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THPNI1

You can use this video to open a discussion in class. Here are some questions that could be useful. It is not important at this point that students identify all possible deductions, but just to remind them of some basic kinds of deductions, such as taxes or health insurance.

THPNI2

Download Thomas the Teacher's Paycheck here

Here is a helpful worksheet students can use to track their calculation in this module. Students should be able to figure out that there are 26 pay periods in a year, and so Thomas would have $27,640.60 if he got $1,063.10 each pay period. Some things to point out:

For Future Teachers

Many high school or middle school students either have, or will be interested in having an after school job. All of the issues of take home pay in this module are applicable and most of them can be simplified for use in the classroom.

Here is an actual student paystub with the name of the employer and student removed that can be used as the basis for an activity. Once your students have finished the module, have them design a Paystub lesson for use with high school or middle school students.

THPNI3

It might be good to point out that all of these are listed in the right hand YTD (year to date) column. This column provides a running tally of all the money put into each category since the first of the calendar year. This is just long division, but it reinforces the meaning of what is in these columns.

For Future Teachers

Future teachers should note that long division is far more meaningful when units are attached to the numbers. Its use becomes more apparent when something important is being divided. What kinds of problems would make long division meaningful to K-12 students?

THPNI4

Here are some questions for discussion of the various tax deductions.

THPNI5

How does society take care of its elderly? Here is an approach you can use with your class.

THPNI6

Health insurance is another topic that can generate a good quantitative discussion. Thomas is paying $32 per month for health insurance. Is that a lot?

THPNI7

This is the opening to a budget discussion. By now the students should see that you couldn't just divide $41,000 by 12 and get an accurate idea of what you can spend.

THPNI8

Thomas's YTD (year to date) earnings divided by pay period earnings confirm 16 pay periods so far. Since there are 26 pay periods in a year, Thomas earns 26 times $1,573.58 annually, $40,913.08. Almost, but not quite, $41,000.

THPNI9

Thomas's retirement contribution is mandatory, but some kinds of retirement instruments (like IRA's, which students may have mentioned earlier in the discussion) are voluntary. Thomas is not currently making voluntary contributions to his retirement, but he could.

The reason to discuss these categories now is that some are tax-exempt. That is, the employee is not taxed on certain kinds of retirement related deductions.

This is why the TAXABLE GROSS is different from the Gross Pay.

THPNI10

For Thomas the only tax-exempt (or pre-tax) categories are TCH 11% and HARVARD IND. Subtracting these amounts from the gross pay will give the taxable gross. For a single person in that 25% marginal tax bracket in 2009, here's how the tax schedule worked:
The first $8,350 in taxable income was taxed at 10%.
Taxable income between $8,350 and $33,950 was taxed at 15%, and the highest layer of income (above $32,950) was taxed at 25%. Thomas had only about $1600 that was taxed at 25%. Most of the earnings were taxed at 15%; some at 10%.

THPNI11

Thomas takes home 67.56% of his pay in months where there are no union dues. This is just $2,126.20 divided by $3,147.16. One third of his paycheck is going to taxes, social security, health care plan, life insurance, and his retirement pension.

THPNI12

An interesting exercise for the class would be to have each person bring in a paystub--theirs or a parent's or friend's, with identifying data removed.

For the future teacher

Percents are a part of the middle school curriculum and creating charts to display data is good way to connect this module to classroom practice. For example, elementary students could brainstorm as a class what expenses a household might have and discuss how to construct a pie chart. For a homework assignment, they could talk with their parents and try to figure what percentage of the household budget goes to food, rent or mortgage and the other items they have thought of on the classroom list. This data would then be a basis for creating a household budget pie chart in class as individuals or in groups.

Have your future teachers design lesson on budgeting that incorporates percentage and data display. There are several chart generators at Create a graph at the National Center for Education Statistics.

THPNI13

This calculation leads naturally to a discussion of whether Thomas can live on his budgeted amount. Most younger people are not really aware of what stuff costs: the apartment, the electricity, the heat, etc. If you want to spend some time on the topic of budgeting, we suggest the following strategy. How well will Thomas's paycheck cover expenses?

THPNI14

This video could spark a discussion of how people handle windfalls. An influx of unexpected cash is very easy to spend, because the recipient thinks of it as "extra" or "free". But the young woman in the video actually had to earn that money.

"Opportunity cost" refers to opportunities lost when a resource is used on one thing, and therefore can't be used on something else. In this case there are at least three ways to think about the money this woman spent.