Win the War for Technology Talent with the Right Cost of Living Resource
According to a recent CompTIA study, 82% of technology workers would move for a job assignment if cost of living were taken into consideration. The stakes are high for employers and recruiting talent remains competitive. Finding the right cost of living resource to measure differences and determine how best to apply that data is an essential part of an organization’s talent strategy.
Costs vary widely around the country. Below is an example illustration of a candidate. They have a family size of four, own a home in Tampa and are considering a job assignment in Washington, D.C. This prospective employee is estimated to experience a more than 17 percent increase in their overall living costs by accepting a job in D.C.
*family size of 4, salary of $100,000, data source: Runzheimer, July, 2019
Companies can use a variety of compensation approaches to help a new recruit acclimate to their new location, including:
- paying a one-time signing bonus equal to all, or a portion, of the difference
- providing an allowance separate from base salary with the option of phasing out over the first year or longer.
- offering to help buy down the mortgage in a new home the employee is purchasing
- setting the base salary at a level that takes cost of living into consideration
Free Isn’t Free – Choose Data Sources Wisely
Getting the dollars right requires carefully scrutinized data sources. A free or low cost solution can be the most expensive choice. Using it may result in penny-wise and pound-foolish decision making. In a recent comparison of data sources, the low-priced option would have resulted in paying $5,000 more per employee for cost of living differences!
Selection criteria for finding the right cost of living resource should include the following:
1. Spending Patterns
Does the resource recognize that spending patterns change based on salary and family size? You can quickly get a sense for this by typing in various salary levels into the calculator and seeing how spending categories change. It’s a red flag if you see no variation in the weights across the categories such as housing, transportation, income tax and goods and services as you enter different salary amounts.
2. Housing Circumstances
Does the resource acknowledge that housing cost dynamics are different if a person owns a home versus rents? Supply and demand for homes versus rental properties can vary considerably within the same market. In addition, spending components are distinct. Property taxes and home maintenance are not applicable to renters. Home owners can deduct expenses like mortgage interest and real estate taxes where renters cannot.
3. Living Community Selection
Does the calculator model out appropriate living communities within a metropolitan area based on salary? Or does it require the administrator who accesses the calculator to choose the living community? A person making $75,000 is not likely to live in the same area as someone making $200,000. Choosing an expensive living community without regard to salary will exaggerate the differences. An expert resource will have a profiling approach that takes the guess work out of choosing living communities within a metropolitan area. This ensures consistency – regardless of who is accessing the information and avoids exaggerating the differences.
Talent shortages are here to stay. Organizations who broaden their compensation approach to include a cost of living resource add another competitive weapon to their HR toolkit. So many technology workers view cost of living as a major factor in their employment decision making. Given that, there is no better time than now to choose the right partner. Interested in learning more? Let us know!