The Chaos of Relocation and Cost of Living Adjustments (part 1)
This series of posts is probably over due. It involves an issue that our team deals with every day… relocation and cost of living adjustment. Nearly a quarter of our placements involve some kind of relocation. These relocations usually go smoothly, but we have also lost an awful lot of placements over the years.
As a result, we have a catalog of experience on what works and what causes chaos.
In this post I want to focus on the problems that arise when candidates are considering a move to a LESS expensive city.
Everyone understands on a conceptual level that some places are less expensive to live and work. Everyone understands the concept and the math until it costs them money… either real or imagined.
The first problem is that there are no reliable ways to calculate cost of living adjustments. Below are salary adjustments from five popular cost of living calculators. A Google search will turn up a dozen such calculators.
$150,000 Salary Adjustment From San Francisco to Orlando:
| Source | Adjusted Salary |
|---|---|
| Salary.com | $117,223 |
| HomeFair.com | $95,744 |
| Bankrate.com | $90,370 |
| CNNMoney.com | $89,704 |
| Bestplaces.net | $85,065 |
If you were the candidate, which one would you choose to believe? If you were the hiring company, which one would be the basis for your offer?
Another problem is that many people don’t live IN the city that they are feeding into the calculator. They live in some commutable suburb or surrounding area, which could be much more or less expensive than the city itself.
Last year we had a client make an offer to one of our candidates based on him residing in Washington, DC. In fact he lived in Central VA and drove 3 hours to the office once a week. They wanted to adjust his salary downward from DC to Atlanta prices. After 3 months of interviewing they offered him a $10k decrease in salary and steadfastly believed that they were being generous.
Let’s go back to the table above – San Fran to Orlando. For the sake of moving the conversation forward, let’s just take the average of the five calculators: $95,000.
Quick poll: How many people are ready to tell your husband or wife, "Great news honey, I got a great new job that is going to pay me $55,000 less than I make now!"
Probably about the same number that would walk into your boss’s office and say: "Great news boss, we have a great Digital Analytics Manager. They are going to cost $55,000/year more than if we hired them locally!"
Both are perfectly justifiable, but incredibly tough to sell.
Here is what often gets lost in the negotiation: Is this a great job opportunity or not?
What will the move do for your career? Will you be working for a great brand? Will you learn and grow? Where will you be in three years if you are successful in the role?
In the scope of your career, the difference between the middle and the high end of the salary adjustment scale is small potatoes. The problem is selling it to yourself and your family.
The same is true on the client side. If this is a game changing digital analyst that is going to raise the bar for your organization, they can make or save the company millions. Why are we agonizing over tens of thousands? Because it’s a tough sell.
So the issue is not with the numbers. Yes, there is some variability. Yes, it makes it difficult to be exactly sure that you have arrived at the perfect number. But with all that is at stake, the scale variability is usually not the real issue. The issue is usually emotional.
The emotional side of the argument is that nobody wants to make less money… even if they could live better on that amount.
Another emotional element that often comes into the equation is that some people simply don’t want to move. Period. The variability in actual cost of living is a perfect scapegoat for turning down the job and staying IN Dodge.
Whenever we start hearing questions like the following, we know the candidate is talking himself out of the opportunity and the offer is about to be declined:
"What if I can’t get a big increase if I want to move back?"
"What if it is sneaky expensive to live there?"
"Sure, I can sell my 2-bedroom apartment here for $750k and buy a 4-bedroom house there for $250k, but how much is it going to cost me for air conditioning in that big house? And furniture and hurricane insurance?"
"Yes, real estate is 58% less expensive, but how much does a quart of milk cost?"
"Sure there is no state income tax, but how much is a gallon of gas?"
The bottom line is that if you are looking for reasons to stay home you will find them.
I have been trying to convince my wife to move South or West for years. I have showed her financial models that demonstrate that she would never have to work another day in her life. I have shown her slide shows of the palaces we could have compared to our crappy quarter acre in Long Island.
My wife counters with the quality of the schools, proximity to family and the investment that she has made in her career. We are not moving… no matter how much sense it makes on paper.
My personal and professional experience has made me believe that there are two types of people in the world. There are people like me, who would move anywhere as long as the quality of life is better for my family; and there are people like my wife who feel that they belong in some place.
You can save yourself a lot of trouble by figuring out which category you fall into… and which does your spouse. When it comes to relocation it takes two to tango.
Once you know if you are a mover or a stayer, the math becomes a lot easier. You can crunch the numbers and decide if the opportunity is worth the hassle. It may not sound like brilliant advice, but on this issue I think it is as good as you’re going to find.
