The Layoff Lady

Let's Talk Money: Salary and Total Compensation

4/25/2023

By Brenda L. Peterson, The Layoff Lady

Contract vs Benefits Eligible Roles

When you're looking for work, it's important to know what salary range you have in mind. As you are initially searching for jobs, a key factor in deciding which jobs to pursue and which to pass on will be what you will earn.

If you are looking at contract positions, the salary you will receive is the same as your base salary. Usually, you are paid a set amount for each hour worked with no additional benefits. Consequently, contract positions often have a higher hourly rate knowing that each contractor will have to cover their health insurance and other additional benefits that may be included in other job offers.

However, If you are in a benefits-eligible role, you will receive additional value above and beyond your base salary rate. Let's consider what factors may be included in your total compensation package.

A Disclaimer

While I feel comfortable discussing various financial and insurance concepts, I do not currently hold a license or any certification that deems me inherently qualified to give financial advice. The information provided here is intended to be used for educational purposes only.

Sometimes, the core challenge is knowing how a system generally works, the terms used to describe what you’re asking about, and where to go for additional help. My goal for this article is to share information to guide you as you navigate the murky waters of job searching. I hope my personal experiences can help you cut a path through the wilderness as you try to figure out your next steps.

Feel free to take my recommendations or not. Whatever you do, double-check my facts--and everyone's purported facts, for that matter. This is your life, and you will care more about your financial and healthcare decisions than anyone else. Use this information as a starting point for further research as you ultimately decide what’s right for you.

Your Work Income

First, let’s look at a high-level, generalized overview of the money you may receive:

Base salary: Money you will earn for showing up and meeting basic employer expectations for your job. This is typically paid on a bi-weekly or bi-monthly basis. This is usually what recruiters are asking for when they inquire about your "salary requirements."
Bonus: Additional money you may (or may not) receive based on the performance of you individually, your team, and/or the organization as a whole. Bonus payment depends on the organization and may be paid quarterly, annually, or on another schedule.
Commission: Additional money you may earn, typically based on what and how much you sell. Commissions are often a percentage of what you have sold. Bonus payment depends on the organization and may be paid monthly, quarterly, or on another schedule.
Signing Bonus: Additional money you may receive for agreeing to work for a given company outside of your agreed-upon salary. This is usually a one-time payment paid out as an incentive to accept a job offer.

Employer Money For A Specific Purpose

In addition to receiving money in the form of a check or payment payable to you, you may also receive money earmarked for a specific purpose.

Retirement Account Contribution: Your employer may give you a matching contribution as a percentage of what you contribute to your retirement account (usually a company-sponsored 401(k) or 403(b) plan). Alternatively, you may receive a retirement contribution before you put any money in. This money is typically deposited into your retirement account and invested alongside your other retirement account money.
A Post-Retirement Pension Payment: Upon retirement (and based upon requirements and guidelines set up by the employer), you may be promised a series of payments. The details of that pension will be set up on an employer-by-employer basis. (Pensions are not as common.)
Health Savings Account (HSA) Contribution: If your insurance is a High Deductible Health Plan (HDHP), your employer may contribute money to your Health Savings Account. This may be a one-time contribution given right away when you start your job, a monthly amount, or money awarded at another interval. This account is specifically designated to be used for qualifying healthcare expenses.
Tuition Reimbursement or Educational Assistance: If you want to pursue a college degree, some organizations may assist with that cost. Depending on the organization, they could pay the cost upfront or reimburse you after you successfully complete a course.
Professional Development: Some organizations will pay for memberships in professional organizations, certifications, or additional job-specific training. Depending on the organization, they could pay the cost upfront or reimburse you after you successfully complete a course.
Offsetting Specific Costs: You may receive a payment or stipend to offset your costs for various expenses. Here are a few examples: gym membership, home office setup, internet access, cell phone access, uniforms, passport, mileage, lunch, parking, travel, rent, and student loan payments.

Benefits, At Least Partially Employer Paid

In the United States, many people obtain different types of insurance through their employers. Employers often pay administration costs of the plan and help cover some of the costs.

Health Insurance: Employers may offer one or more health insurance plan options and usually cover administrative costs and part of the monthly premiums. Costs will vary widely. When reviewing benefit premium costs for recent jobs, I saw health insurance rates for my family of three range from $255.00 per month to $1,249.30 per month for the least expensive High Deductible Healthcare Plan options they had.
Dental Insurance: Employers may offer one or more dental insurance plan options, usually covering administrative costs. They may cover a portion of the monthly premiums as well.
Life Insurance: Employers may pay for a life insurance plan. The coverage may be a set amount, like $50,000, or a multiple of the employee’s salary.
Long-Term Disability: Employers may offer disability insurance plans and usually cover administrative costs. They may also cover some or all of the monthly premiums as well.
Employee Assistance Program (EAP): Usually employers include EAP access to give their employees access to counseling services as needed, referrals, basic budgeting help, and basic legal assistance as needed.
Flexible Spending Account Access: On a related note, employers may pay administrative fees so employees can use flexible spending accounts for healthcare, dependent care, or transportation. These are typically employee-funded accounts.

Access To Purchase Additional Benefits

Many employers offer the option for employees to purchase additional benefits. These can include vision insurance, short-term disability, long-term disability, enhanced disability coverage, supplemental life insurance, spouse life insurance, child life insurance, accident insurance, condition-specific health insurance, a legal protection plan, or orthodontic benefits.

Perks

Companies may also offer a variety of perks. These can include items you can purchase for a lower cost or resources you can take advantage of that you might otherwise pay for elsewhere. These could include an onsite gym, onsite daycare, free parking, entertainment discounts, stamps, bus passes, use of the company van, cell phone plan discounts, or reduced entry fees for area attractions.

Perks can also be anything that makes work easier, more engaging, or more pleasant. These could include shift bidding, flexible work arrangements, remote work, work-from-home days, summer hours, four-day workweeks, onsite flu shots, overtime opportunities, or company events.

Time Off

Employers also often pay you for specific hours when you do not work. Here are a few standard categorizations for different types of paid time off: paid time off (PTO), sick time, vacation time, paid holidays, floating holidays, volunteer time, bereavement leave, jury duty pay, or military leave.

Instead of having a specific number of paid days available for sick or vacation time, some companies have unlimited time off policies. In most cases, instead of earning and then choosing to use paid time off, you work with your manager whenever you want to take off. In general, as long as you are performing your job to an acceptable level, you can take time off.

The Salary Question: Revisited

Remember, when a recruiter asks about your salary range, there is a lot more going on than just your base salary. Overall, I suggest giving a salary range instead of a set number to account for possible differences in company-offered benefits.

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