I received an email last week that gave me a bit of a scare! The subject line included my name and “Pay Decrease.” When I opened the email, the attachment was titled “DECREASE IN PAY ACKNOWLEDGEMENT.” I kind of freaked out until I read the body of the email, but even after that reassurance I was pissed at the manner they let me know about this change! Even my advisor agreed that it was “unfortunately worded.”
Once I was able to process the email, I realized that they aren’t actually going to pay me less, they will just be paying me differently. (The Office, anyone? “It is not a matter of more or less – your pay is just different.”) I followed up with a reply email and it confirmed that I’m still going to be paid the standard department rate that I am now and I will get my yearly COL increase next month as usual.
I’m glad I’ve already done all this research on the differences between compensatory (W-2) and non-compensatory (1099-MISC box 3) pay. I know that in my case it doesn’t really make a difference, although it might for someone else. My advisor told me that it’s helping his funding situation at this point to switch me from one of his grants to some sort of fellowship.
1) I still have to pay income tax even though I’ll receive a 1099-MISC (or no forms whatsoever) at year-end instead of a W-2.
2) I haven’t been paying payroll taxes and I will continue to not pay payroll taxes.
3) I now cannot contribute to my Roth IRA from this portion of my income. Fellowship/1099-MISC box 3 income is not considered “earned income.” I hope this won’t turn out to matter much practically, though. I’ve already received $5,500 of earned income in 2013 so I’m solid on this year’s contribution. Even if this funding situation persisted for all of 2014 (and I hope I’ll graduate at some point during the year so it won’t), Kyle will be able to contribute to a spousal IRA for me – assuming he continues to have earned income. If I weren’t married and I were paid this way for a whole calendar year, I would be stuck not being to contribute to my Roth IRA, which would suck.
This is a perfect example of why I think the designations about what is earned and what is not earned income for grad students is, excuse my French, bullshit. (Watch out, I’m going to get worked up again like I did in the first earned income post!) While I think that most grad students work from the moment they step foot on campus, I can sort of kind of understand arguing that students taking classes, as is common in the first and second year (also when students are on training grants and not designated as earning income), means that they earning their keep less so than later on.
But me? I’m transitioning from my fifth year to my sixth year. I haven’t taken a class in years – I’ve been doing research full-time for several years. My job performance will not be one iota different from the last day of August to the first day of September so it is crazy to say that on the day before I was working and the day after I will be receiving a gift. Can I really have a “work requirement” one day that disappears the next?
Can you find my situation in this flow chart? How about this table? I’ve been thinking about this issue for years and I still haven’t found any logic behind the distinctions the university manages to draw between one PhD student and another. I think the point that sticks in my craw that the people who draw these charts seem to think that faculty members don’t need their fellowship/non-compensatory students – that the work the students do “does not provide a benefit to the faculty member.” Papers aren’t a benefit? Data and writing for grants aren’t a benefit? Adding to your list of mentored and graduated students isn’t a benefit? This is insane!
OK, off my soapbox now. Like I said, I’ll be paid the same amount and there are no immediate practical implications. The only way I will be hurt by this change is if Kyle also goes non-comp and we don’t have any earned income in 2014.
This is the entirety of the pay decrease attachment, BTW – it’s so ridiculous. I can’t believe how big they made the font.
Why do they need me to sign off on this, anyway? What exactly would happen if I failed to acknowledge that they are not paying me this way any longer?
Have you ever received an email regarding employment or pay that gave you a shock? Have you even been switch from W-2 to 1099-MISC payment? Can you parse the compensatory/non-compensatory divide?