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Compare Job Offers: Take Charge of Your Finances

Learn to analyze job offers based on cost of living and benefits to make informed decisions. Examples and equations provided.

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Compare Job Offers: Take Charge of Your Finances

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

  2. 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. • 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.

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

  4. 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?

  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. • 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. 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

  7. 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.

  8. Sara’s Job Offers • Job Offer 1 – Reno, NV (or City 1) • $35,000.00 salary • 105.1 cost of living index • Job Offer 2 – Anchorage, AK (Or City 2) • $40,000.00 salary • 123.1 cost of living index

  9. Sara’s Cost of Living Equations $35,000 × 123.1 = Equivalent Salary in Anchorage 105.1 $35,000 x 1.17 = $40,994.29 in Anchorage How much was she offered, when comparing the $40,994.29 needed to live in Anchorage. If less she chooses Reno If more she chooses Anchorage.

  10. 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.

  11. 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

  12. 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

  13. Joe’s Cost of Living Equations • 24,000 × 148.2 = $34, 565.60 102.9

  14. 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. • Was Joe offered more or less than $35,565.60 ? • Which job offer would give him more spending power?

  15. 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.

  16. Cost of Living Index of City 2 Salary in city 1 x = Equivalent Salary in city 2 Cost of Living Index of City 1 Sara’s Job including benefit package • Round dollar amounts to two decimal places

  17. 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

  18. Sara’s Job including benefit package $39,800 × 123.1 = Equivalent Salary in Anchorage 105.1

  19. Sara’s Job Outcome including benefit package • A person earning $39,800.00 in Reno must earn $46,616.64 in Anchorage to have the same spending power.

  20. 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

  21. 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

  22. 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.

  23. 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 • www.accra.org • $12.95 fee

  24. Questions?

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