1. Cost of living and Employee Benefits

2. 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.
t_of_living/

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
$35,000 in Reno, NV
Job Offer 2
$40,000 in Anchorage, AK

5. Cost of Living 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

6. Sara’s Job Offers Job Offer 1 – Reno, NV Job Offer 2 – Anchorage, AK
$35,000 salary
105.1 cost of living index
Job Offer 2 – Anchorage, AK
$40,000 salary
123.1 cost of living index

7. Cost of Living Cost of Living Index of City 2 Salary in city 1 x
= Equivalent Salary in city 2

8. Sara’s Cost of Living Equations
$35,000 in Reno x
123.1
105.1
= Equivalent Salary in Anchorage
Option 1 or Option 2
$40,000 in Anchorage x
105.1
123.1
= Equivalent Salary in Reno

9. Sara’s Cost of Living Equations
$35, x =
$40, = Equivalent salary in Anchorage
Option 1 or Option 2
$40,000 x =
$34, = Equivalent salary in Reno

10. Sara’s Job Outcome Option 1 Job Offer 1 $35,000 in Reno, NV
$40, in Anchorage
A person earning $35, in Reno must earn $40, in Anchorage to have the same spending power.
Option 2
$35,000 in Reno NV
A person earning $40,000 in Anchorage must earn $34, in Reno to have the same spending power.

11. Conclusion
The salary offer in Reno is better by $ ($40, $40,000.00).

12. Joe’s Offers Job Offer 1- Denver, CO Job Offer 2 - Seattle, WA
$24,000 salary
102.9 cost of living index
Job Offer 2 - Seattle, WA
$32,000 salary
148.2 cost of living index

13. 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

14. Joe’s Cost of Living Equations
$24,000 in Denver x
148.2
102.9
= Equivalent salary in Seattle
Option 1 or Option 2
$32,000 in Seattle x
102.9
148.2
= Equivalent salary in Denver

15. Joe’s Cost of Living Equations
Option 1 or Option 2
$24, x =
$34, = Equivalent salary in Seattle
$32,000 x =
$22, = Equivalent salary in Denver

16. Joe’s Job Outcome Job Offer 2 Job Offer 1 $34,565.60 in Seattle, WA
$24,000 in Denver, CO
A person earning $24, in Denver must earn $34, in Seattle to have the same spending power. Or
A person earning $32,000 in Seattle must earn $22,218.62in Denver to have the same spending power.
Therefore, the salary offer in Denver is better by $2, ($34, $32,000.00).

17. What about benefits?
Benefits- Additional compensations offered beyond wages earned

18. Dollar amount received before taxes
Base Salary
Dollar amount received before taxes
Location and environment
Commute time
Affordable housing
Low crime rate
Good schools
Desired climate
Fringe Benefits
Paid sick time
Holidays and vacation
Health and life insurance
Workman’s compensation
Retirement contributions
Comparing Job Offers
Additional perks
Relocation allowances
Company car
Repayment of education loans
Stock options
Advancement
and work incentives
Performance raises
Bonuses
Profit Sharing
Employer provided services
Gym membership
Flexible hours
Merchandise discounts
Child care

19. Benefits
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.
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.

20. Sara with benefits Job Offer 1 – Reno, NV Job Offer 2 – Anchorage, AK
$35,000 salary + $4,800 benefits = $39,800
105.1 cost of living index
Job Offer 2 – Anchorage, AK
$40,000 salary + $5,200 benefits = $45,200
123.1 cost of living index

21. Sara With Benefits Cost of Living Index of City 2 Salary in city 1 x
= Equivalent Salary in city 2

22. Sara with benefits Option 1 or Option 2 $39,800 in Reno x 123.1 105.1
= Equivalent salary in Anchorage
$45,200 in Anchorage x
105.1
123.1
= Equivalent salary in Reno

23. Sara with benefits
Option 1 or Option 2
$39, x =
$46, = Equivalent salary in Anchorage
$45,200 x =
$38, = Equivalent salary in Reno

24. Sara with benefits
With the benefits package included, the job offer in Reno is higher.
A person earning $39, in Reno must earn $46, in Anchorage to have the same spending power. Or
A person earning $45,200 in Anchorage must earn $38, in Reno to have the same spending power.

25. Joe with benefits Job offer 1 - Denver, CO Job offer 2 - Seattle, WA
$24,000 salary + $4,500 benefits =$28,500
102.9 cost of living index
Job offer 2 - Seattle, WA
$32,000 salary +$6,000 benefits = $38,000
148.2 cost of living index

26. Cost of Living Cost of Living Index of City 2 Salary in city 1 x
= Equivalent Salary in city 2

27. Joe with benefits Option 1 or Option 2 $28,500 in Denver x 148.2 102.9
= Equivalent salary in Seattle
$38,000 in Seattle x
102.9
148.2
= Equivalent salary in Denver

28. Joe with benefits
Option 1 or Option 2
$28,500 x =
$41, = Equivalent salary in Seattle
$38,000 x =
$26, = Equivalent salary in Denver

29. Joe with benefits
With the benefits package included, the job offer in Denver is higher.
A person earning $28, in Denver must earn $41, in Seattle to have the same spending power. Or
A person earning $38,000 in Seattle must earn $26, in Denver to have the same spending power.