Nobody will ever confuse journalists for mathematicians, but I would like to share a lesson I learned long ago. Possibly eighth grade. Maybe ninth.
You can’t add percentages.
I bring this up because I’ve read numerous times — like here and here and here — about the 15 percent raise in Boeing’s contract offer to the Machinists union. Only one problem: That’s wrong. The raise is closer to 16 percent.
Here’s how the math works. If a Machinist is making $50,000 a year, he’ll get a 5 percent raise in the first year of the contract to increase his annual pay to $52,500. The Machinist will get 3 percent raises in the second and third years to increase his pay to $54,075 and then $55,697.25. A 4 percent raise in the fourth year will boost it to $57,925.14. That’s a raise of 15.85 percent (57,925.14/50,000=1.1585028).
If it were a 15 percent raise, that same Machinist would be making $57,500. Not a big difference, but I think I’d rather have the extra $425.14 (before taxes, of course) at the end of the year.