Unpacking employee benefits | Employment | Financial Literacy | Khan Academy

When looking at a new job, it can be very tempting to look only at the pay. 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. This general category of things beyond pay that might make one job versus another more attractive we would call benefits.

Then we can subcategorize 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 that 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. This 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 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 hard benefit is retirement matching. Once again, 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'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 there 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. It 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, etc. 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 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 want to feel like they are educating the world, so that might draw people. That's a soft benefit.

Flexible work hours, or maybe flexible clothing, is something where if you don't have to always have face time 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. Maybe you could work a little bit harder the next day, etc. No one is over your shoulders. I personally really appreciate having a work environment like that.

Once again, a relaxed 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 a 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 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 recognition program; they give awards to folk—Employee of the Month, whatever—something that makes you feel good. 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 a more 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.