calculated by compensation experts at Salary.com and is as of October 1, 2005. All salary dollar values are pretax and based on a 40-hour workweek.Data is based on a total of 500 commutes per year, to and from work, for 250 workdays. Salary.com assumed that employees work 250 days per year and that their travel is equally split between freeway and arterial street travel. The 88 cities used in the study were the sampling of cities analyzed for congestion by the Texas Transportation Institute. About Salary.comSalary.com is the leading provider of compensation-related data, applications, and services to enterprises, small businesses, and individuals. Salary.com's products shape, influence, and facilitate millions of pay-related decisions each year. Salary.com's enterprise software helps companies manage their compensation expenditures with real-time, decision-ready data and analytical tools. Backed by a team of Certified Compensation Professionals, Salary.com is your partner in compensation.
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