A Wolf of a Job Offer in Sheep’s Clothing

Employment Digest has posted a brilliant article on job offers that aren’t actually as good as they look at first. Writer Carole Martin tells the story of Nicholas, who received an on-the-spot offer and was so thrilled he accepted right away. Nicholas was offered $55,000 per year, with a hiring bonus of $5,000 – a $10,000 raise from his last job.

But when Nicholas looked over the benefits package, he discovered that he would now have to pay the insurance premiums for his dependents. His last employer had paid the premiums for the entire family. -$350.00/per month – $4200 per year. His new vacation package offered two weeks time off, accrued over the next twelve months. His former package included three weeks vacation. -$962.00 one week’s vacation pay.
Nicholas was receiving a 6.5% yearly bonus, based on company earnings in his last position. His new company does not have a planned bonus as part of the salary. Bonuses are earned based on performance, and given as judged appropriate. -$3250.00 per year – lost bonus. His former employer matched 50 cents for every dollar contributed up to 6% on his 401K account. This company does not match funds. -$1500.00 per year.
His calculations showed a minus of $10,000 a year from his new offer, based on cost of insurance premiums, lost bonus, and lost matching 401K contributions. He wasn’t quite so thrilled with the offer anymore.
At least he got that $5000 hiring bonus, which will cushion the fall. But even that’ll be affected – Nicholas didn’t expect the higher tax rate on ‚Äúspecial‚Äù checks that was deducted from the bonus money. These higher rate taxes can run as high as 41.5%.
Remember: once you sign the offer letter, you’ve essentially signed a contract. It is too late to go back and negotiate. Never accept an on-the-spot offer, unless it is completely out-of-this-world. It is generally wise to do the math in order to accurately evaluate what you‚Äôre gaining and losing.
Article by Alexandra Levit and courtesy of Water Cooler Wisdom.