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  • Added option C because it is in the body of the LP

Comparing job offers_1.1.3.g1 Presentation Transcript

  • 1. Comparing Job Offers 1.1.3 Take Charge of Your Finances Family Economics and Financial Education
  • 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.
      • 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.
  • 3. Congratulations!
    • Sara just graduated from college with a teaching degree and received two job offers. Which is the best deal?
  • 4.
    • Job Offer 1
      • $35,000.00 in Reno, NV
    • Job Offer 2
      • $40,000.00 in Anchorage, AK
    • Not enough information to decide
    • Which option is best?
    Which is the better deal?
  • 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 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.
  • 6. Comparing Job Offers
    • In groups of 3-4 participants brainstorm examples for each of the following categories:
    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
    • 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
    • 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
  • 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
      • $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
  • 10. Sara’s Cost of Living Equations $35,000.00 in Reno x 123.1 105.1 = Equivalent Salary in Anchorage $40,000.00 in Anchorage x 105.1 123.1 = Equivalent Salary in Reno Option 1 or Option 2
  • 11. Sara’s Cost of Living Equations $35,000.00 x 1.1712654 = $40,994.29 = Equivalent salary in Anchorage $40,000.00 x .8537774 = $34,151.35 = Equivalent salary in Reno Option 1 or Option 2
  • 12. Sara’s Job Outcome
    • A person earning $35,000.00 in Reno must earn $40,994.29 in Anchorage to have the same spending power.
      • Or
    • A person earning $40,000.00 in Anchorage must earn $34,151.35 in Reno to have the same spending power.
    • Therefore, the salary offer in Reno is better by $994.29 ($40,994.29 - $40,000.00).
    Job Offer 1 $ 35,000.00 in Reno, NV Job Offer 2 $40,994.29 in Anchorage, AK
  • 13. 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
  • 14. 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
  • 15. Joe’s Cost of Living Equations $24,000.00 in Denver x 148.2 102.9 = Equivalent salary in Seattle $32,000.00 in Seattle x 102.9 148.2 = Equivalent salary in Denver Option 1 or Option 2
  • 16. Joe’s Cost of Living Equations $24,000.00 x 1.4402332 = $34,565.60 = Equivalent salary in Seattle $32,000.00 x .6943319 = $22,218.62 = Equivalent salary in Denver Option 1 or Option 2
  • 17. Joe’s Job Outcome
    • 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 ($34,565.60 - $32,000.00).
    Job Offer 1 $24,000.00 in Denver, CO Job Offer 2 $34,565.60 in Seattle, WA
  • 18. 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.
  • 19. 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
  • 20. 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
  • 21. Sara’s Job including benefit package $39,800.00 in Reno x 123.1 105.1 = Equivalent salary in Anchorage $45,200.00 in Anchorage x 105.1 123.1 = Equivalent salary in Reno Option 1 or Option 2
  • 22. Sara’s Job including benefit package $39,800.00 x 1.1712654 = $46,616.36 = Equivalent salary in Anchorage $45,200.00 x .8537774 = $38,590.74 = Equivalent salary in Reno Option 1 or Option 2
  • 23. Sara’s Job Outcome including benefit package
    • 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.
    Job Offer 1 $39,800.00 (with benefits) in Reno, NV Job Offer 2 $45,200.00 (with benefits) in Anchorage, AK
  • 24. 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
  • 25. 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
  • 26. Joe’s Job including benefit package $28,500.00 in Denver x 148.2 102.9 = Equivalent salary in Seattle $38,000.00 in Seattle x 102.9 148.2 = Equivalent salary in Denver Option 1 or Option 2
  • 27. Joe’s Job including benefit package $28,500.00 x 1.4402332 = $41,046.65 = Equivalent salary in Seattle $38,000.00 x .6943319 = $26,384.61 = Equivalent salary in Denver Option 1 or Option 2
  • 28. Joe’s Job Outcome including benefit package
    • 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.
    Job Offer 1 $28,500.00(with benefits) in Denver, CO Job Offer 2 $38,000.00(with benefits) in Seattle, WA
  • 29. 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
  • 30. Questions?