Comparing Job Offers 1.1.3
Take Charge of Your Finances
Family Economics and Financial Education
1.1.3.G1
Oh . . . The Places You’ll Go!
Dr. Seuss [6:53]
© 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
1.1.3.G1
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.
Supply and Demand [2:22]
© 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
1.1.3.G1
The four basic laws of supply and demand are:[1]
• If demand increases and supply remains unchanged, then
it leads to higher equilibrium price and quantity
• If demand decreases and supply remains unchanged, then
it leads to lower equilibrium price and quantity
• If supply increases and demand remains unchanged, then
it leads to lower equilibrium price and higher quantity
• If supply decreases and demand remains unchanged, then
it leads to higher price and lower quantity
We got it 4 cheap [2:45]
© 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
1.1.3.G1
Supply & demand curve
P - price
Q - quantity of good
S - supply
D - demand
© 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
1.1.3.G1
The price P of a product is determined by a
balance between production at each price
(supply S) and the desires of those with
purchasing power at each price (demand D)
The diagram shows a positive shift in
demand from D1 to D2, resulting in an
increase in price (P) and quantity sold (Q) of
the product
© 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
1.1.3.G1
Equilibrium point
P - price
Q - quantity of good
S - supply
D - demand
P0 - price of market
balance
A - surplus of demand
- when P<P0
B - surplus of supply
- when P>P0
© 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
1.1.3.G1
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 8
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
Which is the better deal?
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?
© 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
1.1.3.G1
Cost-of-living index
A cost-of-living index is a theoretical price
index that measures relative cost of living
over time or regions
It is an index that measures differences in the
price of goods and services, and allows for
substitutions to other items as prices vary
Census.Gov – 2010 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
1.1.3.G1
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 11
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
Comparing Job Offers
Base Salary
•Dollar
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 & 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
•Telecommuting
Location and
Environment
•Commute time
•Affordable
housing
•Low crime rate
•Good schools
•Desired climate
© 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
1.1.3.G1
Cost of Living Equation
Salary in city 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
= Equivalent Salary in city 2
[or]
Salary in city 2 x
Cost of Living Index of City 1
Cost of Living Index of City 2
= Equivalent Salary in city 1
[Round dollar amounts to two decimal places]
© 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
1.1.3.G1
Cost of Living Equation
In order to compare the cost of living in two
cities always follow these three steps:
Step 1: Assign each city a number
One city will be assigned the number one and
the other the number two
(it doesn’t matter which is which)
Step 2: Provide the corresponding salaries and index
amounts (create the formula)
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 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
Sara’s Job Offers
Job Offer 1
– Reno, NV
Materials Needed:
FEFE 1.1.3.A2 worksheet
Cost of Living Equation Practice
– $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 15
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
Sara’s Cost of Living
Equations (Version 1)
Job Offer 1 (City 1)
Job Offer 2 (City 2)
– Reno, NV
$35,000.00 salary
105.1 Cost of Living Index
– Anchorage, AK
$40,000.00 salary
123.1 Cost of Living Index
Salary in City 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
$35,000.00 in Reno x
123.1
105.1
= Equivalent Salary in city 2
[Round dollar amounts to two decimal places]
= Equivalent Salary in Anchorage
[Reno] $35,000.00 x 1.1712654 = $40,994.29
(Equivalent salary in Anchorage)
© 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
1.1.3.G1
Sara’s Job Outcome
Job Offer 1
Job Offer 2 (Equivalent)
$35,000.00 in Reno, NV
$40,994.29 in Anchorage, AK
A person earning $35,000.00 in Reno must earn $40,994.29 in Anchorage to
have the same spending power
• Job offer is $40,000.00 in Anchorage
• Equivalent salary needed is $49,994.29
• The offer is under spending power by -$994.29
© 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
1.1.3.G1
Sara’s Cost of Living
Equations (version 2)
Job Offer 1 (City 2)
Job Offer 2 (City 1)
– Reno, NV
$35,000.00 salary
105.1 Cost of Living Index
– Anchorage, AK
$40,000.00 salary
123.1 Cost of Living Index
Salary in City 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
$40,000.00 in Anchorage x
105.1
123.1
= Equivalent Salary in City 2
[Round dollar amounts to two decimal places]
= Equivalent Salary in Reno
[Anchorage] $40,000.00 x .8537774 = $34,151.35 (Equivalent Salary in Reno)
© 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
1.1.3.G1
Sara’s Job Outcome
Job Offer 1 [Equivalent]
Job Offer 2
$34,151.35 in Reno, NV
$40,000.00 in Anchorage, AK
A person earning $40,000.00 in Anchorage must earn $34,151.35 in Reno to
have the same spending power
• Job offer is $35,000.00 in Reno
• Equivalent salary needed is $34,151.35
• Offer over spending power by +848.65
© 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
1.1.3.G1
Sara’s Job Outcome
summary
Job Offer 1
Job Offer 2 [Equivalent]
$35,000.00 in Reno, NV
$40,994.29 in Anchorage, AK
A person earning $35,000.00 in Reno must earn $40,994.29 in Anchorage to
have the same spending power
• Job offer is $40,000.00 in Anchorage
• Offer under spending power by -$994.29
Job Offer 1 [Equivalent]
$34,151.35 in Reno, NV
AND
Job Offer 2
$40,000.00 in Anchorage, AK
A person earning $40,000.00 in Anchorage must earn $34,151.35 in Reno to
have the same spending power
• Job offer is $35,000.00 in Reno
• Offer over spending power by +848.65
© 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
1.1.3.G1
SUMMARY
• Reno:
$35,000 (job offer) - $34,151.35 (spending power) = $848.65
[Equivalent job offer needed] [offer over by]
• Anchorage:
$40,994.29 (spending power) - $40,000.00 (job offer) = - $994.29
[Equivalent job offer needed]
[offer under by]
Therefore, the salary offer in Reno is better by $994.29
(The difference in Anchorage’s salary offer and equivalent needed)
© 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
1.1.3.G1
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 22
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
Salary in city 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
= Equivalent Salary in city 2
[Round dollar amounts to two decimal places]
© 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
1.1.3.G1
Joe’s Cost of Living
Equations
$24,000.00 in Denver x
148.2
102.9
= Equivalent salary in Seattle
Option 1 or Option 2
$32,000.00 in Seattle x
102.9
148.2
= Equivalent salary in Denver
© 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
1.1.3.G1
Joe’s Cost of Living
Equations
$24,000.00 x 1.4402332 =
$34,565.60 = Equivalent salary in Seattle
Option 1 or Option 2
$32,000.00 x .6943319 =
$22,218.62 = Equivalent salary in Denver
© 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
1.1.3.G1
Joe’s Job Outcome
Job Offer 1
Job Offer 2
$24,000.00 in Denver, CO
$32,000.00 in Seattle, WA
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
(The difference in Seattle’s offer vs. equivalent needed)
($34,565.60 - $32,000.00)
© 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
1.1.3.G1
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 27
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
Sara’s Job including
benefit package
Salary in city 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
= Equivalent Salary in city 2
[Round dollar amounts to two decimal places]
© 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
1.1.3.G1
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 29
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
Sara’s Job including
benefit package
$39,800.00 in Reno x
123.1
= Equivalent salary in Anchorage
105.1
Option 1 or Option 2
$45,200.00 in Anchorage x
105.1
123.1
= Equivalent salary in Reno
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 30
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
Sara’s Job including
benefit package
$39,800.00 x 1.1712654 =
$46,616.36 = Equivalent salary in Anchorage
Option 1 or Option 2
$45,200.00 x .8537774 =
$38,590.74 = Equivalent salary in Reno
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 31
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
Sara’s Job Outcome
including benefit package
Job Offer 1
$39,800.00 (with benefits) in
Reno, NV
Job Offer 2
$45,200.00 (with benefits) in
Anchorage, AK
• 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
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 32
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
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 33
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
Salary in city 1 x
Cost of Living Index of City 2
Cost of Living Index of City 1
= Equivalent Salary in city 2
•Round dollar amounts to two decimal places
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 34
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
Joe’s Job including
benefit package
$28,500.00 in Denver x
148.2
102.9
= Equivalent salary in Seattle
Option 1 or Option 2
$38,000.00 in Seattle x
102.9
148.2
= Equivalent salary in Denver
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 35
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
Joe’s Job including
benefit package
$28,500.00 x 1.4402332 =
$41,046.65 = Equivalent salary in Seattle
Option 1 or Option 2
$38,000.00 x .6943319 =
$26,384.61 = Equivalent salary in Denver
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 36
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
Joe’s Job Outcome
including benefit package
Job Offer 1
$28,500.00
(with benefits) in Denver, CO
Job Offer 2
$38,000.00
(with benefits) in Seattle, WA
• 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
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 37
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
How to Get a Job:
How to Counter a Salary Proposal After a Job Offer
Most salary proposals are negotiable and there are tips on how to
correctly leverage for a higher amount of money. Negotiate a salary
offer with advice on how to get perks such as air travel and a company
car using advice from a career adviser in this free video on job
guidance.
[5:06]
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 38
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
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)
– http://money.cnn.com/calculator/pf/cost-of-living/
– http://www.bankrate.com/calculators/savings/movingcost-of-living-calculator.aspx
– http://www.numbeo.com/cost-ofliving/rankings_current.jsp [relative to NYC - 100%]
© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Comparing Job Offers – Slide 39
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Questions?