How to compare total compensation packages- Monster.com

Excerpt:

Look at unique benefits

Other benefits you can take advantage of every year, such as a pair of glasses up to a certain amount, are easier to estimate than a value that you may never collect on, such as life insurance. In the latter case, use the employer contribution—if any—as an estimate in your calculations.

Paid time off should be included in any calculations of the benefits you get as well. Calculating its value is fairly straightforward, says Crystal Stranger, president of 1st Tax in Honolulu. Take the annual salary of the job and divide it by 240—the standard number of work days in a year. That gives you the daily rate for the job. Multiply the number of days of paid time off by the daily rate to determine the value of your PTO.

Subtract out lifestyle costs

If you’re comparing the compensation of two possible jobs in order to decide which one to take, you’ll also need to include lifestyle costs associated with those jobs, Stranger says.

For example, if one job requires a longer commute, your transportation costs will go up and the time spent commuting will lower your average hourly rate.

Different clothing requirements can also make a difference. And if one company offers a subsidized cafeteria, include that as well. “Even free coffee is a perk that can add up substantially over time,” Stranger says.

Here’s an example courtesy of Stranger that shows a higher salary doesn’t necessarily mean a better payoff in the long run:

Job 1: $60,000 salary, professional attire, with 2-hour RT commute, 10 days off and free coffee

  • Paid Days Off: $2,500
  • Insurance Value: $300/mo = $3,600
  • Retirement: 50% matching first 5% of contribution = $1,500
  • Free Coffee Savings = $480 (assuming $2 a day value)
  • Total: $68,080
  • Hourly Rate: $28.36

Job 2: $55,000 salary; casual attire; with 30-minute RT commute, 14 days off

  • Paid Days Off: $3,438
  • Insurance Value: $300/mo = $3,600
  • Retirement: No match
  • Clothes/Dry Cleaning Savings = $2,000 annually
  • Commute Cost Savings: $100/mo = $1,200
  • Total: $65,238
  • Hourly Rate: $31.98

“These examples don’t factor in tax rates, which would make the second job that much more beneficial with regards to hourly wage, but it still shows clearly how small differences can make a big impact on what you actually earn,” Stranger says.

 

Please view full article by Catherine Conlan at:

http://www.monster.com/blog/b/how-to-compare-total-compensation-packages-0722

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