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Course: Financial Literacy Library > Unit 2
Lesson 2: Compensation: More than payUnpacking employee benefits
While your salary is a big piece of the job satisfaction puzzle, benefits like health insurance, retirement plans, and paid leave play a crucial role—they complete the picture by boosting your overall compensation and quality of life. It's not just about the number on your paycheck; it's the value of benefits too that truly counts when tallying up what you gain from your job. Created by Sal Khan.
Video transcript
- [Narrator] When looking at a new job, it can be very tempting
to look only at the pay, and that's because the
pay is really important and that's the bulk of what the company is going to give you. But there are other things
that they will give you beyond pay that you should compare, and this general category
of things beyond pay that might make one job versus
another more attractive, we would call benefits. And then we can sub-categorize benefits into hard benefits and soft benefits. Now, hard benefits are things that the company is actually
paying to give you in some way. While a soft benefit isn't
necessarily something that they have to use
money to give to you, but it can still be
something that you care about or makes a job better. So let's go first through some
examples of hard benefits. The first and usually the
most significant is some form of employer-paid insurance. That could include health insurance, which can be pretty expensive, but it can include vision
insurance, dental insurance, disability insurance,
all sorts of insurance. Now, this could be of different importance depending on who you are. If you have no other source of insurance or in many cases if you, if it's very hard for
you to insure yourself, maybe you have a pre-existing condition, which makes insurance
either impossible to get or very expensive to get, this employer-paid insurance
could matter a lot. On the other hand, let's
say you have a partner who gets insurance for the entire family through their employer. Well then this might be a
little bit less important because you're going to
get insurance either way. Another dynamic or benefit, hard benefit is retirement matching. And once again this,
these are hard benefits because these are actually
going to cause the employer to pay something, it actually
costs them some money. This might be, say a 401k plan where you're able to put some money away before you have to pay taxes on it, and the employer might match some of that. Next, you'll hear PTO,
that's paid time off. Obviously, if one employer
is willing to give you, let's say, four weeks
of paid time off a year, and another one's willing
to give you two weeks of paid time off, it's paid time off. It literally has the word paid in it. And so that actually
costs the employer money because it might be two or four weeks where you aren't working, but they are still paying you and obviously it has real
monetary value to you. Sometimes they'll help
you with your commute. Might be a gas allowance, it
might be some type of a voucher for public transportation. Clothing allowance. I haven't seen this a lot, but maybe in certain jobs, let's say you have to
work at a department store where they want you to wear
clothes from that store. Maybe you want to wear
clothes from that store, so that could be a hard benefit. If you are working from home or maybe sometimes work from home. A lot of employers will give you money to pay for your internet, for a desk to have a
nice chair, et cetera. They might pay for your gym membership and some even help you
with things like tuition. Once again, all of these
things cost the employer money and in a lot of ways could save you money. So it has monetary value. Now, let's think about soft benefits. Well, the first might just
be a great work culture. It doesn't necessarily cost the employer much of anything to do that. Sometimes they might
spend money by having, I don't know, a coffee
bar and have nice snacks and all of that. I guess that might start to venture into the hard benefit world, but it might just be they're easygoing. They're the type of folks
that you like to work with that you have a lot of
meaning and purpose. Maybe there's a great mission,
maybe I'll put mission here. That's one of the reasons why we attract a lot of
people to Khan Academy. They wanna feel like
they're educating the world, so that might draw people. That's a soft benefit. Flexible work hours or
maybe flexible clothing. It's something where, you don't have to have
always have FaceTime or put a punch card in, or if one day you're not quite feeling it or you need to go to a dentist appointment or take your kids to
soccer practice, you can and maybe you could
work a little bit harder the next day, et cetera. No one is over your shoulders. I personally really appreciate having a work environment like that. And once again, relax dress code. Not everyone wants to put
on a suit and tie every day. And not that most employers
make you do that anymore, but some let you wear anything reasonable that looks reasonably professional. Remote or hybrid work, which isn't necessarily the same thing. Hybrid work means sometimes
you're inside of the office and sometimes you can work
from home or wherever you like. While remote work means, "Hey, you can work from
wherever you like." You don't necessarily
have to come in the office or they might not even be in office. Now we said a hard benefit is
having paid gym membership. It could be a soft member, it could be a soft benefit on top of that, if the gym happens to be located where, you're actually go to
work, it's just convenient. You don't have to drive someplace else. Now it probably costs
the employer some money to put that on-site gym. So that is a little bit
of a hard benefit as well. Recognition, maybe they have an employee, they give awards to folks, employee of the month, whatever, something that makes you feel good. And then professional
development, they invest in you. They help you develop your skills. That actually probably does
cost them something to do, but you, from your point of view, it's improving your intellectual
and personal capital. And things like PTO, even though we said it's a hard benefit, it could also play into
things like, well, let's see. Great work culture. More PTO, maybe it's more of
a flexible type of employer. So some of these can go back and forth, but it is good to think about in general, above and beyond the pay that the prospective
employer is giving you or your current employer is giving you. You have these benefits. Some of these benefits cost money for the employer to give to you, and some of them, for the most part are a little bit more cultural.