What are Job Benefits Really Worth?

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If you’ve had a job, you’ve had a talk about benefits with your friends or family.


“Well, the salary is a little lower than I’d like but the benefits are nice.” Or, “I need this job for the benefits.” Or, “Benefits. What benefits?” Or, how about this one, “This job has the perfect salary and a ton of benefits!”


We’ve all heard that last one, right?


I had one of these talks with a job searching friend the other day and it spurred this question: How much are job benefits really worth? We’re talking cash value. Healthcare, retirement, time off, and other ‘benefits.’ What percentage of your paycheck. So, compared benefits from different jobs that I’ve had, in addition to jobs of friends, to get a breakdown for the benefits given in 3 different job types (government job, private career-type job, and hourly work job).


Keep in mind that this is not a scientific study, in that only a few samples (jobs) were looked at. Also, I understand that different companies may have completely different viewpoints on benefits. It is true though that I have heard similar trends from other friends and family in similar job types… It’s just that not all of them let me comb through their pay stubs. With all of that said – this is a general overview.


For each job type, I’ll give you the “fixed benefits” (what you’re automatically given and cannot turn down), the “additional benefits” (you have the option to accept or decline), and a brief summary. These numbers will be shown as percentages… to protect the innocent. Meaning, the money earned before deductions (gross income) = 100%. Let’s get to it:


Government job benefits


Working for the man has its perks.


Fixed benefits here accounted for an additional 58% of your salary ON TOP OF what your gross income is. That means if you earn $50,000 – when you account for your fixed benefits only, you actually earn $79,000!! That is a huge measurable difference. For this section, I included retirement (pension) contributions, future time off earned (this number may vary depending on your seniority level), health insurance, life insurance, and disability insurance. All of these are covered by the employer.


Additional benefits, by nature, are flexible and may differ drastically from one employee to the next, so I took my best effort to stay average here. Another important point – these benefits are not added on top of your paycheck, they are deducted from it. This is like you paying a portion to earn the employer match, but in this case, the employer match is definitely worthwhile. I estimated additional benefits to be about 26% of your gross income, which would take your salary down to $37,000 (from the original $50K). These benefits included the employee’s portions of the pension, health insurance, disability insurance, life insurance, and additional retirement savings options.


A few things about additional benefits though: These are pre-taxed, meaning you no longer pay taxes based off the $50k salary above, now your taxes are calculated from the lower amount ($37k). Also, the $37k you have earned will need to be taxed, meaning your take-home will be somewhere lower than that $37k (this tax rate all depends on other factors in addition to your income – consult a tax professional). Finally, additional benefits can be adjusted many times. This means that if you want to save more for retirement, or less, or if you need to adjust your taxable income up or down, this benefit percentage can be manipulated for your “benefit.”




Government jobs are renowned for their good benefits. In our example, when you remove your portion that needs to be paid (26%) and add the employer’s portion (58%), the net benefit is an additional 32% ON TOP OF your take-home pay. Our $50,000 example above then turns into a solid $66k!… Before taxes of course.


Private career-type job benefits


This is the category I’d expect to be most variable across companies and job types. I took an average, so please keep that in mind.


We don’t see as huge of a percentage when it comes to fixed employer paid benefits here, 6% was the documented number. This includes PTO (paid time off) and a modest 2.5% employer match on a 401-k. This would take our $50,000 salary up to $53k… Hey, that’s $3,000, and that’s definitely something. If we look a little deeper though… There are additional insurances here too (life, health, and disability) that weren’t given dollar amounts on the pay stubs, but these would account for a significant portion of the fixed benefit. I estimate an additional 35-40%, which would take our total up to 41-46%. Again, this is a benefit paid by the employer which can be added to your gross income. Our $50k now becomes more like $70.5-73k… which is starting to look more like our government jobs above… interesting.


There are typically some solid additional benefits here too, and those equated to 13%. Additional benefits included your portion of the 401-k, Medicare, social security, health insurance, life insurance, and dental insurance (somewhere Monica is smiling about this one)! After removing our additional benefits from the paycheck, we’re now looking at about $43,500. This is your new taxable income and as mentioned above this can be adjusted up or down depending on how much you want to save for retirement, pay in taxes, etc.




I have been fortunate (and so have some of my friends) to work for some private companies that have a solid benefits package. Don’t let the common talk fool you into thinking only government jobs can have good benefits. With our averages above, adding 44% (chose close to the median) in fixed benefits and removing 13% in additional, our net benefit added is 31%. That takes our $50k salary and turns it into $65.5k! Admirable, to say the least – especially when you remember you’re only paying taxes on about $43.5k. Nice job by you.


Hourly (part-time) work job benefits




Although I would expect some variation here as well, there just aren’t a ton of benefits given for hourly (or part-time) work jobs. Here is what I saw.


Fixed benefits equaled about 0%… With a lack of retirement, health insurance, or other benefit comes some upside – the employer can afford to pay you a higher wage (it’s up to them if they choose to do that though). This would give you the option to choose where your money goes (i.e. savings, insurances, etc.). The downside here is that we don’t have any fixed benefit to add to our actual income. What you see on the paycheck here is what you get.


Additional benefits (paid by you) would include your portion of social security and Medicare taxes or about 8%. This takes our $50k example down to about $46,000. Of course, some employers may offer additional benefits, and if that is the case then those can be added to this column. In our examples though, it was not.




There is an expanding place for this type of work in today’s economy. With more workers valuing independence with their time in combination with a desire to work in different areas, many are choosing hourly (or fee-based) work. It is a more favorable option if the lack of fixed benefits can be made up for in additional income, either with higher wages or more work.


The good news is that there are options. You can evaluate which of these sounds best to you and then start crafting a path on how to get there. If you’re already in your dream scenario, congratulations! If not, hopefully, this brief explanation of benefits can help you determine which path is best for you. Either way, good luck!


Thanks for reading!

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– Mike
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