Domestic Cost of Living
Cost of Living, or the level of prices of everyday items in a particular location, is often a factor in deciding to accept a relocation. Employees consider their current cost of living and try to compare it to the destination’s cost of living. Factors such as housing, utilities, food, transportation, taxes, and common retail purchases are often considered to determine if the move is a financially sound decision.
Some employees moving to areas that are determined to be higher cost locations will receive a Cost of Living Allowance or Adjustment (COLA). This can be referred to by several other names, and there are several ways the difference is determined. COLAs are a staple in expatriate programs, often focusing on goods & services (food, retail purchases, and basic household services) and housing; however, COLAs are also found in domestic employee mobility programs as well, especially within companies that move people from lower cost areas to higher cost areas.
The fundamental of any COLA is to determine the difference between the origin and destination, commonly referred to as the differential. The differential most often comes from an external data provider. Using an outside source for this information alleviates any bias from the company, offers defensible data from the supplying company, and creates an environment of consistency in which all employees are treated equally.
The Aires Pulse Survey – Domestic Cost of Living takes a closer look at how
employers determine compensation structures and COLAs for employees relocating
with in the U.S. The survey results also provide comparison to previous research
conducted by Aires in 2014 to highlight any changes or trends.
Below is a sneak peek of the Domestic COLA survey.