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Comparing Job Offers 1.1.3

Comparing Job Offers 1.1.3. Take Charge of Your Finances Family Economics and Financial Education. Congratulations!. Sara just graduated from college with a teaching degree and received two job offers. Which is the best deal?. Which is the better deal?. Job Offer 1 $35,000.00 in Reno, NV

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Comparing Job Offers 1.1.3

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  1. Comparing Job Offers 1.1.3 Take Charge of Your Finances Family Economics and Financial Education

  2. Congratulations! • Sara just graduated from college with a teaching degree and received two job offers. Which is the best deal?

  3. Which is the better deal? • Job Offer 1 • $35,000.00 in Reno, NV • Job Offer 2 • $40,000.00 in Anchorage, AK • Not enough information to decide Which option is best?

  4. Comparing Job Offers Values, Goals, Needs, and Wants Questions that you should ask – you are interviewing the company just as they are interviewing you: Additional perks Relocation allowances Company car Repayment of education loans Help further education Stock options Gym membership Flexible hours Merchandise discounts Child care Telecommuting Base Salary Dollar amount a person will receive in his/her monthly paycheck before taxes. Based upon supply and demand. **Does it pay enough? **Cost of Living • Fringe Benefits • Paid sick time • Holidays and vacation time • Bonuses • Health and life insurance • Workman’s compensation • Retirement contributions • Opportunity for Advancement & Other Work Incentives • Raised based on performance • Guaranteed pay raise based on longevity • Furthering Education pay or position advancements • Location and Environment • Working conditions • Commute time • Affordable housing • Low crime rate • Good schools • Desired climate

  5. Cost of Living • Cost of living – includes housing, food, transportation, and other everyday expenses. • Rural communities often have a lower cost of living than urban communities. • A person making $50,000 in Salt Lake City may have just as much buying power as a person making $100,000 in another city. • Index form – rates communities on a scale of 100.0 and gives an average cost community a rating of 100.0. • A lower index means a lower cost of living. • A higher index means a higher cost of living.

  6. YOUR JOB OFFER • You have been offered a job with a reputable nation-wide company in your field. • Pay $55,000 a year • $4,600 a month (avg national entry level salary) • Choose any of their 8 locations to move to and work from. • Visit 3 states around the room. • Choose 3 states you would consider • Make note of expenses in relation to your salary • Remember: $4,600 also needs to cover expenses like insurance, car payments, taxes, groceries, gas,….

  7. Cost of Living Index of City 2 Salary in city 1 x = Equivalent Salary in city 2 Cost of Living Index of City 1 Cost of Living Equation • Round dollar amounts to two decimal places

  8. Cost of Living Equation • In order to compare the cost of living in two cities always follow these three steps: • Step 1: Assign each cities numbers. One city will be assigned the number one and the other the number two. • Step 2: Provide the corresponding salaries and index amounts. • Step 3: Complete the math and indicate which city is a better offer and why.

  9. Sara’s Job Offers • Job Offer 1 – Reno, NV • $35,000.00 salary • 105.1 cost of living index • Job Offer 2 – Anchorage, AK • $40,000.00 salary • 123.1 cost of living index

  10. Sara’s Cost of Living Equations 123.1 $35,000.00 in Reno x = Equivalent Salary in Anchorage 105.1 Option 1 or Option 2 105.1 $40,000.00 in Anchorage x = Equivalent Salary in Reno 123.1

  11. Sara’s Cost of Living Equations $35,000.00 x 1.1712654 = $40,994.29 = Equivalent salary in Anchorage Option 1 or Option 2 $40,000.00 x .8537774 = $34,151.35 = Equivalent salary in Reno

  12. Sara’s Job Outcome • A person earning $35,000.00 in Reno must earn $40,994.29 in Anchorage to have the same spending power. • Or • A person earning $40,000.00 in Anchorage must earn $34,151.35 in Reno to have the same spending power. • Therefore, the salary offer in Reno is better by $994.29 ($40,994.29 - $40,000.00). • Explain why moving to a place where your salary doubles may not really double your buying power.

  13. Joe’s Offers • Job Offer 1- Denver, CO • $24,000.00 salary • 102.9 cost of living index • Job Offer 2 - Seattle, WA • $32,000.00 salary • 148.2 cost of living index

  14. Joe’s Cost of Living Equations 148.2 $24,000.00 in Denver x = Equivalent salary in Seattle 102.9 Option 1 or Option 2 102.9 $32,000.00 in Seattle x = Equivalent salary in Denver 148.2

  15. Option 1 or Option 2 Joe’s Cost of Living Equations $24,000.00 x 1.4402332 = $34,565.60 = Equivalent salary in Seattle $32,000.00 x .6943319 = $22,218.62 = Equivalent salary in Denver

  16. Joe’s Job Outcome • A person earning $24,000.00 in Denver must earn $34,565.60 in Seattle to have the same spending power. • Or • A person earning $32,000.00 in Seattle must earn $22,218.62 in Denver to have the same spending power. • Therefore, the salary offer in Denver is better by $2,565.60 ($34,565.60 - $32,000.00).

  17. 2. Benefits of school? Benefits Job offer?

  18. Typical Employee Benefits • Hospitalization, Medical, and Disability Insurance • Dental and Vision Insurance • Accidental Death Insurance • Sick Leave • Paid Vacation Time and Holidays • Parental Leave More 7-K-1

  19. 2 of 2 Typical Employee Benefits • Worker’s Compensation Insurance • Life Insurance • Retirement Benefits • Retirement Savings Plans • Employee Assistance Programs 7-K-2

  20. EMPLOYEE BENEFITS • Employee benefits pay almost 1/3 (33%) of full-time employee compensation. • Furthermore, many employee benefits are non-taxable so your taxes are reduced.

  21. HEALTH INSURANCE Pays for doctors, prescriptions, hospitals, exams, and dental work.

  22. DISABILITY INSURANCE Replaces some of your income if you are unable to work for extended periods of time due to accident or illness. It pays the money directly to YOU.

  23. LIFE INSURANCE Pays others who depend on your income if you die.

  24. RETIREMENT BENEFITS Helps you save for retirement. Employers often contribute additional money for your retirement when you contribute. It is free money!

  25. EDUCATION BENEFITS Help pay education costs while you work.

  26. COMMON EMPLOYEE BENEFITS The most common employee benefits offered by small business to full-time staff with at least 1 year of service are:

  27. COMMON EMPLOYEE BENEFITS • Paid Vacations: Offered by 75% of small businesses. • Employee Health Insurance Plan: 61% • Paid Sick Leave: 59% • Disability Insurance: 41% • Education Reimbursement for Job: 39% • Pension Plan: 30% • Life Insurance: 29% • Dental Insurance: 24%

  28. WHY GIVE BENEFITS? • Offering employee benefits provides many paybacks to your small business. • Number one is staff retention. • An attractive employee benefit package will help recruit good employees and retain them as well. • In addition, staff retention helps reduce turnover.

  29. EIGHT UNCOMMON EMPLOYEE BENEFITS

  30. DIRECT DEPOSIT Provide your staff with the option of having their checks directly deposited into their bank account at any bank or credit union. This makes saving automatic.

  31. WELLNESS PROGRAM With the rising costs of health care, both employers and employees can take responsibility for the health system by participating in a wellness plan. Any form of fitness programs, smoking cessation, and stress reduction can improve employee absenteeism and overall productivity.

  32. COMPANY DISCOUNTS An overlooked employee benefit to staff is the chance to buy company products or services at discount. Even if it’s only one major item or an employee purchase day, your staff will appreciate this benefit.

  33. PARKING PRIVILEGES Depending on employee commuting needs, parking privileges can cover payment of a monthly city transit pass or paying an amount of pre-tax payroll dollars for vehicle parking.

  34. BUSINESS CARDS & TITLE Business cards with an employees name and title will offer an emotional appeal to staff. It may seem trivial, but your staff will enjoy the level of professionalism and pride that comes from having a business card.

  35. COMPUTER LOAN INTEREST FREE Many employees will value the ability to buy a computer interest-free. Determine a limit of the dollar value of the computer on the plan. Set up an automatic payroll deduction. Make sure a formal agreement is signed in case the employee leaves the company.

  36. COMMUNITY HOURS Offer your employees a limit of regular pay hours in community service time. If a staff member wants to be involved in a volunteer event, have the company pick up the tab. You will win the hearts of staff and community.

  37. EDUCATION PLAN There is no doubt today’s work force requires lifelong learning to keep pace with the changing demand of employment. Your small company may not be able to pay the tuition costs of an MBA program, but some community college course reimbursement is affordable.

  38. Comparing Job offer and considering benefits Fringe benefits and employer provided services can make a difference: • For example, if a $35,000.00 job had 100% of medical insurance coverage valuing $400.00 per month, a person would not have to budget for $4,800.00 in medical insurance per year. This would increase the value of his or her salary to $39,800.00. • Benefits and services should be included within the salary before calculating the cost of living.

  39. Sara’s Job including benefit package • Job Offer 1 – Reno, NV • $35,000.00 salary + $4,800.00 benefits = $39,800.00 • 105.1 cost of living index • Job Offer 2 – Anchorage, AK • $40,000.00 salary + $5,200.00 benefits = $45,200.00 • 123.1 cost of living index

  40. Option 1 or Option 2 Sara’s Job including benefit package 123.1 $39,800.00 in Reno x = Equivalent salary in Anchorage 105.1 105.1 $45,200.00 in Anchorage x = Equivalent salary in Reno 123.1

  41. Option 1 or Option 2 Sara’s Job including benefit package $39,800.00 x 1.1712654 = $46,616.36 = Equivalent salary in Anchorage $45,200.00 x .8537774 = $38,590.74 = Equivalent salary in Reno

  42. Sara’s Job Outcome including benefit package • A person earning $39,800.00 in Reno must earn $46,566.00 in Anchorage to have the same spending power. • -Or • A person earning $45,200.00 in Anchorage must earn $38,590.74 in Reno to have the same spending power. • Therefore, with the benefits package included, the job offer in Reno is higher.

  43. Joe’s Job including benefit package • Job offer 1 - Denver, CO • $24,000.00 salary + $4,500.00 benefits =$28,500.00 • 102.9 cost of living index • Job offer 2 - Seattle, WA • $32,000.00 salary +$6,000.00 benefits = $38,000.00 • 148.2 cost of living index

  44. Option 1 or Option 2 Joe’s Job including benefit package 148.2 $28,500.00 in Denver x = Equivalent salary in Seattle 102.9 102.9 $38,000.00 in Seattle x = Equivalent salary in Denver 148.2

  45. Option 1 or Option 2 Joe’s Job including benefit package $28,500.00 x 1.4402332 = $41,046.65 = Equivalent salary in Seattle $38,000.00 x .6943319 = $26,384.61 = Equivalent salary in Denver

  46. Joe’s Job Outcome including benefit package • A person earning $28,500.00 in Denver must earn $41,046.65 in Seattle to have the same spending power. • Or • A person earning $38,000.00 in Seattle must earn $26,384.61 in Denver to have the same spending power. • Therefore, with the benefits package included, the job offer in Denver is higher.

  47. Back to your job offer • Which job location will provide the best of cost of living? • Complete the crossword puzzle.

  48. Additional Web sites • Web sites available to help calculate salaries and cost of living in various locations • www.homefair.com • www.bankrate.com/brm/movecalc.asp

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