Low pay w/ bennies vs. higher pay w/ none

[Stachetastic]

My husband has tentatively accepted a job offer with low pay (13/hr) and benefits. He will not be taking the health ins since we are covered through my employer. The retirement looks like this: 401k through Morgan Stanley, eligibility after 6 mo, company match 25% of first 6% contributed by employee.

He has a second interview scheduled this week for a position that pays 39k/yr, but offers no benefits. Job 1 comes with a company vehicle and is home based, Job 2 is approximately 1 mile from home, so commute times are negligible. He has 14 years in retirement through PERS, none in the private sector so this is all new to us. He has been laid off for almost 2 years and working seasonal construction for 15/hr and no benefits. It's time to make some decisions, even if the choices are not optimal. Thanks for any input.

[Exflyboy]

so 25% of 6% is 1.5%

1.5% of $13 is about 20cents an hour.. And you don't need the HC bennies so they have zero value.... So basically to you this job is worth $13.20 and hour.

Depending on age you can contribut $17,000 or $24000 to the 401k and basically hide you top tax rate on that money.. If you are in the 15$ tax bracket this is 0.15*13 = $2.

So total all up net worth of the low paid job is $15.20.

Second job assuming he can keep to 40 hours per week (2000 hours) is worth 39,000/2000 = $19.50 an hour.

On paper Job #2 is the better deal if you ignore the car.

Now with a 1 mile commute does he even need a car? Might be worth figuring out what your current car costs you per year but its hard to imagine its $8000 (which would make the two jobs cost equal).

I'm not sure the tax consequences of having a company car?

If he works hourly will there be overtime? The problem with the salry position is they could demand 50 hour weeks, then the two jobs look a lot more equal at that point.

[Goldielocks]

What are the career paths for each of these?  There is no problem starting low, especially after a break, if there is possibility to move up when you show initiative.  (move up could include to another employer in the same industry).

But the higher paid job is better on the surface, assuming both are equally interesting. (Walk  to work)

Usually personal use of company car will require you to pay taxes on the benefit.   If you are paying a higher tax rate, as a family, that can add up fast, so plan to not use the car except for work

The benefits for the first employer are really almost nothing....  6% x 25% x $26k/yr? as in $338?  Car that can only be used for work, as you will pay the costs (taxes) on personal use?  No Health care?   Life insurance and such is likely very low value to you too.

Also, working from home, he won't get much networking ability to transfer into higher and higher employment, unless he is travelling sales or something.

So -- look forward,  what would the job look like in 1 year?  Is there a great change for the low paid position versus higher paid?  Would he have quit the higher job due to seasonal work or poor management?

[renata ricotta]

Yeah, with pure dollars and cents Job #2 is better.Total gross compensation at Job #1 is $27,445 and change (if he works 40 hours a week, 52 weeks a year, and maxes out his 401(k) benefit). Job #2 is almost $12k more per year. After taxes, you're looking at ~$700 extra per month, which is nothing to sneeze at.

The benefit of an employer 401(k) [other than the match, which doesn't make up enough ground in this situation] is that you have a ceiling of $18k to save in a retirement vehicle. But with gross wages of $27040/year (if he works 40 hours a week, 52 weeks a year), it's unlikely you'll hit that anyway (unless your job completely supports your family, and basically all of his wages are for saving). He can save $5500 in a tIRA with the same tax benefits (or $5500 in a Roth IRA, if the work option for Job #1 would have been a Roth 401(k)).

I agree with you; the commutes are negligible. There may be some psychological benefit to working from home/with other people on location, depending on his preferences. But even if he really loves working from home, I think it would be hard for me to say that's worth $12k/year.

The one thing I'd consider is how stable your job and health insurance is. Do you think it's at all likely that you would lose either your job or your benefits, meaning it would be valuable for him to have a job where he can choose to pay for insurance? If it's possible, but unlikely, I'd take the risk of having the extra money. If it's likely or something you're really worried about, you can think whether you want to essentially pay $12k a year for a health insurance backup. (I probably wouldn't).

[Stachetastic]

Thanks you for your insight! Some more info:

Job #1 is entry level, and he will be out and about all day every day. They estimate approximately 10 hrs of overtime weekly during the busy season (spring through fall). Not sure about opportunity for advancement, as the main office is over 2 hours away and relocating is not an option for us at this time. But possibly opportunity for networking with other companies. Company vehicle would be used solely for work. Our other vehicles are paid for and have minimal ins coverage. We have discussed possibly selling one.

Job #2 is a director at a non profit. No room for advancement. Not sure what hours would be expected, but flex time is offered. Any raises would have to be board approved. He would walk/bike to work and we would likely get rid of a vehicle. We currently pay for life ins for him through a private company, as well as additional coverage through my employer, so we are covered there.

I am not too concerned with my position at this time. I think it is fairly stable, and I have never in my career been without health coverage, so I'm pretty confident I could pull something together quick if I had to.

[renata ricotta]

I think it's also important to think about growth opportunities for the skillset as a whole, not the specific company. A director of a nonprofit might not have anywhere to climb... In that specific non-profit. But someone who has experience running a nonprofit and who accomplished a lot while there is a lot more marketable in the future and can get themselves a raise by moving jobs in a couple years, because he is acquiring a valuable skillset. An entry level job might mean that technically, there are jobs above him at that specific company, but people who have entry level work experience are a dime a dozen and are facing stiff competition and depressed wages. The more sought-after and difficult to find your skill set is, the more you can command in the marketplace in the future. So, that's yet another reason that if it were me, I'd probably go with Job #2.

[Stachetastic]

Is he entrepreneurial?  If he thinks he can succeed at the non-profit -- effectively fundraise, grow programs, demonstrate impact -- then there is probably more upside there.  But it is challenging/demanding work, especially if it is a one-man-show kind of operation.  A lot depends on the board.

Note that the lack of benefits is something that can be addressed if he is effective in growing/deepening the impact of the organization.

He is not particularly entrepreneurial, though he is excellent at managing people. He has extensive experience fundraising for events, but not necessarily for an organization. But he's a quick study and eager to learn. We are close friends with the board president (who has removed herself from the interview process), as well as two other board members, so if he were to get the job, we feel he would have a good working relationship with them.

At his first interview, they stated they cannot offer benefits due to being a 501(c)3 organization. Anyone have any insight on this?

[Basenji]

I work for a 501c3 and I have amazing benefits (health, dental, vision, 401a, separate 403b retirement, disability, and so on). Maybe it depends on the size and resources of the org, but really, no benefits at all?

[Stachetastic]

Yep, 501(c)(3)s can offer benefits -- I worked for two and had benefits at both.  403(b) programs may have contribution restrictions due to small number of employees/low levels of participation (you can't have just a few highly compensated employees getting the bulk of the benefit, so match is often limited, too).  But they can set them up.  It may be cost-prohibitive for a small organization with a limited budget to do so, but it is definitely possible.

Yeah, I suspect this organization is really limited by their small staff--6 people, rather than their non profit status. Either way, I'm guessing they won't be offering benefits any time soon.

[Axecleaver]

At his first interview, they stated they cannot offer benefits due to being a 501(c)3 organization.

I think they meant that they cannot afford them, or that it's a hassle to do the work to get them figured out. Mrs Axe works in nonprofit and gets benefits. Comp is driven by the revenue you drive to the organization. They have a few people who were hired to write grants and increase donations, but they don't really pay for themselves. If your husband can draw a clear parallel between what revenue he's responsible for, he can make a strong case to the board to add benefits or increase his comp. Make sure you address this with the board up front before he's hired.

There seems to be tremendous waste and laziness in nonprofits, with unproductive staff being able to keep a job forever, and a lot of back room nepotism deals where the funds get funneled to friends and family suppliers. I know I don't have the temperament to run a non-profit, I would be cutting staff left and right until it was a well-oiled, efficient fundraising dynamo with clear goals about where the money went. I serve as a trustee for our local Elks lodge, and along with some other business minded folks we have made a big difference in the efficiency of our spending.

[Stachetastic]

UPDATE:

He was offered and has officially accepted the director position. Thank you all again for your insight. It really helped clear some things up for us and made us confident in our decisions. And he is so excited about riding his bike to work!

[DebtFreeBy25]

UPDATE:

He was offered and has officially accepted the director position. Thank you all again for your insight. It really helped clear some things up for us and made us confident in our decisions. And he is so excited about riding his bike to work!

Congrats! It's sounds like great experience and a good work environment.