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0760 Paycheck Deductions

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Welcome to English as a Second Language Podcast number 760: Paycheck Deductions.

This is English as a Second Language Podcast episode 760. I’m your host, Dr. Jeff McQuillan, coming to you from the Center for Educational Development – I almost forgot where I was from – oh yeah, beautiful Los Angeles, California.

This episode, like all of our episodes, has a Learning Guide. You should go to eslpod.com to download it.

This episode is a dialogue between Bill and Carol about “paycheck deductions.” This is money that your company takes out of your “paycheck,” what you get paid every week or every month, for a variety of purposes. Let’s get started.

[start of dialogue]

Bill: It’s about time! I’ve been waiting for my first paycheck and now it’s finally here. I’m ready to party this weekend! Whoa!

Carol: What’s the matter?

Bill: What happened to all my money? The amount of this check is a lot less than I expected it to be.

Carol: Yeah, my first paycheck was an eye-opener for me, too. Look at the pay stub and you’ll see all of the deductions. After federal income taxes, state income taxes, and FICA, you’re not left with a lot of money.

Bill: You’re right, but what’s FICA?

Carol: Those are taxes for Social Security and Medicare. Did you sign up for a retirement plan? If you did, those retirement contributions are deducted, too.

Bill: Thank God, I didn’t. But you know what? That still doesn’t account for all of the deductions.

Carol: Let me take a look. Oh, it looks like your wages are being garnished.

Bill: They’re garnishing my wages? What for?

Carol: Uh, do you have to pay child support or something like that?

Bill: Oh, yeah, I guess I do. I’d forgotten about that. I guess I’d better change my weekend plans.

Carol: I guess so.

[end of dialogue]

Our dialogue begins with Bill. He says, “It’s about time!” “It’s about time” is an expression that usually means that you are happy that something has finally happened; you’ve been waiting for it for a long time. In fact, you’ve been waiting so long you’ve been a little upset, maybe even angry that this thing hasn’t happened. I called my sister the other day and she didn’t call me back. I waited a week, I called her again, she didn’t call me back. Then suddenly, three weeks later, she called me. I said to her, “Well, it’s about time,” meaning I’m happy you called but I’m not happy I had to wait so long. Well for Bill, it’s about time that he has finally got a job and is getting paid. He says, “I’ve been waiting for my first paycheck and now it’s finally here.” Your “paycheck” is the money that you get for working. Some people get paid every week, most people get paid every two weeks, some people only once a month. Bill says, “I’m ready to party this weekend,” that is, I’m ready to go out and celebrate, to have a party. Then suddenly he says, “Whoa!” “Whoa” is what you might say to a horse to stop it, that’s where you hear that expression, but it now means more generally that you are surprised by something, that you want to stop the conversation or to stop what you were talking about because something surprising, often negative, has happened. Carol says, “What’s the matter?” What’s wrong? Bill says, “What happened to all my money (or all of my money)?” He’s looking at his paycheck; he sees that the amount that he was paid is less than he expected. He says, “The amount of this check is a lot less than I expected it to be.”

Carol says, “Yeah, my first paycheck was an eye-opener for me, too.” To say something is an “eye (eye) -opener (opener)” means that it is a very surprising experience, but something that teaches you an important lesson about something. That’s an eye-opener; it opens your eyes; you suddenly see something you didn’t see before or know something you didn’t know before. Carol says, “Look at the pay stub and you’ll see all of the deductions.” A “pay stub” (stub) is the document that the company that you work for gives you, in addition to your check, that tells you all of the things that were taken out of your check. It also tells you typically how many hours you worked, how much you got paid for working that number of hours, and so forth. Nowadays most people don’t get paid with a physical check; many companies simply send the money directly to your bank, what we would call “direct deposit.” However, most companies still give you a pay stub, or make one available electronically to you, that shows all of the deductions. A “deduction” is a noun, it comes from the verb “to deduct” (deduct), which is the same as subtract or take out of. “Deductions” are things that the company takes out of your total pay.

Carol mentions a couple of these deductions. She says, “After federal income taxes, state income taxes, and (FICA)” or “FICA, you’re not left with a lot of money.” “Income taxes” are money that you pay to the government. Almost everyone pays some percentage of their money to the national or federal government. If you don’t make a lot of money, the government will give you that money back at the end of the year; technically the following year after you file your income tax returns. That is, you tell the government how much you made last year, how much you paid in taxes. Some people get their money back; many people don’t. The more money you make the less likely you are to get any money back from the government. In addition to national or federal income taxes, Americans also pay, in most states, a state income tax. Here in California that can be as high as I think close to 10 percent of the money you make. The federal income taxes can be as much as 35 percent, depending on how much money you make. You have to be making a lot of money to be paying the top or maximum amount of 35 percent, however. Everyone pays (FICA) or FICA taxes, (FICA) stands for Federal Insurance Contributions Act. Basically, that was a law that required employers to hold part of the money that you earn every week or every two weeks, to take some of that and give it to the government, who uses it for retirement and healthcare purposes.

Bill says, “You’re right, but what’s (FICA)?” Carol then explains; she says, “Those are taxes for Social Security and Medicare.” Those are the two things I just mentioned. “Social Security” relates to retirement, for the most part. That is, when you stop working when you are, say, 65 or 68 years old you get some money back from the government. It’s money, in part, related to the amount of money you paid in Social Security taxes. “Medicare” is money the government gives people who need help paying their medical or hospital and doctor bills. Medicare, like Social Security, was mainly designed to help people who are old, people who’ve stopped working. It can also be used, however, to help people who are disabled in some way, who can’t walk for example. It will also help people who cannot work for some other reason, as well. That’s Social Security and Medicare. But your pay stub usually doesn’t say Social Security and Medicare, it says (FICA). Carol says, “Did you sign up for a retirement plan?” In addition to Social Security, many people also have their own “retirement plan,” money that they save each paycheck for their retirement, when they are no longer working. So, “retirement contributions” would be money that you are saving yourself for your retirement.

Bill says, “Thank God, I didn’t.” “Thank God” means he’s happy that he didn’t, although someday he may not be happy that he didn’t. Bill says, “But you know what? That still doesn’t account for all of the deductions.” “To account for” means to explain. So Bill is saying that he understands the income taxes and the (FICA) taxes, but that still doesn’t explain where some of the money has gone, why his paycheck is not as big as he thinks it should be.

Carol says, “Let me take a look. Oh, it looks like your wages are being garnished.” “Wages” (wages) is another word for money that you get every hour for working. Usually “wages” is a term we use for people who get paid by the hour: they get 12 dollars an hour, 20 dollars an hour, 25 dollars an hour. That’s wages; the more hours you work the more money you make. Another term related to that is “salary” (salary). A “salary” is when you get paid one amount, and it doesn’t matter how many hours you work. The better the job, the higher the income from the job, typically the more likely you will have a salary and not a wage. Wages are for when you get paid by the hour, and the more hours you work the more money you make. Salary is when you have one amount of money, regardless of how many hours you actually work. Carol says that Bill’s wages have been garnished. By the way, “wage” is a word with a couple of different meanings in English. Go back to the Learning Guide that you downloaded from our website and you can see some additional definitions.

So, Bill’s wages are being garnished. “To garnish” (garnish) means the company doesn’t give you all of your money. It holds some of the money usually because you owe someone else money, and legally they have to take some of that money and give it to someone else. Now why would they do that, you may be asking. Bill asks that as well; he says, “They’re garnishing my wages? What for?” meaning why, for what reason.

Carol says, “Uh, do you have to pay child support or something like that?” “Child support” is money that you have to pay the typically mother of the child, if you’re a man. It could be that the mother has to pay the father, it depends one who when a couple gets divorced or when they are no longer with each other, supporting each other economically, the person who isn’t raising the child primarily has to pay the other person money to pay for the expenses of the child. It could be a baby; it could be anyone up to the age of 18. That’s what child support is. If you don’t pay child support the other person, typically the wife, will go to the court – to the legal system – and they will demand that you pay that money, and they will tell the person you’re working for they have to take some of that money and give it to the person who is raising your child. That’s what child support is.

Bill says, “Oh, I guess I do,” meaning yes, I do have child support that I have to pay. He said, “I’d forgotten about that.” A strange thing to forget about! Bill says, “I guess I’d better change my weekend plans.” He was going to go out and spend money on drinking or having a party, but now he realizes he doesn’t have very much money so he has to change his plans. Carol agrees; she says, “I guess so.”

Now let’s listen to the dialogue, this time at a normal speed.

[start of dialogue]

Bill: It’s about time! I’ve been waiting for my first paycheck and now it’s finally here. I’m ready to party this weekend! Whoa!

Carol: What’s the matter?

Bill: What happened to all my money? The amount of this check is a lot less than I expected it to be.

Carol: Yeah, my first paycheck was an eye-opener for me, too. Look at the pay stub and you’ll see all of the deductions. After federal income taxes, state income taxes, and FICA, you’re not left with a lot of money.

Bill: You’re right, but what’s FICA?

Carol: Those are taxes for Social Security and Medicare. Did you sign up for a retirement plan? If you did, those retirement contributions are deducted, too.

Bill: Thank God, I didn’t. But you know what? That still doesn’t account for all of the deductions.

Carol: Let me take a look. Oh, it looks like your wages are being garnished.

Bill: They’re garnishing my wages? What for?

Carol: Uh, do you have to pay child support or something like that?

Bill: Oh, yeah, I guess I do. I’d forgotten about that. I guess I’d better change my weekend plans.

Carol: I guess so.

[end of dialogue]

Her scripts account for most of the success of ESL Podcast; that “her” is our own Dr. Lucy Tse.

From Los Angeles, California, I’m Jeff McQuillan. Thank you for listening. Come back and listen to us again here on ESL Podcast.

English as a Second Language Podcast is written and produced by Dr. Lucy Tse, hosted by Dr. Jeff McQuillan, copyright 2012 by the Center for Educational Development.

Glossary
It’s about time – an expression used when one is pleased that something has finally happened after waiting for it for a long time and believing that it should have happened long ago

* It’s about time we received a thank you email from Jameel! We gave him that gift more than two months ago.

paycheck – payment of the money one has earned by working, usually received twice a month or every week

* I won’t be able to pay you until I receive my paycheck on the 15th.

eye-opener – a surprising experience that teaches something new in an unexpected way

* Volunteering at the homeless shelter was an eye-opener.

pay stub – a document given to an employee that explains how the amount of his or her paycheck was calculated, showing how much money was deducted (subtracted) for different purposes

* Save your pay stubs so that at the end of the year, you can see how much money you’ve contributed to your retirement funds.

deduction – something that is subtracted from something else, especially money taken away from what one has earned through working

* Many charities allow you to contribute through an automatic deduction from your paycheck each month.

income tax – money collected by the government as a percentage of the amount of money each worker makes

* Do you think people who make a lot of money should pay higher income taxes than people who don’t make very much money?

FICA – Federal Insurance Contributions Act; the law that requires employers to hold part of the money their employees make for national benefit programs for retirement, disability, and healthcare

* The money taken out of your paycheck for FICA probably won’t be enough for a comfortable retirement, so it’s a good idea to save money for retirement in private accounts, too.




Social Security – a federal insurance program that gives money to Americans who have retired, lost their job, or become disabled

* When Harvey died in his 30s, his wife and two children began receiving his Social Security benefits each month.

Medicare – a federal health insurance program for older people and people who become disabled and cannot work

* Medicare pays for only part of Grandpa’s medical visits and prescriptions, and he has to pay for the rest of it with his own money.

retirement contribution – money taken out of one’s paycheck and put in a special account to save for retirement (the period of time toward the end of one’s life when one no longer works)

* The company matches 20% of its employees’ retirement contributions.

to account for – to explain; to offer a reason

* Janeen is upset about her cat’s death, but that doesn’t account for her angry behavior.

wages – money paid to an employee every day, week, or month, especially for unskilled labor paid by the hour

* Her wages barely cover rent and food. She needs to find a higher-paying job.

to garnish – to hold part of the amount of an employee’s paychecks so that the money can be used to meet some financial obligation that the employee has not paid freely in the past

* If you don’t start paying alimony to your ex-husband, the court might decide to garnish your wages.

child support – money paid to cover the cost of having someone else raise one’s child, such as food, housing, and tuition

* After the divorce, the kids went to live with their mother and their father had to pay $750 in child support each month.

Comprehension Questions
1. Why does Carol say her first paycheck was an eye-opener?
a) Because it taught her a lot.
b) Because she wasn’t able to sleep after she received it.
c) Because it made her want to cry.

2. Why does Bill have to pay child support?
a) Because he doesn’t live with his child(ren).
b) Because he contributes to nonprofit organizations that help children.
c) Because everyone has to support local schools.

Answers at bottom.

What Else Does It Mean?
stub

A “pay stub,” in this podcast, is a document given to an employee that explains how the amount of his or her paycheck was calculated, showing how much money was deducted (subtracted) for different purposes: “Ingrid smiled when she saw her raise reflected on her pay stub.” A “stub” is often the small piece remaining of a ticket or another piece of paper after it has been torn in two: “Keep your ticket stub, because you’ll need to show it to get back into the movie theater if you leave to go to the bathroom.” Or, “Ahmed keeps ticket stubs from all the concerts he has gone to.” Finally, a “stub” is the short part that is left of a long, thin object after the rest of it has been used: “How can you write with such a short pencil stub?”

wages

In this podcast, the word “wages” means money paid to an employee every day, week, or month, especially for unskilled labor paid by the hour: “Small businesses argue that they won’t be able to pay higher wages if the minimum wage is increased.” The phrase “a living wage” refers to money received for working that is enough to cover basic expenses like housing, food, and transportation: “Adam earns a living wage, but it isn’t enough for him to go on fancy vacations or eat at nice restaurants.” The phrase “a wage freeze” refers to an official decision for a business or government agency to not increase the amount paid to employees for a certain period of time: “The governor wants to implement a statewide wage freeze for the next two years.”

Culture Note
Voluntary Payroll Deductions

All employees are “subject to” (affected by) “mandatory” (not optional) payroll deductions for taxes and certain benefits, but some employees “opt for” (choose to have) voluntary deductions, too.

“Union” (an organization where the members all work in the same industry and negotiate for what they want and need) “dues” (money paid each month or year to be part of an organization) are a common voluntary deduction. The dues are used to pay the union leaders for their time spent negotiating with the management.

Employees can sign up for automatic payroll deductions to nonprofit organizations. For example, they might choose to have $10 or $25 deducted each month to support their “alma mater” (the school where one earned a degree) or organizations that help low-income families. Some companies “match” (contribute the same amount) a percentage of their employees’ charitable contributions. For example, if a company has a 20% match, the company will contribute $2 for each $10 the employee “donates” (gives to a nonprofit organization).

Some companies offer optional benefits to their employees, and if employees choose to sign up, they pay through a voluntary deduction. These can include “life insurance” (money paid to one’s family after one dies), “long-term disability” (money paid if one cannot work for a long period of time), and “long-term care” (money paid if one cannot live alone and needs a lot of medical assistance). In some states, employees can sign up for voluntary payroll deductions to contribute to a “college savings plan” (money saved to pay for a child’s future school or college/university costs).

Comprehension Answers
1 -a

2 - a