Why a cost of living comparison?

In every state and every city there is a different standard of living. Cost of living isn’t limited to how much housing costs. While it does play a factor, groceries and other essentials also play a large role in a cost of living calculation. Your employee’s life based in their current city may not be sustainable in their future city at their current salary. Which means, as a company, you have some important questions to think over. Namely, how do you want to address the moving process going forward?

An Accurate Cost of Living Comparison

If your first thought is to use the first cost of living calculator Google sends you to, you might want to think again. These calculators are only as good as the data they use. Whether you’re looking for cost of living comparison by state or to compare cost of living between cities, you’ll want the most current information. Most calculators are out of date. Even more fail to take into account potential areas of living based on the incoming employee’s salary.

Unlike other available calculators, our data is now. We constantly and thoroughly research areas throughout the U.S. and Canada to gather information specific to each location. Why opt for the precise information? It can save your company thousands of dollars with each relocation.

Other Considerations

Using a cost of living comparison, you may have a good idea of how your employee’s expenses change. The move is still a factor. Your employee will still need to visit their new city to determine their new housing. According to our report, most companies offer their employees financial help when exploring the area for housing and the final move. Want to offer the best package for both your employee and your company? You may want to take the Lump Sum approach.

Options Going Forward

Relocating your employees doesn’t have to be complicated. The easiest way to offer the best option begins with a cost of living comparison. You can find our accurate tool here. From there, it’s about taking action. If your calculation is accurate, you can offer the right salary along with a lump sum to help your employees through the moving process. You can find out more about our lump sum process here. Have questions beyond these? We’re happy to help.

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Core-Flex Policies: What Are They

At a high level, a Core-Flex model can help support multiple company strategic needs without the need for a bunch of different relocation policies or a tier system. The structure of a Core-Flex policy is made up of two key components. The first component includes the core aspects of a policy. These apply to all relocating employees and serve as the building blocks of the policy. Core relocation benefits may include travel costs to the new location, some element of household goods support, home sale/home rental assistance, visa and immigration assistance (for international moves) and some sort of expense reimbursement.

The second component is where the flexible options come into play. These benefits are truly specific to an individual’s need and can include items such as destination services, pet shipment, duplicate housing, additional days in temporary living, permanent storage, spousal support and language/cultural training.

The Rise of Core-Flex Policies

Core-Flex policies have risen in popularity recently, especially domestically, because the demographics of the mobile workforce have changed. There are more generations in the workforce now than at any point in history. With that, there are more options, more ways employees can work: flexible schedules, remote work, extreme commuters. This has resulted in a higher priority given to the individual employee experience.

Within this experience is the need for continued flexibility and choice. That is where the core-flex policy comes into play, a powerful retention tool! Millennials and Gen Z workers are the most mobile generations in the workforce, and they want to feel valued as employees. One way to show that value is to provide policy choices that reflect their needs when they are relocated. A single Gen Z transferee will want and need different policy components than an employee that has a family. A Core-Flex policy is an excellent value add to these different generations. A Core-Flex policy not only benefits these two generations, but having flexibility is also an incredible value add for Gen X and Boomers alike.

Core-Flex Policies and Lump Sum Allowance

Now that we understand what Core-Flex polices are and their rise in popularity, where does a lump sum allowance fit? Lump sum allowance policies are flexible. They can be as broad as providing a transferee with a set amount of money for the whole relocation (based on their Core-Flex choices) or tailored to cover specific calculated benefits for a few relocation elements such as a home finding trip, temporary living and/or the final move. For now, let’s focus on a lump sum that covers a few relocation benefits: home finding trip, temporary living and final move.

Say a relocation policy provides a lump sum allowance for home finding, temporary living and final move. Which of these three components make the most sense to keep as a core benefit when developing a Core-Flex policy?

Scenario 1: Final Move

For starters, final move would be a great contender. At the end of the process, the transferee will need to get to their new location. By providing a lump sum here, the transferee would still have flexibility in making their own travel plans. They can budget the allowance to fit their needs, all without having to save receipts and submit them for reimbursement.

Scenario 2: Home Finding

There is also an argument to be made for the home finding trip. As with a final move, a home finding trip is essential to a positive employee experience. The real estate market has made it exceedingly difficult for a homeowner and renter alike. Now it is even more vital that a transferee be given a chance to go explore their new destination in person before they move there permanently. Again, by providing a lump sum for this benefit, the transferee is getting a geographically specific lump sum tailored to their family size without the need for receipt reimbursement. Home finding could also have some flex components as well, for example, an additional home finding trip as an option, but the initial trip should be offered as a core benefit.

Scenario 3: Temporary Living

Lastly, companies can provide temporary living in a lump sum as either a core or flex benefit. In many cases, the real estate market has increased the time it takes to purchase a home. If the transferee needs to be in the new location before they find a home, they’ll need temporary housing. A lump sum tailored to the family’s needs can be a powerful addition to a Core-Flex policy. The transferee can use this lump sum for a corporate apartment, Airbnb, or hotel, depending on their preference. The point is that they have the choice and flexibility on how they want to spend their lump sum. Also, if employees need more time, companies can provide additional value with the flex benefit of temporary living expenses!

Core-Flex Policies: Benefitting Employers and Employees

Core-Flex policies offer advantages for both the corporation and transferring employee. For the corporation, they support mobility strategies and potentially offer cost savings. Both the core components and flexible options can be customized to specific employee needs, resulting in a more accurate expense allocation for the move.

For the transferee, these types of policies provide additional value. With these policies, employees have the decision-making ability to ensure their needs are being met. Making a new or current employee feel valued leads to a positive employee experience, and those positive experiences go a long way. Having a lump sum allowance to cover benefits like home finding, final move and possibly portions of temporary living as part of a Core-Flex policy is advantageous. These Core-Flex benefits, given as a lump sum customized to the employee’s needs, fit the evolving mobile workforce that continues to value flexibility and customization, improving the employee experience.

Core-Flex policies and a lump sum allowance are not mutually exclusive. Whether a benefit is “core” or “flex,” delivering it as a lump sum allowance increases its value to employees. If your company is looking to incorporate a lump sum allowance in a Core-Flex policy, our consultants are here to provide implementation guidance and expertise. Give us a call today!

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The Impact of Inflation on All Employees

Similarly, increased rents and home market values are impacting anyone who is moving. However, almost all markets have increased. Homeowners should be receiving more when they sell their current homes due to the higher values. Certain markets have appreciated more rapidly than others. However, even if the destination housing market has appreciated 10% more than the origin housing market, the annual increase in a cost-of-living calculation, when the mortgage is amortized over 30 years, is ~2% annually.

Increased Mortgage Interest Rates

The largest factor impacting transferees, specifically homeowners, over the past year is the increase in mortgage interest rates. According to FreddieMac, in the first week of 2022, the average 30-year fixed rate mortgage was 3.125%. By the first week of January 2023, the rate had doubled to 6.25%. This has impacted everyone financing a home. However, those moving to higher cost housing locations have seen a disproportionate increase in their costs. Let’s Look at some examples.

Say an individual bought a $625,000 home in January of 2022 in City A, with 20% down, at 3.125%. Their monthly principal and interest payment on the $500,000 30-year mortgage would be $2,142 ($25,704 annually).

City A 2022

City A 2023

Had the same home been financed in City A in January of 2023, at 6.25%, assuming the home market value stayed the same, the monthly payment would be $3,079/month ($36,948 annually). Costs increased by $937 per month ($11,244 annually) for the same home in one year strictly due to increased mortgage rates. Everyone who is buying a home, regardless of whether they relocated, has been impacted by higher mortgage rates. Think City A is bad? It’s even worse in City B.

Where Homes Cost Even More

If an individual purchased a home in City B, where the same size/profile home is twice as expensive, $1,250,000, after a 20% down payment, their payment a year ago on the $1,000,000 30-year mortgage would have been $4,284 monthly ($51,408 per year).

City B 2022

City B 2023

That same home in City B in January of 2023, assuming no appreciation, would be $6,157 monthly ($73,884 per year). Costs increased by $1,873 per month ($22,476 annually), for the same home in one year strictly due to increased mortgage rates.

Had an individual moved from City A in 2022 to City B in 2022, their annual principal and interest mortgage payments would have increased by $25,704. Let’s assume an average salary and all other factors remain the same between the locations: taxes, transportation costs, and goods/services. The doubling of home market values between the locations would have increased the cost-of-living differential by 25.7%.

Increased Interest Rates, Increased COLA Differentials

Assuming all the same factors, the mortgage costs to move between City A in 2023 to City B in 2023 increased by $36,936, resulting in an increased cost-of-living differential of 36.9%! The impact of higher interest rates has led to an increase in the overall COLA differential, with all other factors being constant, of 11.2% (from 25.7% to 36.9%) in this example. The overall change in the cost-of-living is much more now than it was a year ago. That’s strictly due to the impact of higher interest rates.

How does this impact corporate relocation program pay outs?

For a corporate relocation program paying 100% differential in the first year of a move, this would mean their costs have increased by over $11K in the first year alone for this one average transferee. For companies with multi-year payouts, and/or moving numerous individuals to higher cost locations, the cumulative impact can and will be significant.

Additional Factors

Two other factors further exacerbate the issue. The first is the changes to the federal taxation on mortgage interest in 2018 as part of the Tax Cuts and Jobs Act. This limits interest that can be deducted to the first $750,000 of a mortgage. With the increase in rates, the impact of not being able to deduct all the interest is disproportionately impacting those moving to higher housing cost locations.

Lastly, cost-of-living calculations assume current mortgage rates at both the origin and destination — 6.25% to 6.25% for January 2023 in this example. Because of this, it doesn’t take into consideration the fact that most individuals likely purchased their home, or refinanced, when rates were in the ~3% to ~4% range. Any individual who is relocating, even those moving to a location with similar housing costs, will be negatively impacted by the higher rates. When moving to a higher cost housing market, individuals will be paying the increased rate on the amount equivalent to what they currently have financed on their origin home PLUS the additional interest on the differential in increased housing costs.

What does this mean for your company?

Because of higher mortgage rates, all organizations moving individuals to higher cost housing locations are experiencing increased costs. Does a COLA cover all of the increased costs related to higher interest rates? Probably not. It could be argued that some type of mortgage interest differential (MIDA) and a COLA could both be justified to meet the increased cost. Companies should consult with their Cost-of-Living data providers, Relocation Management Companies and/or mortgage lenders to help find a solution that will work best for their program.

Want to learn more about MIDAs or additional insights on this topic from industry experts? Contact us today.

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Rising Airfare Costs

Airfare costs have experienced record highs as the cost of gas, supply and demand, staffing shortages and decreases in routes came to a head. If there is any silver lining, the Consumer Price Index said prices dropped in July. The July decrease in airfare may have come as a welcome relief to end-of-summer travelers as they wrapped up vacations or for the business traveler, starting to get back on the road to meet with clients they have not seen since the beginning of the pandemic. The drop came after airfare prices spiked by 18% in April of this year, which was the largest recorded increase since the Bureau of Labor Statistics started tracking costs in 1963.

Even with this recent decline in prices, travelers should not expect any amazing deals yet, as prices were still 27.7% higher than they were in July of 2021 as the Consumer Price index noted. The average cost of a domestic flight was still over $500 versus approximately $350 in 2021. If we factor in 2020, where the average domestic flight was hovering around $300, the July 2022 price decrease still saw airfares 40% higher than in 2020. Now, we may see some deals in the fall and early winter, but that may just be part of the seasonality of the market.

Rising Lodging Costs

When it comes to lodging, July also saw some price relief on hotel rooms. However, this is not expected to last long. In late June, U.S. hotel prices averaged $185 per night, which was down from $199 in mid-June, according to the travel booking app Hopper Pricing Tracker. Even with this decline, prices were still 16% higher than they were in June of 2021. It is expected that rates will increase in September and October to an average of $217 per night, which is far above the 2021 fall average of $148 per night.

According to Andrew Heritage, senior economist at Hopper, “Hotels typically follow a regular seasonal pattern where nightly rates would also drop in the fall, but we’re not seeing that for this year… we are seeing higher rates than we have typically seen in the past.”

Rental Cars

Historically, lodging and airfare have been a traveler’s biggest expense. Now, more than ever, rental cars are turning out to be a larger piece of the travel budget pie. The rental car companies reduced their fleet sizes significantly after COVID diminished demand. They have not resumed to the same previous fleet sizes but have been faced with a rapid increase in demand this year.

When comparing July 2022 to July of 2019, rental cars are up a whopping 48%! Since July 2022, prices have dipped slightly, but they remain well above pre-pandemic pricing. Currently, car rentals are averaging $80 per day. This is a serious increase from 2020 when rates were typically $45-$50 per day. The demand for car rentals will likely decrease in the fall, but likely rebound for holiday travel.

What does this mean for companies?

As we continue to experience inflation, labor shortages and high gas prices with the risk of recession around the corner, it is hard to truly predict where prices will go from here. However, according to the 2023 Global Business Travel Forecast, there is a sense that prices will increase over the next 18 months. Whether travel prices level out or increase, we do know that we have entered a new, pricier era of corporate travel. It’s created a challenge for those trying to estimate travel costs for their companies.

Changes to Corporate Travel

Given current and expected costs for corporate travel, along with the ongoing “duty of care” concerns for travelers, organizations must understand travel costs prior to employees booking trips. This ensures the trip is worth the cost and plans adequately consider traveler safety in each location. Many organizations have implemented a simple “pre-trip approval process” as a first step in meeting these goals. Others, especially multinational organizations, have implemented sophisticated real-time systems to track and care for travelers.

How can Motus help?

Whatever makes sense for your organization, information is key. That’s where Motus can help. With our travel costs offering, companies can budget accurately and customize travel policies. Corporate travel often gets caught up in the approval process. With Motus Travel Costs, submitting and approving pre-trip requests is easy. Interested in reducing administration and controlling costs? Learn more about Motus Travel Costs.

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The Broad Impact of Inflation

Inflation continues to be at its highest levels in almost four decades, impacting all regions of the U.S. Typically, comparing two locations—the cost of goods, services and rents—there’s a difference in locations. As prices increase, the difference does not change. Overall inflation should be addressed through compensation. According to the Federal Reserve Wage Growth Tracker in May, average wages increased by 6.1% compared to last year. That’s over double the annual increase of a year ago, and the highest since the 1990’s. A recent SHRM article states: “For employers, high inflation puts upward pressure on wages and salaries. To hold on to workers, many employers are resetting their pay strategies and increasing their salary budgets for 2022.”

Inflation and the Home Market

Home values have also increased significantly in many markets across the country over the past 18 months. When comparing the cost of living between locations, as with inflation, if home values are going up in two locations at the same rate, there is no change to the difference between these locations.

Say one market has gone up by 30% in a new location while the pre-move area has gone up by only 20%. As housing is only one component, and a mortgage is amortized over 30 years, this means the overall cost-of-living differential may only go up by a couple percentage points. For homeowners, increased values also means that they should be getting more for their existing home when they sell it. Another  housing factor is limited availability and bidding wars in certain markets. While these factors make it much more difficult to buy a home, low inventory of homes for sale is not a part of the of the cost of housing.

Inflation and Mortgage Interest Rates

Significantly higher mortgage interest rates have become a new issue for home buyers over the past few months. According to the Federal Reserve, while the average 30-year mortgage rate was 2.67% on January 1^st, 2021, it increased to 5.70% on June 30^th of 2022. That is an increase of over 3 percentage points (or over 100%) in 18 months. With the average relocation mortgage being in excess of $500,000, this means that purchasing the same home, without appreciation in home market values, would increase a mortgage payment by over $1,000 per month.

Needless to say, many potential transferees, who have favorable rates in the 3% range, will have some reluctance to relocate. Exactly what rate an employee has for their current mortgage, if or when they refinanced, or if they don’t have a mortgage, is not a part of a cost-of-living calculation. Cost comparisons use current rates in both locations, so when rates are up in all locations at a national level, it won’t change the difference between locations in a cost-of-living report. However, companies will need to be prepared to help employees deal with higher interest rates, depending on the employee’s personal situation relative to their current mortgage.

A High Mortgage Interest Rate Solution

One solution to address higher mortgage interest rates is a Mortgage Interest Differential Allowance (MIDA). This was a fairly common policy entitlement in the 1980’s and 1990’s that has been forgotten or removed from relocation policies by many companies over the past few decades. A MIDA is designed so if rates are over a certain threshold, companies purchase a point, or points, to buy down the mortgage interest rate. They won’t fully buy down the rates to previous levels, but they do provide some assistance to transferees in a higher rate environment. Any of the national relocation mortgage lenders can provide assistance in helping to design or implement a MIDA program.

The Way Forward

While challenges due to COVID have been difficult for the relocation industry over the past few years, we are now facing a new set of challenges. Transferees’s relocation concerns around higher costs for everything—groceries, gas, home values, mortgage interest rates—can’t be tied to their relocation policy. Much of this is related to inflation, a factor impacting everyone, not just relocating employees. Inflation must be addressed by compensation.  These higher costs affect both the origin and the destination locations. Therefore, the difference does not necessarily change dramatically. Increased costs to relocate are largely related to higher mortgage interest rates. These can partially be addressed by separate policy benefits such as a MIDA.

Interested in learning more living cost insights from the industry experts? Contact us today.

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Consumer Price Index

The Consumer Price Index (CPI), an index that measures the change/variance in consumer goods and services released by the Bureau of Labor & Statistics, increased in 2021 by its highest amount in four decades. Early 2022 numbers show this trend is continuing at 6+%. The CPI covers a range of items from food and clothing to electricity and medical costs. It impacts everyone in the country, whether you’re relocating or not.

This index is used as the basis for many other calculations, including social security increases. This year, more than 70 million social security recipients each received a 5.9% cost-of-living adjustment, the highest since 1982. Many critics have said that the Social Security increase, calculated based on October data, is lagging. They believe it is low and expect similar increases next year.

Consumer Price Index Impacting Relocating Employees

How does the increased Consumer Price Index impact the cost-of-living for a relocating employee? The key is to remember that if prices are increasing at the grocery store and elsewhere—by 6% in Detroit and 6% in Los Angeles—the net difference or impact is little to nothing on the cost-of-living differential.

Inflation is not just impacting the relocating employee but every other company employee. Further, this means that all employees should be receiving annual increases in line with inflation, at an average of at least 6%. With employees leaving their jobs voluntarily at record numbers, the Great Resignation is expected to continue in 2022 which should lead many companies, looking to retain talent, to provide even higher annual increases.

Related Relocating Factors

Many relocating employees express concern about a related factor: increased home costs.  The S&P Case-Shiller Index—which measures the change in home market values in the 20 largest metropolitan markets in the U.S.—showed increases of 15-20% for almost the entire second half of last year. While certain markets are appreciating faster than others, almost all are experiencing increases.

Relocating homeowners should expect to pay more for a home in their new location than they may have prior. They should also expect to receive more when they sell their existing home. Some markets are experiencing limited inventory and bidding wars. While this makes it more difficult to buy a home, it doesn’t directly impact the cost-of-living. Cost-of-living only uses closed home market values (not listing prices as someone can list their home at any price).

An Important Note on Purchase Prices

It is lastly important to realize that when calculating an annual cost-of-living differential, the purchase price is amortized over a 30-year mortgage. Transferees aren’t paying the entire amount in the first year that they relocate. Other costs, ranging from taxes and transportation to goods and services are paid each year. Consider a scenario where average home market values have increased by $100,000 in the new location, while remaining completely flat in the old location (which is unlikely). With a 20% down payment amortized over 30 years, when combined with all of the other annual expenses, the overall cost-of-living differential will only increase by 1-2%.

The Impact of Inflation

Costs are increasing on just about everything. This is impacting relocating employees. However, it’s not just relocating employees. It’s impacting everyone. Cost-of-living calculations used for relocation—and paid to employees moving to higher cost locations—measure the difference between locations while national inflation issues should be addressed by an organization’s compensation strategy.

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Two Approaches to Managing Team Travel

As the holiday season approaches, global mobility teams are focusing on home leave. On one hand, these next few months can become very stressful at the mere thought of gathering, managing and tracking these expenses for their assignees. This is even more difficult with country-by-country COVID entry requirements.

On the other hand, there are global mobility teams out there that only have to set their home leave allowance budgets (usually once a year) and communicate the amounts to their teams. Using a lump sum allowance for their employees’ moves, these companies are able to reap benefits of reduced costs while extending the same benefits to their employees.

The Choice is Yours

Which team would you rather be on?  If you would rather be on the second team, you’re in good company! Over the past few years, there have been more companies moving to the option of providing an allowance for an assignees home leave. The feedback has been well received as it offers a win-win situation for both the company and their assignees.

For the company, their global mobility teams are no longer tied to the manual administrative task of flight approval and reimbursement, which is a welcomed relief.  While for the assignees, they are excited to receive an allowance that not only meets their family’s needs but provides them flexibility which is needed in this day and age. This enables the company to save costs on administration and boost employee morale by giving them freedom to manage their family’s move in a way that will reduce some of the stress of the move.

Support Your Global Mobility Team

At Motus, we can help you and your global mobility teams establish a home leave allowance program that will not only reduce your administrative burden but will empower your assignees to manage their specific home leave needs. Our reports offer airfare and car rental data, among other data if your corporate policy requires it. The reports can be used to offer an allowance to your employees to cover their travel expenses on their home leave trip.

Below is an example of the most basic of data able to be included on our reports. There are options for lodging and meal costs as well, if your corporate policy includes it. The example below includes travel for the employee only, however, there can be flight costs for any family members needing to travel. The reports can also include a custom allowance from your corporate policy that are not standard to our reports. With this level of flexibility, companies can remove the need to manage exception requests and other time consuming, manual items.

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COLA Compensation 

COLA compensation, or cost-of-living allowance compensation, is a stipend that helps moving employees adjust to life in a place where costs are higher than their previous location. Say, for example, an employee living in Augusta, Georgia moved to Los Angeles, California. Many prices—housing, food, utilities—would be more expensive in their new location than what they were used to. Using a two-location comparison, a company could then provide an accurate COLA compensation to help them adjust their lifestyle and spending patterns to the new location without breaking the bank. 

When should a company use COLA compensation? 

The use of COLA compensation is completely at the discretion of the company. That being said, certain circumstances may draw more reason than others. 

Promotional Transfer 

When a company promotes an employee to a position in a different location, a move is a big deal. Certain factors compound that. The employee may have a spouse with a regionally specific job. The employee may also have children. Regardless, moving requires organization and effort. Relocating an employee to a higher cost location without COLA compensation will have a negative impact on them. In all likelihood, they will turn down the move or look for positions elsewhere before incurring greater costs in a new location. 

Attracting New Talent 

A majority of employees are comfortable working remotely. Some industries and specific companies continue to require in-person workers. Bringing new talent to a company that requires in-person work may also require the benefit of COLA compensation. Without it, top potential candidates are likely to look elsewhere.  

General Employee Transfer 

A company may also simply shuffle talent. This does not change the impact of the move on the individual and those who may be moving with them. COLA compensations should be a benefit extended to anyone moving to a higher cost location. When it isn’t offered, it may foster resentment in employees and encourage them to seek work elsewhere. 

When should a company not use COLA compensation? 

Employees may move to another location, but it may not have a higher cost of living than they’re accustomed to. In a reverse of the previous example, say an employee from Los Angeles, CA moves to Augusta, GA. Prices that employee is accustomed to being much higher—again, housing, utilities, food—are now considerably less expensive. The employee may benefit from a lump sum allowance to help them cover the cost of their move, but COLA compensation would not be necessary. 

Other forms of relocation aid may better benefit moving employees. If a company is looking to encourage workers to move from a more expensive area to a less expensive one, they may provide them with a delocation allowance. This can be tailored specifically to their destination, regardless of the difference in cost-of-living. 

Compensating Correctly 

There are plenty of ways to calculate cost-of-living differences between two cities. However, the most economical approach is often the least likely to provide accurate information. Free options found by a quick Google search are often outdated or exclude critical components, such as income tax, and may end up costing your company more money in the long run. Put your trust in a platform that accurately calculates rates based on thousands of data points. Learn more about how Motus can help you implement fair and accurate COLAs as part of your compensation strategy today. 

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Cost of Living 

One of the biggest changes an employee faces when relocating is cost of living. A 1,500 square foot home in southern California does not cost the same as a 1,500 square foot home in northern Georgia. But cost of living differences extend beyond the home prices. 

Consider, for example, consumables. The cost of eggs or milk also vary from place to place. Those with higher salaries may frequent restaurants more often and might not feel the impact of this change as greatly, but its still very important. So is family size. It’s one thing if you intend to support yourself on your salary. Supporting a spouse and children means differences in cost of living can be very impactful. 

What can companies do to support employees moving to an area with a higher cost of living?  

Cost-of-Living Allowance 

Many employers help their employees move with relocation packages. Some also provide a living allowance. A living allowance, or a cost-of-living allowance (COLA), helps employees adjust to the prices in their destination city they didn’t experience in their original location. Depending on the cost-of-living difference between two locations, the living allowance can supplement the relocated employee on a monthly basis for a year or two. 

Unfortunately, these can cost companies a considerable amount of money. One of the biggest reasons for this is faulty data. Even decision makers with years of relocation experience may rely on inexpensive cost of living calculators found on search engines with inaccurate, out of date information. 

Where can companies find information on appropriate cost-of-living allowances? 

Consider what you’re looking to help your relocating employees with. Cost-of-living data should take into account employee income, the price of consumables, the price of housing, the impact on income taxes and family size;. It should also be sensitive to whether the employee is a homeowner or a renter. Any resource or calculator that isn’t using these data points to create a cost-of-living allowance is not to be trusted. 

Look for companies that provide up-to-date information on any domestic location. With the Motus Platform, our team can share precise calculations specific to the circumstances of each relocating individual. Depending on the moves in any given year, these calculations could result in your company saving hundreds, or even thousands, with each relocation. 

Interested in learning more about our cost-of-living allowance product? 

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