Question 916694

He starts at $10 an hour. 


He takes a 50% pay cut, so he goes from $10 an hour to $5 an hour (50% of $10 is $5, $10-$5 = $5)


He makes <font color="red">$5 an hour</font> after the pay cut.


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Then he'll get a 75% raise in 6 months.



75% of $5 = 0.75*5 = 3.75


Add this to $5:  5+3.75 = 8.75


His new wage after the raise is <font color="red">$8.75 an hour</font>




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Summary: He goes from $10 per hour to $5 per hour, then to $8.75 an hour. This is a horrible deal because he not only has to deal with awful pay for 6 months ($5 an hour, possibly below minimum wage) and then his final wage is below where he started. If Steve didn't know his math, this may sound like a good deal. However, doing the math shows us otherwise. We haven't even factored in inflation, or other expenses (eg taxes, social security, etc), which take even more away.



Should he take this deal? No, he should NOT take this deal. If he does, then it will take him a long time just to get back to his original wage of $10 (this is assuming he even gets a raise at all). This will happen with inflation in the background going on which will ultimately lower his standard of living.



Let me know if you need more help or if you need me to explain a step in more detail.
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Thanks,


Jim