- My $40,000 salary was barely enough to get by, but when I got a $5,000 bonus, I suddenly felt rich.
- My bonuses were sometimes as large as $20,000, and I got them twice a year.
When I accepted a job with a $40,000 annual salary in 2014, I thought I was rich. I was a year out of college and my first "adult" job had paid $25,000 with no benefits — and I was laid off after six months.
Even living in Birmingham, Alabama, I quickly realized how little my $40,000 a year paycheck actually was. Despite living with a roommate and having my dad pay my cellphone bill, I was still eating mostly ramen, spaghetti, and crackers and cheese from Aldi for lunch and dinner. I'd skip breakfast entirely.
A year later, I got my first bonus: $5,000 that I had no idea was coming. It was mid-December, just before the company closed for the week of Christmas and New Year's, when my boss called to tell me my next paycheck would have a holiday surprise.
I felt rich when I got my first bonus
"A Christmas bonus?" I said, awestruck. "You mean like what Clark Griswold got in 'Christmas Vacation'?"
"Yeah," she laughed before explaining that bonuses were given based on performance and the company's financial standing, which, as a private company, employees at my level weren't actually privy to. I was less concerned with how much the company made overall than I was with my performance as an employee — only one of those was in my direct control.
When that $5,000 hit my bank account — which was more like $3,600 after taxes — I really felt rich. For the first time in a long time, I was actually able to put money in savings and pay for the grad school program I was enrolled in part-time without having a full-blown panic attack.
I worked for that company for six and a half years and got bonuses typically twice a year, ranging from $5,000 to $20,000. When bonus time rolled around, usually toward the end of summer and right before the winter holidays, it felt like I'd won the lottery. While my base salary of $40,000 wasn't much, especially after taxes, suddenly making $60,000 or $80,000 a year made a huge difference in my overall take-home pay. Before I knew it, I'd dropped out of grad school and started considering buying a house.
When bonuses were handed out, it was done with the reminder that we should feel lucky to work for a company that gives us bonuses when so many employees never get them — we should be grateful for the generosity that had been bestowed upon us. Giving employees a bonus comes with the sense that doing so is not only generous but ethical in a world where workplaces so often make the news for their unethical, immoral practices that actively harm employees. It was a reminder that we weren't peeing in bottles working the floor of an fulfillment center or being regularly scheduled for fewer than 20 hours a week in order to be denied health insurance.
My bonus stopped feeling generous when it disappeared
For years, I thought I had it made. Then the year came when we didn't get bonuses. While I hadn't become a lavish spender in the intervening years, the bonuses had come so regularly that I came to expect them.
That year, getting a bonus was the difference in being able to pay to repair a ruptured sewer line that burst in the backyard and caused sewage to pool in our basement every time it rained. There was only one bathroom in the house, and we couldn't flush toilet paper. We were told to flush as little as possible to avoid straining the already broken system, so our house would literally smell like shit until we were able to get it fixed.
Though our home warranty would cover some of the cost of a repair, it wouldn't cover all of it, and we'd still have to front the money and wait to find out later how much we'd be reimbursed. All of which is to say, it was a big expense — one that a $5,000 bonus could have knocked out with money to spare.
It wasn't clear why I had lost my bonus
I started wondering if my performance was the problem. It felt like I'd been working harder than ever, putting in longer hours, taking on more responsibility, and proposing initiatives to increase profitability. It didn't seem likely that the company was suffering — we'd seen an interview where the boss was being interviewed about making eight figures and there were only about two dozen full-time employees at the company. Something was amiss, and I couldn't help wondering if everyone had gotten a bonus except for me.
I scheduled a meeting with my manager to check in about my performance and, in preparation for that meeting, I made notes about what a massive difference the bonuses made in my overall take-home pay. Digging into the numbers, I realized taxes were withheld from the bonuses at a much higher rate than a normal paycheck — upwards of 35% to 40% depending on the amount — which meant we took home a lower percentage of that money than we would if the bonus had been spread out incrementally over the course of the year like a regular paycheck.
My bonus wasn't really a bonus, but a necessity
I realized the company was using bonuses to pay us a living wage, when that's not what a bonus is supposed to be. The base salary should be a living wage. A bonus should be just that — a bonus for going above and beyond. No employee should have to rely on a bonus to make a desperately needed home repair.
It shouldn't have felt like a luxury to be able to fix a health hazard in my home. Had I actually been gotten a paycheck that was the same overall amount as what I'd gotten with my base salary and bonuses, I would've gotten to keep more of that money and been able to save a portion of each paycheck to pad my emergency fund.
Having a boss who was featured in an interview about making eight figures while I struggled to get a broken sewer line fixed was a slap in the face to underlings like me. I couldn't fathom a good reason not to pay even the lowest-ranking employee at the company $60,000 when it sounded like she could well afford it instead of holding bonuses over our heads.
At first, I thought the bonuses were an incredible gift, but half a decade later I came to see them for what they really were, at least in the context in which my boss used them: a form of psychological abuse. These days, I don't want a bonus unless I'm already being paid a livable wage.