LeBron James and Job Selection by the Net Numbers

If you’re like us, you’re sick of hearing about LeBron James and his decision. But it serves as a great case study in job selection so we’re going to belabor it!

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 Hear George & Mary-Lynn talk net numbers on The Bigg Success Show! Click the player to listen [5:31m]: Play Now | Play in Popup | Download

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Create an auction
Wouldn’t it be nice if you could create a bidding war for your services like LeBron did? You could essentially create an auction … and you know what happens at an auction – the bids keep going up!

Sound like a fairy tale? It can happen to you if you become one of the very best in the world in your field!

How’s the market for jobs like yours?
Of course, the economy has to cooperate as well. When the demand isn’t there – like we’ve witnessed recently – it’s harder for almost everyone to command higher rates of pay.

But LeBron James had plenty of suitors in spite of the anemic economy. So you have to look at the market for jobs in your field, not the market for jobs as a whole.

Net pay matters much more than gross pay
One of the biggest mistakes that people make is just looking at the top line. You also need to consider taxes.

We saw a great article over at the Tax Foundation on how the state jock tax made Miami a better choice for LeBron James. According to NBA rules, Cleveland could pay a little over $100 million since they were LeBron’s current club. All the other clubs could only bid a little over $96 million.

But you shouldn’t make a decision like this on gross pay. You need to make it on net pay.

We’re going to ignore the jock tax and just pretend LeBron’s state and local taxes would be the same as any other resident of the respective cities.

As you can see – even though Cleveland could pay him $4 million more – he would keep $4 million more (i.e. net pay) by going to Miami. That’s because, according to the Tax Foundation article, he would have to pay taxes of 8% in Cleveland and nothing in Miami.

So if we’re just considering numbers, the decisions seems pretty easy – Miami!

Stopping short
A lot of people stop here but taxes aren’t the final buzzer. When you’re comparing jobs between cities, you also want to think about the cost of living. 

Let’s limit our discussion here to Cleveland and Miami. According to the cost of living calculator at Sperling’s BestPlaces, it costs 20 percent more to live in Miami than Cleveland.

So LeBron would have to earn over $110 million, after taxes, in Miami in order to have the same standard of living that he would have in Cleveland.

Since the $110 million is more than the maximum Miami can pay him per league rules, and remember we’re talking after-taxes here, Cleveland comes out the winner in a pure quantitative sense.

More than numbers
But there are also qualitative considerations. In this case, he feels like he has a better chance of winning a championship in Miami. You should also weigh in the qualitative factors when you make your decision.

Ultimately, if you’re fortunate enough to have more than one organization competing for your talents, determining which job to accept is a complex decision. Make sure you look at taxes and cost of living. But base your final decision on what’s most important to you. That leads to BIGG success!

Direct link to The Bigg Success Show audio file | podcast:
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(Image in today's post by lostpoet)