No, you wouldn’t. You want benefits. In fact, benefits can (and should) be a big factor in your decision process when evaluating a job offer.
Let’s do the (simplified) math here. I’ll start with an hourly wage of $17, which is pretty typical for a young professional here in Central Florida. That’s an estimated yearly salary of $34,000, pre-tax.
Health Insurance (Monthly)
- with benefits: $50 for medical + $15 for dental, + $7 for vision = $72 (this number is rounded up quite a bit, and some people choose not to carry vision insurance)
- without benefits (on ACA marketplace): $284 (but, hey! Make below $47,000? In Orange County, FL a 25 year old qualifies for $11/month credit!) This is not to mention that many plans feature maximum out-of-pocket costs of over $7,000. If something serious happens, you could be on the hook for over $7,000 in costs. No good.
- Alternatively, you could pay a $695 penalty for being uninsured (roughly $58/month) – along with whatever medical costs you incur.
Retirement Savings
- with benefits: you’ll set up a 401K (private sector), 403B (nonprofits), or pension fund (see here for an explanation of the difference between these).
- Many jobs will match the money put into 401K or 403B account. Let’s say you put in 4% ($113 a month). Let’s assume that your employer will double what you put in, so they contribute $226 each month for a yearly total of $2,712.
- Some employers pay in even more than 200% of what you put in. For example, I’ve paid in about 6% of my annual salary to a 403B and my employer has paid in a little under 8%, meaning that I’ve squirreled away about 13% of my annual salary for retirement. More importantly, since my retirement is an investment account and I’m in my mid-twenties, that money will compound interest for the next four decades. So it’ll look a little something like this by the time I’m ready to retire:
- without benefits: $113/month into Roth 401K or other investment account
- I choose to believe you are still putting away money for retirement. Read more on why you should save in your 20s, no matter how strapped you’re feeling. (If you’d like to know why I haven’t read a single thing published by Elite Daily in years, this article on ‘saving’ in your 20s about covers it.)
Paid Time Off (PTO)
- with benefits: Let’s say you get three weeks PTO, that’s $2,040 in wages you’re still being paid while you’re sitting on a beach with a daiquiri.
- without benefits: you simply lose wages – potentially up to $2,040!
Let’s add it up
- +$1.50/hour = $37,000
- $3,000 in additional funds (pre-tax)
- + benefits: $2,412 (insurance) + $2,712 (retirement savings in a defined contribution plan) = $5,124, and that’s not even including the PTO!
- Of course, this is based on the assumption that your employer will match your contributions (which is a reasonable expectation). It’s also based on an admittedly low monthly insurance payment; yours may not be quite so low, but you’ll still come out ahead. Even if your insurance is $172 a month, instead of $72, you’ll come out $1,344 ahead of insurance off the ACA marketplace.
In summary: You want benefits, not a higher hourly wage… but if ‘both’ is an option, go with that!
*Estimates in this article are based on the ACA Marketplace price calculator and on my salary and that of my friends who were willing to share.
According to Aubs 