If you have another job offer in your hand, it’s time to calculate the job worth. The most important things to consider are salary, bonus, vacation days, and tax advantaged accounts benefits. You don’t want to take a job thinking it was a salary increase when it actually is a compensation decrease.
People change their jobs an average of 12.3 times during their career (source: BLS). I made the mistake of taking a job too hastily before. I saw a 43% increase in base salary and said yes right away without giving it a good amount of thought. In actuality, it was maybe a 10% increase. I should have negotiated for higher pay.
So when I received a job offer in early 2021 of $110,000 base + $27,500 bonus, I carefully calculated the job worth of both companies. Then made the decision. I eventually ended up passing on the offer because the compensation was similar, if not lower.
If I’m changing jobs, there’s no way I would change without at least a 20% increase in compensation.
It’s a risk to take another job. You have to reprove yourself and you don’t know if you’re going to like your bosses. Therefore, you should always be compensated for taking on the additional unnecessary risk. If you’re not going to be compensated, it’s a good idea to walk away.
People say “would you take a pay cut if it meant a better work life balance?” That’s one of the worst questions you can ask. Whether you work for one company or another, they’re still going to be very demanding of your time. It doesn’t matter whether they’re paying you $70,000 or $150,000.
Therefore, carefully evaluate the two job offers before making the same mistake I did. I can’t change or take it back.
Salary and Bonus to Calculate Job Worth
The most important factor in determining job worth is obviously your salary and bonus. In my old company, the compensation was heavily skewed to bonus rather than salary. It was a $70,000 base salary+ $35,000 bonus, of which the company usually paid out close to 100%.
When I got my current job offer of $100,000 base salary + $9,100 bonus, I focused too heavily on the salary increase. Not the overall compensation increase. That was my crucial mistake. Yes, I actually ended up getting higher compensation with my current company.
The number of vacation days they give me is unparalleled and the 401k matching is a nice 9% matching. However, I lost sight of the bigger picture and I actually didn’t negotiate. I lost the negotiation because I didn’t negotiate. That was my crucial mistake.
In any case, the salary plus bonus number is the number one factor in determining the job worth and your negotiation angle. I actually had companies refuse to tell me what their target bonus actually is. It’s a good thing I refused to work for them. Companies who leave you at their mercy is not a company you want to work for.
Take careful note of what this number is versus what your current job’s number is. This is the basic number from where you will work from to calculate what your overall jobs are worth. This is step one to comparing the total compensation.
Vacation Days to Calculate Job Worth
The second step in calculating job worth is to look at how many vacation days they are offering versus your current company. In my old job, they offered 15 days worth of vacation days. In my current job, they offered 24 days of vacation days per year. However, that’s not the most important part.
Then you have to calculate how much your vacation days are worth based on your salary. Employers are legally required to pay out vacation days IF they say in their employee handbook that that is their policy. All you have to do is multiply your hourly rate times 8 times the number of days the company offers.
In my case, at a $70,000 salary with 15 days of vacation days, it was worth about $4,038. They allowed 5 days worth of rollovers, so it was worth closer to $5,384. In my current job, at a $100,000 salary with 24 days of vacation days, it’s worth about $9,230. Then they allow a 10-day rollover so it’s really worth $13,076.
From a vacation standpoint, I got a really nice bump. The large number of vacation days the company offers gave me tremendous leverage when I negotiated with the new job offer. The new job offer that I got in early 2021 had a salary of $110,000 with 10 days of vacation. Vacation days were only valued at $4,230.
Therefore, in evaluating job worth, it was easy to see that it may be higher cash compensation, but it wasn’t overall higher compensation. This is step two in determining whether your new job is actually an increase in compensation. Don’t just look at the dollar numbers but other factors as well.
401k and HSA Matching to Calculate Job Worth
In my old company, they matched 6% of my salary to contribute to my 401k. So, a $4,200 matching. I actually ended up losing about $3,000 in unvested funds because I didn’t negotiate the job offer with my current company. I still regret it to this day that I didn’t negotiate.
In my current company, they match 9% of my salary to my 401k. For the first two years, they contributed $9,000 on top of the $19,500 that I contribute to my 401k. The amazing thing is that they also matched my bonus as well. They put in another $819 to my 401k from my bonus as well.
Besides 401k matching there is the HSA matching. In my old company, they contributed $1,000 and in my new company they contribute $500 upfront at the start of the year. So purely from the tax advantaged accounts perspective, I got an increase in compensation.
From $5,200 total contribution to both 401k and HSA to $10,319 in total contribution.
A nice little bump. Considering that one 401k dollar is worth more than a dollar in your savings account, it’s a meaningful compensation increase. In the new job offer, they told me that they “match 5% of salary” to my 401k. Then when I carefully read over their benefits package, it turns out it was capped at $1,500.
It’s funny how they left that part out when walking through the offer with me. I’m glad that I carefully read the fine print to know what I’m getting myself into. Although it was an increase in cash compensation, it was actually quite similar when considering everything altogether.
That’s why it’s important to walk through the numbers so that you can accurately assess the job worth of both jobs.
Health Insurance Plans to Calculate Job Worth
This is the last step in determining and comparing two jobs. Health insurance plans. Do they offer comprehensive? Full dental, health, and vision? Does the company contribute to life insurance? Then it comes down to how much plans cost versus another.
In my experience, there aren’t many differences between one company’s health plan versus another. United Healthcare or Blue Cross usually supplied the health insurance. I haven’t had bad experiences with either yet. The cost was relatively the same, with maybe a $10 per pay period difference here and there.
This is a standard perk and benefit that employees now expect of their company to provide. Unless you’re working for a startup, it’s important that the company offers these benefits in the first place. The comparability of the quality of the health insurance providers is quite difficult.
Therefore, this is one of the last qualities to consider when comparing on how much a job is worth versus another. The test is “do they offer it at a comparable price with reputable companies?” I’m not a healthcare professional so it’s important to figure out the answer to this based on your past experiences and research.
All I can say is from my own experience. I haven’t experienced any significant differences in quality yet.
Compare Jobs Qualitatively
Besides from the quantitative factors above, now it’s time to evaluate job worth based on qualitative factors. One thing to not care about is whether your work life balance will improve. News flash, EVERY company is demanding of their employees. They expect you to produce above average work while paying average pay.
Don’t place this high in the list of priorities to consider. I haven’t worked for a company who weren’t so needy that they wanted more time out of me for work. Some companies aren’t as demanding. However, they are in the minority. The default position is that every company will overwork you.
So now, let’s get into the qualitative factors that you should actually consider.
1) Your Boss
This is the number one qualitative factor you need to consider. People don’t leave jobs, they leave bad bosses. I’ve never left a job when I got along with my boss and made the workplace a pleasant time. When I interviewed at my current company, I had a feeling that my soon to be boss was a bad one.
I was right and I should have trusted my instincts. He takes advantage of me at work. He is not the worst boss I ever had but one of the worst bosses I ever had. You shouldn’t overlook or neglect who you will be working for. It’s who you’re going to be talking with the most. Do you get along with him or her?
When you ask questions, does it get answered in a clear and succinct manner? Can you talk to him or her on a personal level? Can you trust them? That’s up to you to decide during the interview. People are generally bad at hiding who they are because they don’t know how they come across to others.
Therefore, if your gut instinct is telling you something, listen to it.
2) Coworkers
Next to your boss, you will be talking with your coworkers the second most. Do you get along with them as well? Soon to be coworkers are generally honest about what they’ve seen the work condition to be. I haven’t had a coworker work hard to convince me to join the company.
They generally don’t care about the conflict of interest and was honest about the positives and negatives of the job. Most of them don’t really care. If you are talking with a direct boss and HR who has a vested interest in you joining board, then yes they care. Don’t listen to their feedback and general view of the job and company.
All they want is for you to join the company. I remember I told a potential boss that “if I join the company, I’m considering the risk that I’ll have to re-prove myself”. He immediately retorted “ohh.. ohh. uhm.. well you shouldn’t be so unconfident, you should have confidence!”. I rejected their offer.
No way will I join a company who doesn’t take my concerns seriously.
3) Job Experience
What are you going to do? Does it fit with your long term goals of what you want your career to be? If it does, then that’s great. Remember about exit opportunities. You can absolutely be pigeonholed into a single thing for the rest of your life. Are there many transferrable skills for you to apply to your next job?
My current job is significantly specialized. There isn’t a lot of transferrable industries it can apply to, if I want to stay at my current city. That doesn’t mean that there aren’t any similar jobs I would be a good fit for. It means that there isn’t a whole lot of jobs that matches my skillset.
This is a good qualitative factor to consider in evaluating job worth. If you are going to enjoy what you are going to be learning and there are generally good exit opportunities, it’s not a bad idea. You don’t want to be stuck doing one thing for the rest of your life if you don’t like it with no chances of you being able to change your decision.
4) Growth Potential
Is the company large enough to the point where you can get promoted? Can you grow and move up with the company or is it a join for two years and leave? There are actually companies who wants you to leave to get an MBA after 2 years at the company.
If you don’t mind doing that, that’s great. If you do, then that’s something to think about. Are there other departments that you can join after proving yourself if the current job doesn’t come out good? The prior company I worked for encouraged workers to move if they weren’t happy at their current position.
That was a great perk that I haven’t seen in other companies. One coworker moved to another department in a matter of months after talking to my boss back then. This may not be something you bring up in an interview but something you should get a feel for to calculate job worth.
It’s a hidden perk.
Accurately Calculate Job Worth to Make the Best Decision
I almost took the new job in early 2021 when I didn’t actually sit down and walk through the numbers to calculate job worth. The rationale looks something like this:
| Factors | Current Job | New Job |
| Salary + Bonus | $107,000 (promotion) + $9,100 bonus | $110,000 + $27,500 |
| 401k + HSA Matching | $10,949 | $1,500 |
| Vacation Days | $13,992 | $4,230 |
| Total | $141,041 | $143,230 |
As you can see, at first glance of the salary and bonus figure, it’s a huge increase. My compensation is increased from $116,100 salary + bonus to $137,500 salary + bonus. I should have jumped at the opportunity! Not so fast. Salary and bonus doesn’t tell the whole story.
Yes, it’s an increase in cash compensation but it’s not a big increase in the overall compensation. The job would have had to be worth at least $160,000 for me to even consider it. I couldn’t even negotiate because the $143,230 number was after I negotiated.
The pre-negotiated job offer was worth something close to $125,000. A significant pay cut from my current job. This is the rationale you should use to calculate job worth. Otherwise, you will make a hasty decision that you will regret down the road. I can’t imagine how much I would have regretted if I took the new job.
Don’t be fooled by the leading numbers. It might just be the same compensation wrapped in a different dress. You don’t want to be filled with regrets down the road because you generally can only work for one company. If I brought up the job offer to my boss, and he told me to take it, I would be left holding the bag.
You don’t want to be stuck after a job switch. You can only switch jobs every so often before it starts to look bad.
