Financial Literacy Miniseries Part 3: The World of Work

The World of Work.

It’s complex. It’s stressful. It’s demanding. But, what is it really?

When we refer to the “World of Work”, we are talking about you obtaining your first full-time job (sorry old-timers). We know, part-time jobs are work and are definitely important, but these positions are not necessarily where you are going to start your career.

Your post-graduation career is going to be an adjustment and, to the average person, going out into the world to find your dream job can seem quite daunting. However, it is important to know what you can expect when you get out there.

There are thousands of jobs waiting for you, each with its own unique set of advantages and disadvantages. Right after graduation, you might be pressured into finding a “good” job as soon as possible, which is all well and good. But, we believe it is just as important to understand what goes into those “good” jobs, such as the difference between full-time and part-time work, how to “opt in” to a retirement program, and how you can be compensated for your work (salary vs. commission based).

Working can be rough. We know it just as well as you do. And, you may not find your dream job right away. Many of us work to get the paycheck and don’t realize that there is so much more out there. We don’t realize the extensive benefits packages that are available to us. That’s why you have to pay close attention to what’s going on around you as well as to your personal preferences.

Employers are often obligated to offer their employees certain benefits such as overtime, vacation pay, medical leave, etc. But, not all employers are obligated to provide such benefits, just as not all employees are eligible to receive them.

It’s an important process and an important step into the “real world” for every new graduate. It’s something that practically everyone will have to experience at one time or another. Our hope is that we will be able to extend our knowledge to those who may not fully understand the process so that they aren’t blindsided right out of college.

It is complex, stressful, and demanding. But, it’s also rewarding. Thus, we welcome you.

Welcome, to the World of Work.

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What Benefits is My Employer Required to Provide (For full-time positions)?

  1. COBRA (Consolidated Omnibus Budget Reconciliation Act): This gives employees and their families the option of continuing to participate in health benefits for an extended period of time in the event of special circumstances. The benefits are typically extended for a period of 18 months following unemployment due to death, involuntary job loss, etc.
  2. Minimum Wage: All employers are required to pay their employees the standard hourly minimum wage as defined by the United States Department of Labor. (In New York State, the current minimum wage is $9 per hour)
  3. Unemployment Insurance: Employees who have been fired or lose their job due to lack of work or other circumstances are entitled to unemployment insurance. It provides monetary assistance to an employee for a specified period of time, or until the employee finds a new job.
  4. Social Security Disability Insurance (SSDI): Certain benefits are given to employees who have a medical condition that prevents them from working for monetary compensation.
  5. Overtime: Employees that work more than 40 hours in a week must be compensated no less than one and a half times their standard pay rate. (Not all full-time positions are eligible for overtime. Some positions are exempt. For instance, many salary jobs do not get overtime.)
  6. Workers’ Compensation: Each state has different laws regarding workers’ compensation eligibility and benefit details. If an employee is injured on the job, or falls ill on the job, employers are required to compensate the employee for medical bills related to the employee’s condition, as well as be paid a portion of their salary.
  7. Family and Medical Leave Act (FMLA): Employers are required to pay eligible employees (who have to take time off from work due to family obligations, such as maternity leave) 12 weeks of unpaid FMLA leave during any 12 month period.

See. Already, there are so many different things that go into a job other than a simple paycheck. However, these are just the things required by law. What’s not required by law is where you and your employer can have some major discussions.

What other benefits do employers provide?

  1. Health Insurance: Private health insurance is extremely expensive. Thus, employers often offer their employees group benefits packages including health, dental, vision, and mental health benefits. However, each employer is different. Some employers cover all your premiums, whereas others deduct a small percentage of their employees’ paycheck to put towards their medical benefits.
  2. Holiday Pay: Holiday Pay is when an employer compensates you for a day of work on which the business might otherwise be closed, such as Thanksgiving or Christmas.
  3. Other Benefits: Additional benefits may include vacation and sick days, raises, tuition assistance programs, life insurance, etc.
    • Some employers also offer discounts at companies with whom they have a professional relationship. E.g., GAP employees often receive discounts at their partner stores, Banana Republic and Old Navy.

All of the above are just some of the many benefits that have to be/can be offered to you once you join the workforce. However, this wouldn’t be a post about the World of Work if we did not go over one of the most important aspects of it: The Paycheck. Thus, let’s go over some of the basic components.

The Paycheck:

  1. Gross Pay: This is the total amount of money you earned for a particular pay period BEFORE taxes are deducted.
  2. Net Pay: This is the amount of money you are given after taxes and other deductions have been taken out.
  3. Federal Tax Amount: Depending on the number of exemptions you claimed on the W4 your employer had you fill out, the federal tax amount is what is owed to the government based on what you made.
  4. State Tax: The amount of taxes you owe to the state. (Note: Some states do not have a state tax…Possibly something to look into when thinking about where to live.)
  5. FICA: First of all, who is he and why is he taking money from me…what a jerk. Seriously though, FICA is the Federal Insurance Contributions Act and is a tax imposed on both employers and employees to fund Social Security and Medicare.
    • Social Security: The government requires that all employees contribute money to a social security plan that you will receive upon retirement. The money that comes out of your paycheck for this is matched by your employer, so don’t fret too much.
    • Medicare: Just like social security, paying for Medicare is not optional. Medicare covers a portion of your medical expenses upon retirement.
  6. Year-to-Date: Indicates how much you have been paid by your employer, and how much of your money has gone to taxes and other deductions.

The World of Work can be complex and irritating. But, it is incredibly important to understand it because it could make your decision about whether or not to accept/decline a job offer. You might get paid more at one job, but you might get a better benefits package at another. It is all in the balance, and, unfortunately, there is no one definitive, correct answer. You need to find out what is best for you by doing your research.

We sincerely hope that this miniseries has brought you some sort of additional knowledge about topics that may not be the most exciting, albeit important. We implore you to check out additional resources, such as our Money Smart Seawolves page, Dummies.com for personal finance, Salary.com for work and life advice, as well as many others to get more information concerning the topics important to you.

We want you to be financially literate so that you can make the best decisions for your future jobs or even the one that you currently have. Don’t be left in the dark. As mentioned in Part 1 of this miniseries, we want you to take control of where your money is going. Some things are unavoidable, but others are not. Be aware, be smart, but always, be SAVVY!

 

 

 

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