Human Capital
This term describes the knowledge, skills, experience, and credentials a worker develops.
What is human capital?
This compensation method pays a worker a fixed annual amount in regular intervals
What is salary?
This is your income before taxes and other deductions are removed.
What is gross income?
College, community college, trade school, military service, and entering the workforce are all examples of these after high school.
What are career/education pathways?
Health insurance, retirement contributions, and paid time off are all examples of these.
What are employee benefits?
Earning an industry certification, completing training, and gaining work experience all do this to your human capital.
What is increase/build human capital?
A salesperson earns a percentage of the value of the products they sell. This form of compensation is called this.
What is commission?
This is the amount actually available to spend or save after deductions are removed.
What is net income/take-home pay?
Choosing to attend college full-time may require giving up several years of wages. Those lost wages represent this.
What is opportunity cost?
This retirement benefit occurs when an employer contributes money based on the amount an employee contributes to a retirement account.
What is an employer match?
This is what you give up when you choose one option over another, such as wages you could have earned while attending college.
What is opportunity cost?
This type of income can continue to generate money without being directly tied to the worker's current labor, such as investment dividends.
What is passive income?
Social Security and Medicare are funded through this payroll tax.
What is FICA?
Name two non-financial factors someone should consider when comparing jobs.
What are factors such as commute, work-life balance, schedule, workplace environment, job satisfaction, advancement opportunities, etc.?
A worker earning $60,000 contributes 4% to a 401(k), and the employer provides a full 4% match. How much does the employer contribute annually?
What is $2,400?
A student spends $12,000 on technical training that allows them to qualify for a much higher-paying career. The student should use this concept to compare the cost of training with its potential financial benefit.
What is return on investment (ROI)?
A worker earns $20/hour and works 45 hours. Assuming overtime is paid at 1.5× the normal rate, calculate the worker's gross pay.
What is $950? ($800 regular + $150 overtime)
You complete this form when beginning a job to help your employer determine how much federal income tax to withhold.
What is a W-4?
A higher-paying job requires a 60-minute commute while a slightly lower-paying job is 10 minutes away. Gas, vehicle wear, and additional commuting time are examples of these.
What are hidden costs?
This term refers to the combined value of salary/wages plus benefits provided by an employer.
What is total compensation?
Explain why simply having more education does not automatically mean someone has made a better investment in human capital.
What is the type/relevance of human capital and its ROI matter, not simply the amount of education?
Two workers each earn about $60,000 per year, but one has a much more predictable monthly income than the other. Identify one compensation structure that could explain the second worker's variable income AND explain its trade-off.
What is commission/tips? Earnings can potentially be higher, but income is less predictable.
A worker receives a raise and part of their income moves into a higher tax bracket. Explain what happens to their taxes under a progressive tax system.
What is only the income falling within the higher bracket is taxed at the higher rate?
Explain why the career pathway with the highest educational cost does not necessarily have the best financial outcome.
What is higher costs, debt, lost earnings, and different earning potential can produce a lower ROI than a less expensive pathway?
Job A pays $55,000 with full health insurance and a retirement match. Job B pays $60,000 with no health insurance or retirement match. Explain why Job A could actually be worth more.
What is Job A's benefits could make its total compensation greater than Job B's despite its lower salary?