1. Take Charge of Your Finances
Comparing Job Offers
Take Charge of Your Finances
Changes on Slides 4, 6

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. 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.

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, in Reno, NV
Job Offer 2
$40, in Anchorage, AK
Not enough information to decide
Which option is best?
Added option C because it is in the body of the LP

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 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.

6. Comparing Job Offers Base Salary Additional perks
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
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

7. 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

8. 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.

9. Sara’s Job Offers Job Offer 1 – Reno, NV Job Offer 2 – Anchorage, AK
$35, salary
105.1 cost of living index
Job Offer 2 – Anchorage, AK
$40, salary
123.1 cost of living index

10. Sara’s Cost of Living Equations
123.1
$35, in Reno x
= Equivalent Salary in Anchorage
105.1
Option 1 or Option 2
$40, in Anchorage x
105.1
= Equivalent Salary in Reno
123.1

11. Sara’s Cost of Living Equations
$35, x =
$40, = Equivalent salary in Anchorage
Option 1 or Option 2
$40, x =
$34, = Equivalent salary in Reno

12. Sara’s Job Outcome Job Offer 1 Job Offer 2 $ 35,000.00 in Reno, NV
$40, in Anchorage, AK
A person earning $35, in Reno would earn $40, in Anchorage to have the same spending power. Or
A person earning $40, in Anchorage would earn $34, in Reno to have the same spending power.
Therefore, the salary offer in Reno is better

13. Joe’s Offers Job Offer 1- Denver, CO Job Offer 2 - Seattle, WA
$24, salary
102.9 cost of living index
Job Offer 2 - Seattle, WA
$32, salary
148.2 cost of living index

14. 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

15. Joe’s Cost of Living Equations
148.2
$24, in Denver x
= Equivalent salary in Seattle
102.9
Option 1 or Option 2
$32, in Seattle x
102.9
= Equivalent salary in Denver
148.2

16. Joe’s Cost of Living Equations
Option 1 or Option 2
$24, x =
$34, = Equivalent salary in Seattle
$32, x =
$22, = Equivalent salary in Denver

17. Joe’s Job Outcome Job Offer 1 Job Offer 2 $24,000.00 in Denver, CO
$32, in Seattle, WA
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

18. 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.

19. 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

20. Sara’s Job including benefit package
Job Offer 1 – Reno, NV
$35, salary + $4, benefits = $39,800.00
105.1 cost of living index
Job Offer 2 – Anchorage, AK
$40, salary + $5, benefits = $45,200.00
123.1 cost of living index

21. Sara’s Job including benefit package
Option 1 or Option 2
123.1
$39, in Reno x
= Equivalent salary in Anchorage
105.1
105.1
$45, in Anchorage x
= Equivalent salary in Reno
123.1

22. Sara’s Job including benefit package
Option 1 or Option 2
$39, x =
$46, = Equivalent salary in Anchorage
$45, x =
$38, = Equivalent salary in Reno

23. Sara’s Job Outcome including benefit package
Job Offer 1
$39, (with benefits) in Reno, NV
Job Offer 2
$45, (with benefits) in Anchorage, AK
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.

24. Joe’s Job including benefit package
Job offer 1 - Denver, CO
$24, salary + $4, benefits =$28,500.00
102.9 cost of living index
Job offer 2 - Seattle, WA
$32, salary +$6, benefits = $38,000.00
148.2 cost of living index

25. 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

26. Joe’s Job including benefit package
Option 1 or Option 2
$28, in Denver x
148.2
= Equivalent salary in Seattle
102.9
$38, in Seattle x
102.9
= Equivalent salary in Denver
148.2

27. Joe’s Job including benefit package
Option 1 or Option 2
$28, x =
$41, = Equivalent salary in Seattle
$38, x =
$26, = Equivalent salary in Denver

28. 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, 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.

29. Additional Web sites
Web sites available to help calculate salaries and cost of living in various locations
(compares both where you live and where you work)

30. Questions?