Comparing Job Offers Financial Literacy

What Should Sara Do? Sara has just graduated from college with a degree in teaching and has been offered a $35,000 job in Reno, Nevada and a $40,000 job in Anchorage, Alaska. Which should she take? Sara has just graduated from college with a degree in teaching and has been offered a $35,000 job in Reno, Nevada and a $40,000 job in Anchorage, Alaska. Which should she take? A. $35,000 in Reno B. $40,000 in Anchorage C. Not enough information to decide

The correct answer is: C The scenario does not provide information about the cost of living in either city

Base Salary Base salary is the amount a person will receive in his/her annual salary before taxes Base salary is the amount a person will receive in his/her annual salary before taxes Salary is based on: Salary is based on: Location Location Education Education Laws of supply and demand Laws of supply and demand

Fringe Benefits Additional compensation offered by a company beyond the base wage Additional compensation offered by a company beyond the base wage May include: May include: Paid sick time Paid sick time Holidays and vacations Holidays and vacations Bonuses Bonuses Health and life insurance Health and life insurance Workman’s compensation Workman’s compensation Retirement contributions Retirement contributions

Opportunity for Advancement and other Work Incentives Can an employee easily advance within the company and earn more money? Can an employee easily advance within the company and earn more money? Raises based on performance Raises based on performance Bonuses Bonuses

Employer Provided Services Additional services provided Additional services provided May include: May include: Gym membership Gym membership Flexible hours Flexible hours Merchandise discounts Merchandise discounts Child care Child care

Additional Perks Relocation allowance Relocation allowance Company car Company car Repayment of education loans Repayment of education loans Stock options Stock options

Location and Environment Is the job in a good location? Is the job in a good location? Commute time Commute time Affordable housing Affordable housing Low crime rate Low crime rate Good school Good school Desired climate Desired climate

How Might Wants and Needs Influence a Decision? A mother may value having child care facilities instead of relocation options A single person may value having a gym membership instead of merchandise discounts

Cost of Living Cost of living includes: Cost of living includes: Housing Housing Food Food Transportation Transportation Other everyday expenses Other everyday expenses Cost of living may be lower in rural rather than urban communities Cost of living may be lower in rural rather than urban communities

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

Sarah’s Two Job Offers $35,000 in Reno X = $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 Offers $24,000 in Denver X = $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 Benefits $35, ,800 in benefits in Reno = $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 Benefits $24, ,500 in benefits in Denver = $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