Congratulations, Graduate!

“Find a job you enjoy doing, and you will never have to work a day in your life.” Mark Twain

This is commencement season when college graduations get the best and brightest to provide all kinds of advice for your life. Some of those speeches through the years have become legendary.

For one of the most inspiring, read or listen to the commencement speech of Steve Jobs, co-founder of Apple, at Stanford University in 2005.

Enjoy this moment of sunshine.

After years of toil at your college, and most likely working hard in high school to land at your top college choice, you have earned the chance to enjoy this moment. The time between college and starting your first job is often a special but awkward time and may involve traveling, family, friends and possibly part time employment.

The value of obtaining your bachelor’s degree remains a major factor in your lifelong income and financial well being.

Your first job after college

On average, most graduates believe the benefits of their education meets or exceeds the costs. If you are in the top fields of study: 76.3% of these engineering graduates believe the benefits exceed the costs and 70.2% of business/ management grads believe the same.

Likely you are either starting your first job soon or are engaged in your search. A Korn Ferry 2018 study pegged average salaries for 2018 graduates at $50,390 though software engineers commanded over $67,000.

Hiring for college graduates is forecasted to rise 16.6%  for the class of 2019 according to National Association of Colleges and Employers (NACE), above 2018’s 4% year-to-year rate.

Here are some tips for making the most of your first job:

Perfect is the enemy of the good. This is the beginning of your professional life. You don’t know what to anticipate in your new environment. Expect to make mistakes and learn from them.

If you haven’t already done this in preparation for your interview for the job, read their annual report and any articles to understand the company. Competence is what you are aiming for when you first get started in your new job.

“Paying Your Dues.” Initially, you are not likely to get the “cool” assignments. You will be doing a lot of the grunt work or doing something you believe is beneath you. Everyone goes through this feeling. Remain enthusiastic as your co-workers and boss may be wanting to see how you handle the easy work before they give you more tasks.

Volunteer to help others so long as you have fully completed all your work. When I hired associates to work with me I often had “eager beavers” wanting to do everything everyone else was doing, leaving behind the work that they were asked to do or do a quick and shabby job.

Seek opportunities to learn new skills. As you get deeper into the swing of your job, complete tasks on or ahead of schedule, become a sponge. Learn as much as possible and take advantage of any company-sponsored training offered to you.

Be inspired to do more than asked

I heard a great story from a now successful executive at a major newspaper firm, who migrated from the entry level job, by completing her work efficiently, then helping others, along the way picking various skills to make herself invaluable.

Understand your company benefits package. According to the Bureau of Labor Statistics, the combined benefits plan averages about 30% of your total compensation. In a tight employment market, companies often become more generous with their benefits. Besides the standard vacation days, your benefits package may vary widely.

A recent Glassdoor survey said 4 out of 5 employees prefer benefits to a raise.

Key parts of a company benefit package:

Retirement 401K Plan: As soon as you begin to work at your new firm, you need to set up an account to start saving in your 401K plan. You need to understand the dollar amount or percentage of company matching contribution with any defined cap amounts on employee contribution.

For example, Discover, the credit card company, has a generous company match up to 7%.

What is the vesting period of the company’s matching contribution for the 401K? If vesting is partial or two years, it is more likely you will keep the company’s match amount than if the vesting period is 5 years or more. Find out if there is partial vesting.

As this is your first job, you may not expect to stay the five years required to earn the company’s contribution. You should still begin to put money in your 401K. You can take the amount you invested and maybe you will stay longer.

Student Loans repayment. Student loan repayment as an employee benefit is in its infancy period. It could grow into a core part of a company’s benefit package. Currently, about 4% of employers are offering student loan help through the company’s 401K.

More companies are indicating some interest in helping on student loans, especially since the IRS ruling last year.

Abbott Laboratories had received permission from the IRS private letter ruling last year to allow workers who direct a certain amount of their paycheck toward student loan repayments to still get the employer’s contribution in their 401K even if the worker didn’t contribute themselves.

Company stock ownership plans differ widely. They are a desirable benefit for the employees to participate in the growth of the company and may offer tax deductions to the company.

For closely-held or private corporations, Employee Stock Option Plans or ESOPs, mean that the company is owned in part or fully by employees. Publix, the supermarket company, is among the largest owned.

Employee Stock Purchase Plans or ESPPs are offered by 52% of mostly public corporations though employee participation is relatively low at 42%.

The ESPP plan is offered usually as a tax-qualified plan. All employees may participate based on a minimum number of years at the company. These employees may buy stock during “an offering period” over  3 months-to-27 months, set at a discount up to 15% from the market price.

Employees can profit immediately or over a longer holding period. If holding more than a year and a day, your income is taxed at the capital gains rate. Make sure you diversify your investment portfolio beyond holding any concentrated positions.

A Word of caution

Sometimes employees can expand their stock ownership on a tax advantaged basis, even buying the shares inside their 401K plans. I have great concerns about employees using their employer’s stock in their 401k for three main reasons:

  • Owning too much stock of the company you are working for is too much risk no matter how great the company is as your employer. That is too many eggs in one basket and you need diversification.
  • WorldCom and Enron financial scandals were devastating for those companies’s employees who received an inordinate amount of compensation in their company stock for bonuses and 401K plans. There was little heads up of the calamity coming.
  • Many of them lost a substantial amount of their life savings along with the devaluation of their homes due to  their close proximity to corporate headquarters. I knew many of the WorldCom folks.

 


Health insurance plan. Not surprisingly, 58% of new college grads want 100% employer-paid medical insurance but only 7.5% of employers provide that. You need to understand the premiums, deductibles, and co-pays you are responsible for and what your plan covers. If there is a high deductible, find out about whether your employer contributes to health savings accounts (HSAs).

Disability Insurance. According to Social Security Administration, 25% of all 20 year olds will be disabled by the age 67 years. Disability insurance is an important part of any package but few think of this kind of insurance until you need it. 42% of private sector companies offer this insurance.

This insurance plan replaces a portion of an employee’s gross income, usually up to 50%-60% to you, while you remain disabled subject to a physician’s approval. It is offered on short-term and long term basis, with premium paid fully or in part by the employer, with remaining amount paid by the employee.

On a short term basis, the disability benefits extend up to 52 weeks, kicking in 1-14 days after the employee is unable to work and has applied their sick days.

Health Care Flexible Spending plans. A flex plan allows employees to pay for certain unreimbursed healthcare and dependent care expenses with pretax dollars. This plan helps to offset some of the costs not met with the main health insurance up to a capped amount (eg. $2,000).

Dental and Vision insurance is offered by about 62% of employers and considered a desirable perk for college grads. Vision insurance is part of the larger health insurance, allowing for regular eye exams and some employer contribution for glasses.

Life insurance plan. Usually employers offer a relatively small amount of life insurance rather than enough to fully protect you and your family. The employee can increase its coverage amount by paying the premiums on a monthly or quarterly basis through its company’s group term life plan at reduced rates than what they would pay on their own.

Tuition reimbursement for education. Most employers are often willing to provide tuition reimbursement for advanced education rather than lose the employee. The reimbursement is often provided based on grades. An “A” would 100% reimbursement, “B” gets 75% and so on.

Increasingly, companies are offering online courses to employees to complete their degrees for high school and college, as well as “English as a Second Language.”

Unique lifestyle benefits.  There is a long list of unique benefits often found by the best companies to work for. Here are some of the best I found:

  • egg freezing for female employees
  • adoption and surrogacy assistance and reimbursement
  • employee relief fund for national disaster victims
  • doctor’s office or medical clinic onsite
  •  counselling sessions to reduce stress
  • high quality dining
  • leave of absences to care for family members or newborns
  • financial aid coaches
  •  career planning
  • discounts or full paid courses for high school, undergraduate degrees, yoga, and ESL
  • flex hours or work from home
  • dry cleaning on premises
  • paid time off for volunteering
  • pet insurance
  • onsite gym
  • personal or professional time off
  • child day care or  day elder care

Maybe there is a free lunch

Take advantage of your company benefits plan by reading it thoroughly. Ask questions of human resources to understand it better. Work diligently and convey a positive attitude. Whether this is your first job or fifth job, your company benefit package is a meaningful part of your compensation.

What is your company benefit package like? What are the benefits you value you the most? Please share your thoughts with us!

 

 

 

 

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