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US Dollar Based Overview
Comparing U.S. income to a one-year English teaching contract in Korea involves a bit of Apples vs. Oranges. In Korea your taxes will be lower, you will have no rent, and you will effectively be paid 14 months for working 12. You will be paid in Korean Won (KRW), but it is a simple and convenient to convert your won to dollars, and transfer money to the States as desired. Go to www.xe.com for current exchange rates. Historically the average exchange rate has been between 900-1000 won per dollar.
The following calculations assume an exchange rate of 1200 won /1 US Dollar.
At present, ESL base monthly salaries in Korea are largely in the range of 2,100,000 to 2,800,000 KRW/month ($1,750 to $2,334 USD) plus private apartment, though these numbers require some elaboration to arrive at a comparable US salary.
Overview
At a common offer of 2,300,000 KRW/month ($1,917 USD/month), a rough estimation of compensation in U.S. terms would be:
| ● Comparable total US compensation: |
$37,166 |
| ● Disposable Income: |
$1400+/month |
| ● End of Contract Payments: |
$4780 |
| ● What can be saved (per year): |
$10,000 or more |
Breaking it Down
Here are the details for a 2,300,000 KRW/month ($1,917 USD/month) base pay contract.
| ● Base Income: |
2.3M KRW/month |
| ● Housing: |
500,000+ KRW/month, nominal value (in form of actual housing) |
| ● Severance: |
2.3M at end of contract (1 month of base salary) |
| ● Pension: |
2.48M at end of contract (1.08 month of base salary) |
This results in a total contract value of 38,380,000 KRW, which is about $31,984/year in compensation, or $2665/month, not considering taxes. However, tax savings are an important factor, as we will see shortly.
In Korea your income taxes will be low, and these tax advantages greatly improve your relative income as compared to a similar U.S. salary.
Additionally, there are many other savings from living in Korea. For example, public transportation is extensive and cheap; there is no need to have a car, and the expenses of insurance and gas.
Adjusting Base Salary for Tax Advantages
In Korea you would be taxed less than 9% on your base income (income and pension deductions). These taxes would total about 3.19M KRW ($2,654) for all taxes for the year.
By comparison, on an income in America of $31,984 (for a single person, no dependents), there would be Federal taxes of about $4100, State taxes that would average about $1500, and Social Security of about $2400. Indeed, in most States, there will generally be other taxes taken directly from the paycheck, such as unemployment insurance, but we'll ignore those.
| ● U.S. Taxes: |
$7836 (24.95% total taxes) |
| ● Korean Taxes: |
$2654 (8.3% total taxes) |
| ● US-Korea tax savings: |
$5182/year, or about $432/month. |
Adjusting Salary to Account for Tax savings:
All compensation ($31,984) + Tax Savings ($5182) = $37,166
Conclusion
With all compensation and tax savings factored in, a 1 year teaching contract in Korea at 2.3m KRW/month can reasonably be compared to a job in the USA at $3098/month, or $37,166/year. As the exchange rate is higher than it has historically been the comparable salary will become higher as the won becomes stronger. At the historical average of 950 won/ USD the comparable salary will be $40,400/year or $3,366/month.
For positions and applicants above the 2.3M KRW/month level, these numbers of course become correspondingly higher.
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