Stop Falling For Sign-On Bonuses.

If you’re like me, you pay attention to job postings for your field, to see how your current hourly rate compares with what’s being offered, considering your level of experience, or whether your raises are keeping up with inflation.

There is a trend that I’ve been noticing, and that’s that more employers and recruiters are offering sign-on bonuses in an effort to entice applicants. Many of these sign-on bonuses appear to be substantial. After all, who wouldn’t like to receive an extra $3000 to the checking account after about 6 months on the job?

Except, it’s not really a great deal. And if you’ve noticed that many employers and recruiters are not specifying the hourly rate in the same posting as the sign-on bonus, you should consider that a great big red flag.

What it comes down to is an attempt to impress you with a big-sounding number. But when you perform some simple math, you see that a sign-on bonus of $3000 is not a big screaming deal.

Let’s perform that simple math. There are 40 hours in a work week, and there are approximately 26 weeks in six months. That comes to 1040 hours worked in six months. Using this number, we can determine pretty quick how $3000 divides into that time to determine the hourly rate.

And it’s only an additional $2.88 per hour.

That’s it. And it’s a one-time bonus, so after six months, there goes the equivalent of $2.88 from your hourly rate. And considering that the $3000 gets taxed, you’re not getting the full amount.

And it gets worse. When it comes time to negotiate a higher salary, that $3000 number may come back to haunt you when your cheap-o employer will come at you by saying, “What? We just gave you $3000. And you want even more money?”

Even worse is the initial grift, that the $3000 number is a nice, big, attractive number that’s designed to override your better judgement so you’d be more likely to overlook that your hourly rate may be substantially below industry average. It may even be at least $2.88 below industry average.

Suppose that you’re an engineer looking for work. On the one hand, you see a posting offering $48/hr, but on the other, you’d see a posting for $39/hr, but they’re offering you a $3000 sign-on bonus if you stay on for six months. Hopefully, you’d go for the $48/hr job, because that gets you nearly $50,000 in six months. If you’d instead go for the job that would get you $40,560 in the same time with an additional $3000 bonus, you’d probably be too stupid to be an engineer.

Cheap-o employers have found another way to cheat people out of wages. Please stop falling for it.

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