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Comparing Job Offers

Sara, a recent college graduate with a teaching degree, faces two job offers: $35,000 in Reno, Nevada, and $40,000 in Anchorage, Alaska. Determining which offer to accept requires evaluating the cost of living, salary equivalence, fringe benefits, and personal preferences. Without information on living expenses in each location, it's challenging to make an informed decision. This scenario highlights the importance of financial literacy in comparing job offers and understanding how location and benefits impact overall compensation.

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Comparing Job Offers

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Presentation Transcript

  1. Comparing Job Offers Financial Literacy

  2. What Should Sara Do? • Sara has just graduated from college with a degree in teaching and has been offered a $35,000 job in Reno, Nevada and a $40,000 job in Anchorage, Alaska. Which should she take? • $35,000 in Reno • $40,000 in Anchorage • Not enough information to decide

  3. The correct answer is: C The scenario does not provide information about the cost of living in either city

  4. Base Salary • Base salary is the amount a person will receive in his/her annual salary before taxes • Salary is based on: • Location • Education • Laws of supply and demand

  5. Fringe Benefits • Additional compensation offered by a company beyond the base wage • May include: • Paid sick time • Holidays and vacations • Bonuses • Health and life insurance • Workman’s compensation • Retirement contributions

  6. Opportunity for Advancement and other Work Incentives • Can an employee easily advance within the company and earn more money? • Raises based on performance • Bonuses

  7. Employer Provided Services • Additional services provided • May include: • Gym membership • Flexible hours • Merchandise discounts • Child care

  8. Additional Perks • Relocation allowance • Company car • Repayment of education loans • Stock options

  9. Location and Environment • Is the job in a good location? • Commute time • Affordable housing • Low crime rate • Good school • Desired climate

  10. How Might Wants and Needs Influence a Decision? A mother may value having child care facilities instead of relocation options A single person may value having a gym membership instead of merchandise discounts

  11. Cost of Living • Cost of living includes: • Housing • Food • Transportation • Other everyday expenses • Cost of living may be lower in rural rather than urban communities

  12. Cost of Living • Cost of living is reported in index form on a scale with 100.00 being the average cost of living • A lower number means a lower cost of living • A higher number means a higher cost of living

  13. Sarah’s Two Job Offers $40,000 offer in Anchorage 123.1 105.1 $35,000 in Reno X = $40,994 (equivalent salary in Anchorage) This means a person earning $35,000 in Reno must earn $40,950 in Anchorage to have the same spending power. Therefore, the salary offer is Reno is better by $994 ($40,994-$40,000)

  14. Joe’s Two Job Offers $32,000 offer in Seattle 148.2 102.9 $24,000 in Denver X = $34,565 (equivalent salary in Seattle) This means a person earning $24,000 in Denver must earn $34,565 in Seattle to have the same spending power. Therefore, the salary offer is Denver is better by $2,565 ($34,565-32,000)

  15. Sarah’s Two Job Offers Plus Benefits $45,200 offer in Anchorage 123.1 105.1 $35,000 + 4,800 in benefits in Reno X = $46,616 (equivalent salary in Anchorage) (39,800) This means a person earning $39,800 in Reno must earn $46,616 in Anchorage to have the same spending power. Therefore, the salary offer is Reno is better by $1,416 ($46,616-45,200)

  16. Joe’s Two Job Offers Plus Benefits $38,000 offer in Seattle 148.2 102.9 $24,000 + 4,500 in benefits in Denver X = $41,047 (equivalent salary in Seattle) (28,500) This means a person earning $28,500 in Denver must earn $41,047 in Seattle to have the same spending power. Therefore, the salary offer is Denver is better by $3,047 ($41,047-38,000)

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