When I was a kid, and my parents took me to the ice cream parlor, I had one simple choice to make: Which flavor did I want?

I myself have always been a mint chocolate chip connoisseur.

But nowadays, when we walk into a shop, the real star of the show seems to be the toppings-- Fruity Pebbles, boba, crushed potato chips.

The ice cream seems a bit of an afterthought.

Honestly, shopping for a job in the modern era can feel eerily similar.

The salary can get lost in the fray when you compare it to the flurry of options and add-ons that can come with a new position-- insurance, retirement, onsite child care, stock options, vacation days, tuition reimbursement, bring your dog to work day.

Phew!

Obviously, it's really nice for people who have these kinds of things to choose from, but it can make it harder than just comparing one ice cream flavor to another.

But, thankfully, it's not impossible.

And today we will explore the buffet of employer benefit options and figure out how to pick the flavor combo that's right for you.

♪ Have you ever wondered why employers do this kind of stuff?

Why bother with all these add-ons, fringe benefits, and bells and whistles?

One of the key drivers for employee benefit plans is basic human psychology.

According to Maslow's hierarchy of needs, we Homo sapiens have an order with which we prioritize what's important to us.

At the very bottom of the pyramid you'll find the essentials, like food, water, shelter.

And just one level up, there's safety and security.

For our ancestors, that might have looked like avoiding predators or natural disasters.

But in modern society, how we make our money plays an enormous part in how we experience that safety and security.

When our income is erratic or we get let go from a job, it can really feel like a fault line has shifted in our emotional foundation.

Prior to the Industrial Revolution, [moos] the majority of the labor force was based in agriculture on farms.

Your job security was based on the fact that you were born into a certain family, and, by default, your job and place in society was basically preset.

But as soon as industries like manufacturing and mass transportation took hold, there was a new opportunity for consistent income, which can be pretty appealing when you're used to hoping and praying that strange weather or a pest infestation doesn't ruin your financial security.

Next came the first defined benefit plan, or what we may think of today as a retirement plan.

The earliest private sector defined benefit plan here in the U.S. was offered by the American Express Railroad Company in the late 1800s.

Similar offerings were also adopted by banks, factories, and public utilities.

The setup worked like this: After you left your job, you would continue to get paid by the company, often a percentage of your salary, but you had to have worked at the company for a significant amount of time-- say, 10 to 20 years-- and you usually had to be over 60.

Given that the average 20-year-old in the late 19th century was only expected to live to around 60 or maybe 65, employers were definitely playing it safe.

Things really started to heat up in the 1920s, not long after the ratification of the 16th Amendment which established the perennial favorite, the federal income tax.

[people cheering] Almost immediately afterwards, amendments created a laundry list of legal ways around it, also known as exemptions.

One of the earliest exemptions allowed employers to deduct whatever they contributed to their employees' pension plans.

This provided an extra incentive, and the age of normalized retirement benefits came into full swing.

As you can see, what started as an effort to meet our basic human needs of safety and security has morphed and evolved over the last century.

Companies today keep piling on more and more of these perks to attract high-quality employees, so much so it's getting harder to effectively compare offers.

Heck, I'll admit if someone offered me a "free tacos every day" benefit, I'd have a hard time focusing on what I'm actually getting paid.

So let's dig into how to go about calculating your total compensation.

[drumroll] I think it's time to... (both) Run the numbers!

[band plays fanfare] ♪ This is Taylor.

They are looking to make a big move from a sales job to a management position at another company.

They've received two offers that look pretty different on paper and would like to compare them side by side.

Offer 1 comes from a well-established online bike sales company, We Like Bikes.

They've offered the following: a $60,000 base salary, 2/3 of health insurance premiums covered, a free gym membership, and the possibility of a 5% annual bonus.

After their first year, they'll be eligible for 10 paid vacation days a year and a 401k with a 3% match.

Taylor's goal should be to try and whittle all this down into an hourly pay rate.

The hours are capped at 40 hours a week.

And assuming they work 50 weeks a year, that gives us 2,000 working hours annually.

Just the base alone would come to $30 an hour.

The average individual cost of health care premiums comes to about $7,400 a year, with employers usually paying for 83% of that tab.

But remember, We Like Bikes is paying 2/3, so that's worth an extra $2.47 an hour.

Not bad at all.

The $90-a-month gym membership tacks on another 54 cents an hour.

The possibility of a 5% bonus isn't a sure thing, but Taylor feels confident they can hit their goal, so that's another $1.50 an hour.

So for the first year with the company, this offer is worth $34.51 an hour, or $69,020 annually.

In the second year, an extra 90 cents an hour is added for the 401k match, and an extra $1.38 for the 10 days paid vacation, which brings the new number to $36.79 an hour, or $73,580 for the second year and beyond.

Now, obviously, this isn't money they'll have in their pocket after every hour of work but, rather, the approximate worth of the total compensation expressed in an hourly format.

Let's look at the second offer.

This is a tech start-up called Educatopia with an open sales role selling software to schools.

They're offering $72,000 base salary, lunch in their fancy cafeteria every day, and 5 stock units upon signing, with the potential for more to be granted as bonuses.

They even offer two weeks of paid vacation after the first year.

But right now there's no 401k match, and they only pay a quarter of the insurance premiums.

This one's a little trickier, but let's see what we can do.

Base salary works out to $36 an hour.

Nice.

Let's say that lunch is worth 12 bucks a day; times 250 working days a year is an extra $1.50 an hour.

The covered quarter of insurance premiums tacks on 93 cents an hour, bringing us to $38.43 in Year 1 and $40.58 in Year 2.

So despite the fact that they'll be on their own to figure out retirement savings, this is still looking pretty good.

Not so fast, Taylor.

What if, after chatting with a potential coworker at the final interview, it becomes clearer that the company's culture seems to encourage working late and on weekends?

It's not uncommon for start-ups to expect 50-hour work weeks from their employees.

If, in reality, Taylor ends up working an extra ten hours a week, those hourly rates tank to $30.74, Year 1, and $32.47, Year 2.

Suddenly, the first offer is looking mighty good again.

The only thing that could possibly tip the scales, stock units, are a gamble at this point.

So they'll have to think nice and hard about how much risk and how much grind they're willing to tolerate.

Now, we understand that some job benefits don't come with a price tag and can't be crunched on a spreadsheet.

Jobs can offer benefits like working from home or flexibility of work hours that are more of a personal values conversation than a financial one.

It's also critical to take the time to get a feel for who your direct manager is going to be and what the growth opportunities are.

A 2019 study found that 57% of employees quit their job because of their direct manager.

As the saying goes, people don't quit jobs, they quit bosses.

Remember, when it comes to picking the right job for you, the salary is important, but it's not the whole picture.

You are giving them your most valuable nonrenewable resource--your time.

So do your digging, run those numbers beforehand, and you'll be reaping the benefits for years to come.

(both) And that's our two cents.