A tough job decision to make. Sucks!!

[BYeh1]

LS400? Nice. Well, I've been suffering from chronic back pain for the past 6 months or so. I drive a Mazda CX-9. A big ass SUV. But I also have a 12 yr old Mercedes with leather seats that's better than the Mazda's seats but after a week of driving 2+ hr commutes a day, the back pain has come back with full force.

Yeah, I think I'll go back to PMC...to a place where all my ex-colleagues are there. some are brilliant and would be a pleasure to work with, but there are also some who are a pain to work with.

I'd go with PMC, sounds like you have much better job security there, and personal relationships there that are valuable (turned into a job when you needed one). Assume you'd make $50k at PMC vs $55k at E-Trade, the $5k difference is really $2.5k after additional commuting costs and time ( but pretax), and your break-even incremental job loss risk is 4.76% ($2.5k/$52.5k). In other words, at 4.76% higher job loss risk at E-Trade, your expected economic outcomes are equal (100% chance of earning $50k at PMC = 95.24% chance of making $52.5k at E-Trade).

In an economy where general unemployment is 8%, I'd say the incremental job-loss risk at E-Trade over PMC is higher than 4.76%, so better expected value to stay at PMC.

To be fair and make this decision model more robust, you need to also account for

1) the potential earnings upside at E-Trade over PMC, and
2) the present value of the incremental earnings upside over 20-30 years.

So for example, assuming the incremental risk of job loss at E-Trade is exactly 4.76%, then the insurance premium of $2.5k you pay (forgone higher earnings) for job security at PMC is priced fairly. However, that's only half the equation (downside).

You also need to look at the probability of higher upside at E-Trade. So if there was a 50% chance you could make $10k more per year at E-Trade, you have positive expectancy of $5k per year, which depending on your personal utility curve may or may not make the difference. But then you also have to take the present value (PV) of this incremental $5k annual expected value over 20-30 years (your remaining career), which at 3% interest equals approx $75k-$100k (look up the formula for PV). Again, you'd need to adjust these expected values for job loss risk. It sounds complicated, but pretty straightforward if you get the concepts right. Remember to keep units on apples-to-apples basis.

To simplify all this, if the gross earnings differential is just $5k per year, then not worth the additional risk of job loss and incremental commuting cost. Plus you get quality of life improvements. However, if you could see your annual earnings realistically growing by more than $10k per year over the long run with low incremental job-loss risk, then it would make sense to take the E-Trade job.

[bombtek]

I'd go with PMC, sounds like you have much better job security there, and personal relationships there that are valuable (turned into a job when you needed one). Assume you'd make $50k at PMC vs $55k at E-Trade, the $5k difference is really $2.5k after additional commuting costs and time ( but pretax), and your break-even incremental job loss risk is 4.76% ($2.5k/$52.5k). In other words, at 4.76% higher job loss risk at E-Trade, your expected economic outcomes are equal (100% chance of earning $50k at PMC = 95.24% chance of making $52.5k at E-Trade).

In an economy where general unemployment is 8%, I'd say the incremental job-loss risk at E-Trade over PMC is higher than 4.76%, so better expected value to stay at PMC.

To be fair and make this decision model more robust, you need to also account for

1) the potential earnings upside at E-Trade over PMC, and
2) the present value of the incremental earnings upside over 20-30 years.

So for example, assuming the incremental risk of job loss at E-Trade is exactly 4.76%, then the insurance premium of $2.5k you pay (forgone higher earnings) for job security at PMC is priced fairly. However, that's only half the equation (downside).

You also need to look at the probability of higher upside at E-Trade. So if there was a 50% chance you could make $10k more per year at E-Trade, you have positive expectancy of $5k per year, which depending on your personal utility curve may or may not make the difference. But then you also have to take the present value (PV) of this incremental $5k annual expected value over 20-30 years (your remaining career), which at 3% interest equals approx $75k-$100k (look up the formula for PV). Again, you'd need to adjust these expected values for job loss risk. It sounds complicated, but pretty straightforward if you get the concepts right. Remember to keep units on apples-to-apples basis.

To simplify all this, if the gross earnings differential is just $5k per year, then not worth the additional risk of job loss and incremental commuting cost. Plus you get quality of life improvements. However, if you could see your annual earnings realistically growing by more than $10k per year over the long run with low incremental job-loss risk, then it would make sense to take the E-Trade job.

huh?

[Nightbat]

You don't get paid to commute
might aswell get a job 5 minutes away and do 3 hours overtime every day

[stevieb91]

I would assume that the hour long drive does nothing for the chronic back pain.. Your back is one of two things you only have one of, so you have to take care of them both. As previously stated, 5k is not much of a difference when you compare the cost of the extra commute maintenance on your vehicle, not to mention you gain 5 hours a week in personal time. Over a year, that is 260 hours that you can never recover. Five hours a week that you aren't compensated for anyway.. I just changed jobs, took a more significant pay cut than 5k, but not working EVERY Saturday was worth it to me.. Didn't affect my commute, though, it was only half a block from my previous employer.. lol