Comparing Job Offers Grade Level 10-12 “Take Charge of Your Finances”

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1.1.3

Materials provided by: Marie Dyer, Family and Consumer Sciences Educator, Bootstrap Ranch High School, Belgrade, Montana & Kathryn Cox, Family and Consumer Sciences Educator , William G Enloe Magnet High School, Raleigh, North Carolina, & Joanna Krogstad, Family and Consumer Sciences Educator, Manhattan High School, Manhattan, Montana

Time to complete: 90 minutes

National Content Standards

Family and Consumer Science Standards: 1.1.1, 1.1.2, 1.1.3, 1.1.4, 1.1.5, 1.1.6, 1.2.2, 2.1.7, 2.6.1, 2.6.3, 3.3.1 National Council on Economic Education Teaching Standards: 13, 19

National Standards for Business Education

 Career Development: I.A.3, II.A.3, II.A.4, V.C.3, V.C.4

 Economics: II.3, II.4, VI.2, IX.2

 Personal Finance: II.1, II.2, II.3-4

Objectives

Upon completion of this lesson, participants will be able to:

 Examine the importance of career planning, salaries, and benefits to overall financial well-being  Differentiate salaries in different cities using the cost of living equation

Introduction

Employment is usually considered the most important factor affecting an individual’s financial situation. One of the main reasons people work is to earn money. Salaries can vary drastically between careers as a result of the laws of supply and demand. Supply is the relationship of prices to the quantities of a good or service sellers are willing to offer for sale at any given point in time. Demand is the relationship between prices and the corresponding quantities of a good or service buyers are willing to purchase at any given point in time.

After a person acquires an education, he/she is ready to enter the workforce. At this stage, it is necessary for an individual to have the ability to objectively evaluate job offers. There are many factors which affect a person’s salary. Base salary is the dollar amount a person will receive in his/her paycheck before taxes. Companies often provide employees with fringe benefits. Fringe benefits are additional compensation offered by a company beyond an individual’s wage, salary, commissions, or other cash payments. Fringe benefits can include paid sick time, holidays and vacations, bonuses, health insurance, life insurance, workman’s compensation, and retirement contributions. The benefits can dramatically increase value of the job offer received from a company. For example, health insurance is very expensive for a family. If a company has a health insurance policy which covers the entire family and pays 100% of expenses, it can save the family hundreds of dollars per month.

When comparing job offers, an individual must also evaluate the opportunity for advancement and work incentives within the company. Some companies provide guaranteed pay raises based upon work performance and longevity with the company. An individual must also realize when starting most jobs, they are at the bottom of the pay scale and a goal should be to advance within the company. Therefore, a person needs to determine the advancement

Comparing Job Offers

Grade Level 10-12

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opportunities and requirements. Is the company rapidly growing? Does the company fill openings by promoting current employees or hiring from outside the company?

In addition, examples of work incentives can include gym memberships, flexible hours, merchandise discounts, and childcare. Some companies also offer relocation allowances, a company car, repayment of education loans or expenses, and stock options.

Cost of Living Equation:

Two additional factors to consider when evaluating a job offer are location and environment. Is the job in a good community? Does it require time and resources to travel long distances to get to work? Is there a low crime rate, good schools, and a good climate? What is the cost of living in the community? Cost of living includes housing, food, transportation, and other everyday expenses. The cost of living varies dramatically between communities. It is often lower in rural communities than large urban metropolitan areas. This drastically affects the spending power of each dollar a person earns. Data on the cost of living for different communities is reported by the American

Chamber of Commerce Researchers Association (www.accra.org). Data is reported in index form. Index form gives an average cost community a rating of 100.0. A lower index indicates a lower cost of living which is better. For example, if Happyville had an index of 100.0 and Greenville had an index of 126.0 the same widget would cost $1.00 in Happyville and $1.26 in Greenville.

The equation for cost of living is:

Index city 2

Salary in city 1 x = Equivalent salary in city 2 Index city 1

Example Problem:

Assume Joe was offered a job paying $32,000.00 in Happyville with a 100.0 cost of living index and $34,000.00 in Greenville with a 126.0 cost of living index. Which job offer would provide more spending power for the income earned?

126 index in Greenville

Happyville’s $32,000.00 x ____________________ = $40,320.00 in Greenville 100 index in Happyville

This means a person living in Happyville earning $32,000.00 would have to earn $40,320.00 to purchase the same items in Greenville. Therefore, Happyville’s salary has more spending power. However, before making any final decisions about which company offers the best salary, an individual should include the value of any fringe benefits offered by the company and then complete the cost of living calculations.

In this lesson, participants evaluate the factors involved when comparing job offers including compensation packages offered by employers, employer provided services, health benefits, and additional perks. They learn how to calculate the cost of living when comparing two cities. Finally, participants will evaluate two job offers to determine which is the best.

Body

a. Ask participants to individually list what their perfect job would be like. If possible, have participant go to Fortune magazine’s website http://money.cnn.com/magazines/fortune/bestcompanies/2010/index.html and browse through the top ranked companies to work for and learn why.

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ii. Benefits iii. Salary

b. After their list has been made, ask them to circle items they believe are realistic.

c. Ask 2-3 participants to share their list and identify why each item may or may not be realistic. b. Hand out one What is the Best Job Offer? Note taking guide 1.1.3.L1 per participant and instruct them to

complete it during the Comparing Job Offers PowerPoint presentation 1.1.3.G1 c. Present the Comparing Job Offers PowerPoint presentation 1.1.3.G1.

a. Slide 1: Title Slide

b. Slide 2: Supply and Demand

i. Ask the participants why NFL players get paid millions of dollars each season when a school teacher gets paid an average of $44,400.00 per school year.

1. Because there is a high demand for NFL players but not many individuals are skilled to play in the NFL (low supply) and therefore they are paid more for their services.

c. Slide 3: Congratulations!

d. Slide 4: Which is the better deal?

i. Sara has just graduated from college with a degree in teaching and has been offered a $35,000.00 job in Reno, Nevada and a $40,000.00 job in Anchorage, Alaska. ii. Which job Sara should take.

iii. A – $35,000.00 in Reno, Nevada iv. B – $40,000.00 in Anchorage, Alaska

v. C – Not enough information to decide

1. Have participants vote on which job Sara should take and defend their answer. a. Explain that C is correct because the scenario does not provide information

about the cost of living in either city. e. Slide 5: Cost of living

i. Explain the cost of living data is reported in index form. f. Slide 6: Comparing Job Offers Table

i. Discuss additional benefits that may not be monetary but influence and individuals satisfaction with a potential job.

ii. Base salary:

1. The amount of money an individual earns with no additional benefits or perks. Often this is the amount of money that is considered their gross pay. Gross pay is the amount of money before taxes.

iii. Fringe benefits:

1. Ask participants in small groups of 3-4 to brainstorm examples of fringe benefits. 2. Add to their answers with information from the PowerPoint.

iv. Opportunities for advancement and work incentives:

1. Individuals should evaluate if they can easily advance within the company and earn more money.

v. Additional perks:

1. Ask participants in small groups of 3-4 to brainstorm examples of additional perks. 2. Add to their answers with information from the PowerPoint.

vi. Location and environment:

1. Ask participants in small groups of 3-4 to make a list of things that would make a job be in a desired community.

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iii. Near shopping/restaurants iv. Near quality schools

d. Discuss with participants how an individual’s values, needs, wants, and goals will impact which job they choose.

a. Stress that they are interviewing the company as well.

i. If the job is not a good fit for them, they do not like something about it, or the community they will live in is not desirable they may decide to not accept the job if an offer is made. b. For example:

i. A mother may value having childcare facilities available at work instead of finding childcare options.

ii. A person may value having a gym membership instead of merchandise discounts. e. Stress to participants that the cost of living can vary dramatically between communities.

a. Slide 7: Cost of Living Equation - Show the Cost of Living Equation and explain the equation. i. For consistency, round to two decimal places for all calculations.

f. Hand out the Cost of Living Equation Practice worksheet 1.1.3.A2 and calculators to each participant to complete the calculations on Slides 9-28.

a. Slide 8: Cost of living equation

i. Discuss with participants that if they follow the same three steps each time they complete the math formula, they will be able to successfully compare the cost of living in two different cities.

b. Slides 9-12: Example #1, Sara

i. Instruct participants to refer to #1 on their Cost of Living Equation Practice worksheet 1.1.3.A2 to work this problem.

ii. Example #1: Have participants calculate the cost of living between Sara’s two jobs. (Round to two decimal places.)

c. Slides 13-17: Example #2, Joe

i. Example #2: Have participants calculate the cost of living between Joe’s two jobs. (Round to two decimal places.)

d. Slide 18: Benefits

i. Stress how fringe benefits and employee provided services can make a difference in the base amount of the salary.

ii. Ask participants to brainstorm benefits that may be included with a job 1. Answers should include:

a. Health insurance b. Tuition reimbursement c. Vacation days

iii. Ask participants to indicate from the brainstormed list what benefits they feel are most important.

1. Because benefits and services have a monetary value, they should be included within the salary before calculating the cost of living.

e. Slides 19-23: Sara with Benefits f. Slides 24-28: Joe with Benefits g. Slide 29: Additional websites h. Slide 30: Conclusion

i. Stress to participants the base salary is not the only thing to consider when evaluating a job offer. In addition, participants should evaluate:

1. Fringe benefits

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4. Additional perks

5. Location and environment

Conclusion

Instruct the participants to take the following items into consideration from the lesson; base salary, fringe benefits, opportunity for advancement and work incentives, employer provided services, additional perks, and location and environment. Have participants write an essay about what components of a job are the most and least important to them and why. Instruct participants to use the Comparing Job Offers rubric 1.1.3.B1 as a guide for their essay writing.

Or

Hand out one Comparing Job Offers Math worksheet 1.1.3.A3 for participants to complete. This worksheet can be used as additional practice for participants who are having a difficult time acquiring the mathematical skills needed to compare the cost of living from city to city.

Assessment

Hand out the Comparing Job Offers worksheet 1.1.3.A1 for participants to complete.

Materials

Comparing Job Offers worksheet – 1.1.3.A1

Cost of Living Equation Practice worksheet – 1.1.3.A2 Comparing Job Offers Math worksheet – 1.1.3.A3 Comparing Job Offers essay rubric – 1.1.3.B1 Comparing Job Offers information sheet – 1.1.3.F1

Comparing Job Offers PowerPoint presentation – 1 .1.3.G1 What is the Best Job Offer? Note taking guide – 1.1.3.L1 Calculators

Resources

ACCRA www.accra.org

 This is a nonprofit organization which offers current cost of living index comparisons at a small cost.

InfoPlease

http://www.infoplease.com/ipa/A0883960.html

 This provides the cost of living index for selective larger cities within the United States.

CNN Money

http://cgi.money.cnn.com/tools/costofliving/costofliving.html

 This is a cost of living calculator to help determine how much an individual will need to make in different cities to be living at the same level.

Fortune Magazine

http://money.cnn.com/magazines/fortune/bestcompanies/2010/index.html

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1.1.3.L1 Note taking guide

What is the best job offer?

Name ____________________________

Date ____________________________

Class ____________________________ Directions: Complete the following chart from the information discussed in class. Define each term, and then in groups of 3-4 participants brainstorm examples to complete the comparing job offers chart.

C

OMPARING

J

OB

O

FFERS

LOCATION AND ENVIRONMENT

BASESALARY FRINGEBENEFITS OPPORTUNITY FOR ADVANCEMENT AND OTHERWORKINCENTIVES

ADDITIONALPERKS

Total Points Earned

27 Total Points Possible

Percentage

Supply –

Demand –

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1.1.3.A2 Worksheet

Cost of Living Equation Practice

Name_________________________

Date_________________________

Class_________________________

Directions: Complete the calculations for the cost of living in the community and identify which job the individual should accept.

For each of the following questions be sure to follow these steps:

Step 1: Assign each city numbers. One city will be assigned the number 1 and the other the number 2.

Step 2: Write the formula by providing the corresponding information for each city determined by the number it was assigned.

Step 3: Complete the math in addition to indicating which city was a better offer and why.

The COST OF LIVING includes housing, food, transportation and other everyday expenses. Data is reported in INDEX FORM which gives an average cost community a rating of 100.

Index city 2

EQUATION: Salary in city 1 x = Equivalent salary in city 2 Index city 1

1. Sara’s 2 job offers:

a. $35,000.00, Reno, NV, 105.1 cost of living index b. $40,000.00, Anchorage, AK, 123.1 cost of living index Step 1:

Step 2:

Step 3:

2. Joe’s 2 job offers:

a. $24,000.00, Denver, CO, 102.9 cost of living index b. $32,000.00, Seattle, WA, 148.2 cost of living index Step 1:

Step 2:

Step 3:

Total Points Earned

(2 points each)

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1.1.3.A2 Worksheet

a. $35,000.00, Reno, NV, 105.1 cost of living index, $4,800.00 in benefits b. $40,000.00, Anchorage, AK, 123.1 cost of living index, $5,200.00 in benefits Step 1:

Step 2:

Step 3:

4. Joe’s 2 job offers plus benefits:

a. $24,000.00, Denver, CO, 102.9 cost of living index, $4,500.00 in benefits b. $32,000.00, Seattle, WA, 148.2 cost of living index, $6,000.00 in benefits Step 1:

Step 2:

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1.1.3.A1 Worksheet

Comparing Job Offers

Name_________________________

Date_________________________

Class_________________________

Directions: Match the following terms with the statements below.

____ 1. This includes housing, food, transportation, and other everyday expenses.

____ 2. Additional compensation offered by a company beyond an individual’s wage, salary, commissions, and other cash payments.

____ 3. Dollar amount a person will receive in his/her monthly paycheck before taxes. Based upon supply and demand.

A. Base Salary B. Fringe Benefits

C. Cost of Living

Directions: Read the following questions and fill in the blank or answer them with a short answer.

4. Give two examples of fringe benefits.

5. High supply = _________________Demand

6. High Demand = ________________Supply

7. Give two examples of employer provided services.

Directions: After reading each scenario, calculate the cost of living in the community and state which job the individual should accept. Show all calculations. (Round to two decimal places.)

For each of the following questions be sure to follow these steps:

Step 1: Assign each city numbers. One city will be assigned the number 1 and the other the number 2.

Step 2: Write the formula by providing the corresponding information for each city determined by the number it was assigned.

Step 3: Complete the math and indicate which city is a better offer and why.

Total Points Earned

(2 points per question)

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1.1.3.A1 Worksheet

a. $42,000.00, Billings, MT, $3,800.00 benefits, 95.3 cost of living index b. $48,000.00, Cheyenne, WY, $4,000.00 benefits, 102.7 cost of living index Step 1:

Step 2:

Step 3:

9. Brandon’s 2 job offers:

c. $43,000.00, Atlanta, GA, no benefits, 97.7 cost of living index

d. $36,000.00, Portland, OR, $4,900.00 benefits, 111.7 cost of living index Step 1:

Step 2:

Step 3:

10.Becky’s 2 job offers:

e. $21,000.00, Minneapolis, MN, $2,400.00 benefits, 106.1 cost of living index f. $27,500.00, Omaha, NE, $1,200.00 benefits, 89.2 cost of living index Step 1:

Step 2:

Step 3:

11.Chad’s 2 job offers:

g. $33,000.00, San Diego, CA, no benefits, 137.8 cost of living index h. $45,000.00, Las Vegas, NV, no benefits, 104.8 cost of living index Step 1:

Step 2:

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1.1.3.A3 Worksheet

Comparing Job Offers Math

Name_________________________

Date_________________________

Class_________________________

Directions: Assign one city number 1, and one city number 2. It makes no difference which city gets which number, however, this will help with confusion. Use the provided formula to practice determining which offer is best for each job offer. Complete the formula by providing the amounts for the corresponding salaries and index amounts. Each question is worth 1 point unless otherwise indicated. Round each answer to the nearest two decimal places.

Formula: Offer city 1 X Index city 2

₌

Equivalent in city 2

Index city 1

Example 1:

Step 1: Assign each cities numbers

For this example Atlanta will be 1, and Minneapolis will be 2

$32,000.00 in Atlanta, GA, index of 97.7 $34,000.00 in Minneapolis, MN, index of 106.1

Step 2: Provide the corresponding salaries and index amounts

($32,000.00 (offer city 1) X 106.1 (index city 2)

₌

Equivalent in Minneapolis (city 2)

97.7 (index city 1)

Step 3: Complete the math and indicate which city is the better offer and why.

1. Using a standard calculator, perform the following equation: 106.1/97.7 =__________

2. Multiply the answer you found in number one by 32,000.00 = ___________

3. Is the answer in number two more than the salary offered for city 2 (Minneapolis)?

a. If yes, there is greater spending power in city 1 b. If no, there is greater spending power in city 2

Total Points Earned

(2 points per question)

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1.1.3.A3 Worksheet

© Family Economics & Financial Education – Revised April 2010 – Career Development – Comparing Job Offers – Page 12 Now, it’s Your Turn. Following the same steps outlined above complete the following problems:

Example 2:

$40,000.00 in Billings, MT, index of 95.3 $38,000.00 in Omaha, NE, index of 89.2

Step 1: Assign each cities numbers

4. Billings = city ________

5. Omaha = city ________

Step 2: Complete the formula by providing the corresponding salaries and index amounts

6. __________ (offer city 1) X 7. _________ (index city 2)

₌

(equivalent in city 2)

8. _________ (index city 1)

Step 3: Complete the math and indicate which city is a better offer and why.

 Using a standard calculator, perform the following equation: 9.________(index city 2)/10.________(index city 1)

a) 11.________________is the correct answer for the above division problem.

 Complete the second step of math. 12.________(answer recorded at number 11) X 13._________(offer city 1)

 14.___________________(equivalent salary in city 2)

 Complete the following question:

15. What city is the better offer? Why? (2 points)

Example 3:

$39,000.00 in San Diego, CA, index of 137.8 $33,500.00 in Portland, OR, index of 111.7

Step 1: Assign each city’s numbers

16. San Diego = city ________

17. Portland = city ________

Step 2: Complete the formula by providing the corresponding salaries and index amounts

18. __________ (offer city 1) X 19. _________ (index city 2)

₌

(equivalent in city 2)

20. _________ (index city 1)

Step 3: Complete the math, and indicate which city is a better offer and why.

 Using a standard calculator, perform the following equation: 21.________(index city 2)/22._______(index city 1)

b) 23.________________is the correct answer for the above division problem.

 Complete the second step of math. 24.________(answer recorded at number 23) X 25._________(offer city 1)

 26._____________________(equivalent in city 2)

 Complete the following question:

27. What city is the better offer? Why? (2 points)

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1.1.3.B1 Rubric

Comparing Job Offers Essay Rubric

Name: Date:

Directions:

1. Participants must write a 1 page, double-spaced, 12-font with 1-inch margins essay answering the question, what components of a job offer are most important to them and provide reasons to support their ideas.

2. Identify a minimum of two important aspects of a job offer and a minimum of two reasons to support their decision.

3. Identify a minimum of two aspects that they feel are less important and a minimum of two reasons to support their decision.

4. Grading will be based upon the following rubric.

Exemplary - 3 Satisfactory - 2 Unsatisfactory - 1 Rating Weight Score

Content Essay identifies a

minimum of two important aspects of a job offer.

Essay identifies one important aspect of a job offer.

Essay identifies no important.

3 9

Content Essay identifies a

minimum of two less important aspects of a job offer.

Essay identifies one less important aspect of a job offer.

Essay identifies no less important aspects of a job offer.

3 9

Content Essay includes a

minimum of four reasons for their choices.

Essay includes only two reasons for their choices

Essay includes no reasons for their choices.

3 9

Writing Skills Sentences are fluent and effective with very few errors in

mechanics,

punctuation, and word usage.

Sentences are usually controlled. There are minor errors in mechanics,

punctuation, and word usage.

Sentences are generally adequate. There are lapses in mechanics, punctuation, and grammar.

2 6

Completion Assignment is easily

read and neatly assembled with an introduction, body, and conclusion.

Assignment is adequate. Answers may be missing, incomplete, or too brief.

Assignment is incomplete. Answers show lack of attention to detail.

2 6

Total Points Earned

Total Points Available 39