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Young adults entering the job market often focus on the salary or hourly wage first, and that makes sense. Pay matters. But the benefits package can be just as important, and sometimes a slightly lower-paying job with stronger benefits is actually the better deal.
Health insurance, deductibles, retirement matching, vesting rules, paid leave, sick time, disability coverage, tuition assistance, promotion potential, and work-life balance all have real value. A 401(k) match, for example, is part of your pay. Ignoring it is leaving money on the table.
I’d also tell young adults to look beyond the hiring brochure. Can employees actually use their leave? Are schedules predictable? Does the company promote from within? Do managers support people when life happens?
What benefits do you think young adults should pay the most attention to when choosing a job? Looking back, is there one benefit you ignored early in life that you now realize mattered more than you thought?
What benefits do you think young adults should pay the most attention to when choosing a job? Looking back, is there one benefit you ignored early in life that you now realize mattered more than you thought?
I’m so old that my young adult years preceded 401k plans, Health Savings Accounts, PPO’s, HMO’s, Flexible Spending Accounts, Lifestyle Accounts, EAP’s, concierge services, etc. However, I had the privilege, over the past 46 years, to manage the benefit plans for my various employers.
Unfortunately for them, my two now-adult Millenial children suffered through those efforts.
One “benefit” they received from my work experience was free, expert benefits counseling when they transitioned from school to wage earners.
The outcome:
As far as I know, neither has made any benefit decision mistakes where they missed out on something valuable to them.
For me? Back in 1992 (yes, 1992), I had conjured up a scheme to create a variant of what we know today as a Health Savings Account. It was unique enough such that I wouldn’t proceed without asking the IRS for approval using what’s called the private letter ruling process.
I had investigated early Medical Savings Account concepts developed by the Golden Rule Insurance Company. My variant was closer to the predecessor of the Health FSA, what we called a ZEBRA, a zero based reimbursement account. It also had features that at times resembles today’s Health Reimbursement Accounts. Today’s HSA, once opened, also has some of those ZEBRA features.
Unfortunately, my employer did not get out on the limb with me as I sawed furiously and refused to pursue that unique, innovative, “bleeding edge” design. One senior VP who rejected the proposal shared his thoughts widely with many other executives asserting my design was: “antithetical to small group health reform”.
Today, as nearly one in three workers with employer-sponsored health coverage are enrolled in HSA-capable coverage (29%) and as 43% of Americans with coverage in the public exchanges are in HSA-capable coverage, my 34 year old proposal remains in my missed opportunity personal file. That’s a regret. I should have paid the fee out of my own pocket, run it through a law firm, and submitted it anyway – even though chances of IRS approval would likely have been less than 1 in 5.
This benefit is a sleeper, but important. A young adult’s greatest attribute is their human capital – which they can put to good use for decades.
Therefore, its critical to protect that human capital. And the best way to do that is with long term disability coverage. So young adults need to make sure they have that coverage. Because if they get injured and can’t work, that may be the end of their human capital – and the beginning of a very tough life.
Where I worked, if we wanted to create a new position, we had to budget the salary of the person, of course, and also had to add 35% of the position’s salary for benefits. Very, very few people who got hired, I imagine, had any idea of the value/cost the organization placed on those benefits.
It took a while for me, at least, to fully understand how valuable they were.
Those of us without all these great benefits just have to roll our own using the extra salary invested over a career.
I spent my entire career in benefits and compensation from clerk to VP. Most workers did not understand the value of the benefits and tended to focus on pay.
The tax value of benefits is tremendous. I used to have people say, yeah, but you can’t eat benefits. True, but giving up benefits for cash as some unions wanted was a big mistake in the long run.
those of us now with pensions and maybe other retiree benefits have it pretty good. Government and college workers always had a good deal even while having lower compensation- that is still true, but none of the benefits package is as good as it once was.
My union’s leadership always recognized the value of benefits. It was the rank and file whose demands were always money, money, money.
That’s my experience as well.
Don’t know if it’s still true, but when interviewing candidates in IT, if they would ask about benefits their candidacy went into the trash bucket.
That was many decades ago so things may have changed.
When I got my first “real” job as an assistant professor at a state university, my salary was very low—$33K, and I had a PhD. But I was thrilled to get excellent medical benefits for my young family. Later, my husband finished law school and was employed by a state agency. Neither one of us made huge salaries, but I remember my dad explaining to me, “You’re both now in one of the best retirement systems out there.” We were in our early 30s with two young daughters and were just thrilled to have two steady paychecks after so many years of school. We weren’t thinking about retirement or Medicare supplements or health coverage that continued if we retired before 65. But over time it began to sink in how fortunate we were. You can make choices other people may not have if that foundation (pension + health care) is solid.
A discussion near and dear to my heart!
I held three full-time jobs during my working career. My first job was at a state university hospital/medical school. I believe my salary topped out at about $30,000/year (in 1996), but the job made me eligible for a state pension plan benefit that was fabulous. Even though I lost half of my pension in my divorce settlement, if I wait to draw on it until I’m 72 years old, I’ll get a benefit of about $1200/month. The state contributed all the funds into that pension–none of my salary went into it.
My second job came with a much higher salary ($42,000/year), but basically no benefits beyond health insurance and a small ‘matching’ contribution to a 401(k). I didn’t stay there long.
My third job–where I stayed for 24 years–also had a modest salary. My final gross was about $76K/year. But I only had to work 37.5 hours a week, had TONS of paid time off and it came with an early retiree health care benefit that I take advantage of now. My employer also contributed a sum equal to 10% of my salary into a 403(b) plan the entire length of my employment. And, on top of everything else, I got to take my dogs with me to work–every single day.
I’ve mentioned before that I never felt ‘passionate’ about any of my jobs. They were a means to an end and a way for me to support my dog training passion. But the benefits were always more important to me than the salary. My lifestyle is simple enough, I’ve never felt like I needed to make a lot of money. The benefits are what allowed me to retire early and will likely provide me with a reasonably good income stream for the rest of my life.
Now, I would be remiss if I didn’t mention that the state pension plan I’m vested in no longer offers the same level of benefits. And that “early medical retiree” plan my final employer offered? It doesn’t exist in the same form either. I was fortunate the timing of my employment allowed me to take advantage of some very generous benefits.
Looking at benefits is all well-and-good if you have a job and are looking for a new one. But when one is unemployed due to a layoff or business closure, the primary goal is to start making money again. It’s a tough time for far too many young and middle-aged professionals out there.
Not deductibles, leave, sick time, vacations, at least don’t mention them in an interview. That sends a message that your focus is not on the job. Check health benefits generally, especially if they are managed care or not, premiums, retirement benefits-company match. Asking questions at interviews is fine, but don’t put too much stake in the answers to the ones you mentioned.
Good points, Jeff. And of course, many benefits taken in lieu of salary are tax free.
Thinking of jobs that require physical strength, health and longevity should be considered.
Good point, people don’t realize the value of tax free benefits, especially the employer contribution toward insurance or Section 125 employee contributions.