I was talking to a friend the other day, someone who is on a job search and fielding plenty of offers. My friend was about to take a job paying about 65 thousand dollars a year (65K), compared to one paying about 55 thousand (55K). He was ready to grab the 65K job, until we got around to discussing some variables.
Suddenly, he realized that the 65K job was going to end up leaving less money in his bank account than that 55K job. In addition to taxes, the benefits package was terrible, he'd have to work overtime for no extra pay and there wasn't a yearly bonus for superb performance.
I hope the short info below, a general guideline of pros and cons when comparing jobs, is useful to someone, because we've made similar assumptions and mistakes as my friend and learned the hard way, over time, how to evaluate various job offers:
So consider these facts when comparing various job offers:
1. Benefits - Here is where things really get down to the nitty gritty - and quickly!
Heath insurance plans - some employers cover a huge chunk of health insurance or have great plans. Others don't.
Retirement plans. Check to see if each potential employer offers retirement plans in pre-tax dollars with company matches. If one company matches 7% of your retirement contributions and another matches 20% (up to a set limit), you can see that there could be a huge difference in potential returns over time, depending on the quality of the retirement plans offered. Check out track records of various investments offered. Are there a variety of options or not?
2. Next, look at these factors: does your company offer child care subsidies or have an on-site daycare? What about long-term health care insurance to help pay for care if you are sick or in retirement if you need care ( this is something just now being offered by many companies). There are also such options as FSAs (Flexible Savings Accounts) which also are often in pre-tax dollars and can be combined with Health Insurance plans to cover co-pays, non-prescriptiion meds, eye exams, etc. All of these benefits can put thousands of dollars of savings into your pocket. In some cases, people can save an exctra 3 thousand dolalrs or more per year in health insurance expense that wouldn't be covered or reimbursed.
2 . Tuition Reimbursement for the employee or employee's children - Some employers will cover a huge chunk of tuition or even full tuition for their employees' children. A local janitorial service in our town routinely covers college expenses for many of their employees' children. With college costs skyrocketing,clearly this is a major benefit!
3. Bonuses, free memberships, travel expenses, overtime pay - Get the facts about all of these possible chances for extra or free benefits or money. If you are routinely expect to work 50 or 60 hours a week in one job for a set salary per year but another employer pays you overtime for the extra hours, you can't ignore that.
4. Travel and Commuting Time - Will you be reimbursed for that or not? Don't ignore the yearly cost, even if you can deduct it from your taxes. The time spent traveling to and from work is also taken from your free time. Is it worth it?
5 On-site cafeterias? Some companies have excellent ones, with free meals for employees. If yours does not and doesn't reimburse you for meals, add that in.
Now, consider the 45 or 55K job that offers full tuition reimbursement for your kids (or you), low health premiums and excellent coverage, a FSA (Flexible Savings Account), retirement plan wiht company match, long term health care options (if desired), overtime pay and possible performance bonuses.
When compared to the 65K job offers that has lesser benefits, it becomes clear that what appears to be a higher salary on paper may actually end up being less in reality.
I hope this provides some food for thought and I hope people chime in about their own experiences and dilemnas when weighing job offers.
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Comments: 44
When I started my job 4 years ago, I was making about 8K less a year then my previous job but my medical and dental were 100% company paid. Without having that deduction, my take home pay wasn't that much less than before. Plus, with my new company I have opportunities for bonuses if the company is doing well which I didn't have before.
Some companies tend to up their bottom line at the expense of their employees.
Your information should go onto a chart when comparing jobs!
Too bad they ended up sending most of their work to Mexico.
I agree with the benefit consideration.
Problem benefits can also be removed and often are.
Wow, I'd like to know your secrets to that belt tightening. We do all we can to maximize retirement savings but even if we cut discretionary spending, it seems something comes along that has to be done - home maintenance, etc, beyond what we expect. We do have our savings on automatic each month but I'd love to increase that amount.
My friend is in computer support and is in demand (for now). It is a field where you have to stay in the loop, always learning something new.
Did you know that you are PW this week???
I submitted links in the thread...I hope it is showing up.
If you set it so that nobody can view it except the group, we cant see it either until Sherry posts it to the group. I dont see it myself but I will go to the PW page and click on your link
No it says it is not available. We will have to wait for Sherry to release it to the group. Once she does that, we can see it. Darn it anyway. I was ready to comment.
When evaluating a new job, you should also make certain you're going to be happy doing what you're doing for a huge portion of your day. I was fortunate to change jobs to a not-for-profit company working in the same field which was largely a conglomerate of subject matter experts and testing facilities, in other words, where their hired talent was their primary asset. Because their integrity was the key to their continued success, those same work that had been getting me in trouble for being a "troublemaker" were assets to this other company and, three years later, they continue to be.
I can't complain about the reimbursement. I have FSA, long term and short term disability, health insurance (about 5 times better than before at 30% of the price), life insurance for me and every member of my family. Additionally, the company contributes 8% of my salary (not out of my salary, but an additional 8%) to a retirement fund whether I save any or not. They have a voluntary plan that allows me to save up to 12% and I save that too. All this (and probably some I forgot) with about a 20% increase in salary over where I was before. Since hiring on, some three years ago, the salary's increased about another 20%. They do pay overtime as well, though I rarely need to use it.
Even so, even if I had taken a pay cut, it would be worth it to work for a company where I am universally proud of the work I produce, where I feel appreciated and heard, where I enjoy the eight hours a day I spend here. When evaluating a new job, don't discount the quality of the time you'll be spending, not just how much time or how much you're paid for it.
Quality of life is not a minor point.
Location- Where the job is located and how much you spend to travel. Does it require you to drive which might mean a need for a second auto for the family, which means additional insurance and maintence costs.
Stablity of Industry and company. Good job offer might end in a couple years. Is the business shakey or risky...have they recently cut benefits to others, or in past here, why are they hiring you..to replace someone who left or expanding?
Room for advancement, if there is a chance to climb the ladder if you desire it. Management hire from within or from outside, Union or not?
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