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The
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Dollars and Sense
I was reading an article in Executive Travel magazine about cost of living in major US cities. It was interesting because the article discussed annual housing costs rather than an ephemeral overall cost of living percentage or average housing cost. In our work with clients, we always ask if they have a geographical location in mind for their job because it impacts their job search. Some areas are hotter than others and some, like New York, New York, have expenses involved that the average job seeker might not consider. We want to make sure we help our clients prepare as well as possible and consider these aspects of relocation when negotiating compensation.
The article noted that the annual cost to live in Manhattan is $146,060. Just today, I talked with three job seekers who were targeting Manhattan for their job search and none of them were targeting salaries that would support this living cost, much less support an investment plan. Sure, they might commute from the suburbs but if they do that, they need to consider commute costs and other ancillary costs when negotiating salary. Don’t forget these items when considering where you would accept a job. So much impacts your lifestyle and location is one of the most important.
Interested in the other four most expensive cities in the US? San Francisco came in second at an annual cost of $133,880 for living expenses. Following San Francisco was Los Angeles at $117,726 and San Jose at $108,506. Rounding out the top five was Washington, DC at $102,589. These figures are the minimum amounts needed to live – that’s just covering the basics such as housing, food, transportation, and clothing.
The article also noted the percentage of housing costs of each figure. In Manhattan, 68.83% of the $146,060 living cost is devoted to housing. Have you thought of what your cost to live is compared to your target salary? Have you considered that cost of living tends to rise faster than salaries? Think about it – has your salary over the past year risen in proportion to the costs of gas, mortgage rates, and home heating fuel?
Salary negotiation is more than just negotiating the base salary and the bonus. You must think in terms of cost of living, too. Think total compensation. Many companies are getting creative in their compensation of employees. Jewelry TV recently provided employees with a stipend to help them offset the rising cost of gas. Municipalities are providing their employees with bio-fueled company vehicles to help reduce emissions, cut costs, and reduce attrition. Some smaller companies offer no-interest employee loans for purchase of certain items such as vehicles. Professional development and paid tuition is a hot compensation item.
If you are considering a new job with a potential relocation, think about all aspects of the new location. Are the schools safe or will you need to shoulder private school tuition? What are the taxes in the new location? Is food more expensive there? Is affordable housing available near the employer location or will a commute be involved? Consider all the options!
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