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

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 give point in time.

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona A.Job Offer 1 –$35, in Reno, NV B.Job Offer 2 –$40, in Anchorage, AK Which option is best? Which is the better deal?

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 and gives an average cost community a rating of –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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Location and Environment Commute time Affordable housing Low crime rate Good schools Desired climate 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 and life insurance Workman’s compensation Retirement contributions Opportunity for Advancement & Other Work Incentives Raised based on performance Bonuses Employer Provided Services Gym membership Flexible hours Merchandise discounts Child care Additional perks Relocation allowances Company car Repayment of education loans Stock options

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job Offers Job Offer 1 – Reno, NV –$35, salary –105.1 cost of living index Job Offer 2 – Anchorage, AK –$40, salary –123.1 cost of living index

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Cost of Living Equations $35, in Reno x = Equivalent Salary in Anchorage $40, in Anchorage x = Equivalent Salary in Reno Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Cost of Living Equations $35, x = $40, = Equivalent salary in Anchorage $40, x = $34, = Equivalent salary in Reno Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job Outcome A person earning $35, in Reno must earn $40, in Anchorage to have the same spending power. –Or A person earning $40, in Anchorage must earn $34, in Reno to have the same spending power. Therefore, the salary offer in Reno is better by $ ($40, $40,000.00). Job Offer 1 $ 35, in Reno, NV Job Offer 2 $40, in Anchorage, AK

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Offers Job Offer 1- Denver, CO –$24, salary –102.9 cost of living index Job Offer 2 - Seattle, WA –$32, salary –148.2 cost of living index

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Cost of Living Equations $24, in Denver x = Equivalent salary in Seattle $32, in Seattle x = Equivalent salary in Denver Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Cost of Living Equations $24, x = $34, = Equivalent salary in Seattle $32, x = $22, = Equivalent salary in Denver Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job Outcome A person earning $24, in Denver must earn $34, in Seattle to have the same spending power. –Or A person earning $32, in Seattle must earn $22, in Denver to have the same spending power. Therefore, the salary offer in Denver is better by $2, ($34, $32,000.00). Job Offer 1 $24, in Denver, CO Job Offer 2 $34, in Seattle, WA

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Benefits Fringe benefits and employer provided services can make a difference: –For example, if a $35, job had 100% of medical insurance coverage valuing $ per month, a person would not have to budget for $4, in medical insurance per year. This would increase the value of his or her salary to $39, –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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job including benefit package Job Offer 1 – Reno, NV –$35, salary + $4, benefits = $39, –105.1 cost of living index Job Offer 2 – Anchorage, AK –$40, salary + $5, benefits = $45, –123.1 cost of living index

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job including benefit package $39, in Reno x = Equivalent salary in Anchorage $45, in Anchorage x = Equivalent salary in Reno Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job including benefit package $39, x = $46, = Equivalent salary in Anchorage $45, x = $38, = Equivalent salary in Reno Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sara’s Job Outcome including benefit package A person earning $39, in Reno must earn $46, in Anchorage to have the same spending power. -Or A person earning $45, in Anchorage must earn $38, 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, (with benefits) in Reno, NV Job Offer 2 $45, (with benefits) in Anchorage, AK

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job including benefit package Job offer 1 - Denver, CO –$24, salary + $4, benefits =$28, –102.9 cost of living index Job offer 2 - Seattle, WA –$32, salary +$6, benefits = $38, –148.2 cost of living index

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job including benefit package $28, in Denver x = Equivalent salary in Seattle $38, in Seattle x = Equivalent salary in Denver Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job including benefit package $28, x = $41, = Equivalent salary in Seattle $38, x = $26, = Equivalent salary in Denver Option 1 or Option 2

© Family Economics & Financial Education – Revised May 2009 – Career Development Unit – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Joe’s Job Outcome including benefit package A person earning $28, in Denver must earn $41, in Seattle to have the same spending power. Or A person earning $38, in Seattle must earn $26, 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 – Career Research Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Additional Web sites Web sites available to help calculate salaries and cost of living in various locations – – – $12.95 fee

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