Comparing Job OffersComparing Job Offers

Financial LiteracyFinancial Literacy

What Should Sara Do?What Should Sara Do?

Sara has just graduated from college Sara has just graduated from college with a degree in teaching and has with a degree in teaching and has been offered a $35,000 job in Reno, been offered a $35,000 job in Reno, Nevada and a $40,000 job in Nevada and a $40,000 job in Anchorage, Alaska. Which should she Anchorage, Alaska. Which should she take?take?

A.A. $35,000 in Reno$35,000 in Reno

B.B. $40,000 in Anchorage$40,000 in Anchorage

C.C. Not enough information to decideNot enough information to decide

The correct answer is:The correct answer is:

CCThe scenario does not The scenario does not

provide information about provide information about the cost of living in either the cost of living in either

citycity

Base SalaryBase Salary

Base salary is the amount a person Base salary is the amount a person will receive in his/her annual salary will receive in his/her annual salary before taxesbefore taxes

Salary is based on:Salary is based on: LocationLocation EducationEducation Laws of supply and demandLaws of supply and demand

Fringe BenefitsFringe Benefits Additional compensation offered by a Additional compensation offered by a

company beyond the base wagecompany beyond the base wage May include:May include:

Paid sick timePaid sick time Holidays and vacationsHolidays and vacations BonusesBonuses Health and life insuranceHealth and life insurance Workman’s compensationWorkman’s compensation Retirement contributionsRetirement contributions

Opportunity for Advancement Opportunity for Advancement and other Work Incentivesand other Work Incentives

Can an employee easily advance Can an employee easily advance within the company and earn more within the company and earn more money?money? Raises based on performanceRaises based on performance BonusesBonuses

Employer Provided ServicesEmployer Provided Services

Additional services providedAdditional services provided May include:May include:

Gym membershipGym membership Flexible hoursFlexible hours Merchandise discountsMerchandise discounts Child careChild care

Additional PerksAdditional Perks

Relocation allowanceRelocation allowance Company carCompany car Repayment of education loansRepayment of education loans Stock optionsStock options

Location and EnvironmentLocation and Environment

Is the job in a good location?Is the job in a good location? Commute timeCommute time Affordable housingAffordable housing Low crime rateLow crime rate Good schoolGood school Desired climateDesired climate

How Might Wants and Needs How Might Wants and Needs Influence a Decision?Influence a Decision?

A mother may value having child care A mother may value having child care facilities instead of relocation optionsfacilities instead of relocation options

A single person may value having a gym A single person may value having a gym membership instead of merchandise membership instead of merchandise

discountsdiscounts

Cost of LivingCost of Living

Cost of living includes:Cost of living includes: HousingHousing FoodFood TransportationTransportation Other everyday expensesOther everyday expenses

Cost of living may be lower in rural Cost of living may be lower in rural rather than urban communitiesrather than urban communities

Cost of LivingCost of Living

Cost of living is reported in index Cost of living is reported in index form on a scale with 100.00 being form on a scale with 100.00 being the average cost of livingthe average cost of living A lower number means a lower cost of A lower number means a lower cost of

livingliving A higher number means a higher cost of A higher number means a higher cost of

livingliving

Sarah’s Two Job OffersSarah’s Two Job Offers

$35,000 in Reno X

123.1

105.1= $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)

$40,000 offer in

Anchorage

Joe’s Two Job OffersJoe’s Two Job Offers

$24,000 in Denver X

148.2

102.9= $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)

$32,000 offer in Seattle

Sarah’s Two Job Offers Plus Sarah’s Two Job Offers Plus BenefitsBenefits

$35,000 + 4,800 in benefits in Reno

123.1

105.1= $46,616 (equivalent salary in Anchorage)

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)

(39,800)

X

$45,200 offer in Anchorage

Joe’s Two Job Offers Plus Joe’s Two Job Offers Plus BenefitsBenefits

$24,000 + 4,500 in benefits in Denver

148.2

102.9= $41,047 (equivalent salary in Seattle)

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)

(28,500)

X

$38,000 offer in Seattle