Comparing Job Offers

Take Charge of Your Finances

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Supply and Demand

• The availability of jobs and the rate of pay is dependent upon the economic concept of supply and demand. – Supply – the relationship of prices to

the quantities of a good or service that sellers are willing to sell at any given point in time. In other words, how many people possess the knowledge and skills for a particular field.

– Demand – the relationship between prices and the corresponding quantities of a good or service individuals are willing to purchase at any given point in time. In other words, how needed is this particular field.

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Congratulations!

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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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A. Job Offer 1– $35,000.00 in Reno, NV

B. Job Offer 2– $40,000.00 in Anchorage, AK

C. Not enough information to decide

Which option is best?

Which is the better deal?

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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.

• 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.

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Comparing Job Offers

Base SalaryDollar amount a person will receive in his/her monthly paycheck before taxes. Based upon supply and demand

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

Additional perks• Relocation

allowances • Company car • Repayment of

education loans

• Stock options• Gym

membership • Flexible hours • Merchandise

discounts • Child care• Telecommutin

g

Location and Environment• Commut

e time • Affordabl

e housing

• Low crime rate

• Good schools

• Desired climate

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Cost of Living Equation

• Round dollar amounts to two decimal places

Salary in city 1 x

Cost of Living Index of City 2 Cost of Living Index of City 1

= Equivalent Salary in city 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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.

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Sara’s Cost of Living Equations

$35,000.00 in Reno x

123.1105.1

= Equivalent Salary in Anchorage

$40,000.00 in Anchorage x

105.1123.1

= Equivalent Salary in Reno

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Sara’s Cost of Living Equations

$35,000.00 x 1.1712654 =$40,994.29 = Equivalent salary in Anchorage

$40,000.00 x .8537774 =$34,151.35 = Equivalent salary in Reno

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Sara’s Job Outcome

• A person earning $35,000.00 in Reno would earn $40,994.29 in Anchorage to have the same spending power.

– Or • A person earning $40,000.00 in Anchorage

would earn $34,151.35 in Reno to have the same spending power.

• Therefore, the salary offer in Reno is better

Job Offer 1$ 35,000.00 in Reno, NV

Job Offer 2$40,000.00 in Anchorage, AK

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1.1.3.G1

Cost of Living Equation

• Round dollar amounts to two decimal places

Salary in city 1 x

Cost of Living Index of City 2 Cost of Living Index of City 1

= Equivalent Salary in city 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Joe’s Cost of Living Equations

$24,000.00 in Denver x

148.2102.9

= Equivalent salary in Seattle

$32,000.00 in Seattle x

102.9148.2

= Equivalent salary in Denver

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

Job Offer 1$24,000.00 in Denver, CO

Job Offer 2$32,000.00 in Seattle, WA

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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.

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Sara’s Job including benefit package

• Round dollar amounts to two decimal places

Salary in city 1 x

Cost of Living Index of City 2 Cost of Living Index of City 1

= Equivalent Salary in city 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Sara’s Job including benefit package

$39,800.00 in Reno x

123.1

105.1= Equivalent salary in Anchorage

$45,200.00 in Anchorage x

105.1123.1

= Equivalent salary in Reno

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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.

Job Offer 1 $39,800.00 (with benefits) in Reno, NV

Job Offer 2 $45,200.00 (with benefits) in Anchorage, AK

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Cost of Living Equation

• Round dollar amounts to two decimal places

Salary in city 1 x

Cost of Living Index of City 2 Cost of Living Index of City 1

= Equivalent Salary in city 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Joe’s Job including benefit package

$28,500.00 in Denver x

148.2102.9

= Equivalent salary in Seattle

$38,000.00 in Seattle x

102.9148.2

= Equivalent salary in Denver

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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

Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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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.

Job Offer 1 $28,500.00(with benefits) in Denver, CO

Job Offer 2 $38,000.00(with benefits) in Seattle, WA

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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Additional Web sites

• Web sites available to help calculate salaries and cost of living in various locations–

www.payscale.com/cost-of-living-calculator

–www.bankrate.com/brm/movecalc.asp

–www.homefair.com (compares both where you live and where you work)

Questions?