Are you compensated fairly in expensive cities?

[Dutch]

I always see that New York and Los Angeles are the most expensive cities to live in. If I were to move to New York or Los Angeles, would my salary compensate me for where I lived?

In the military, they do that (through a housing allowance). For government civilians they do that (with a cost of living allowance). But as for the normal world, I have no idea. How does it work for most companies/corporations?

Do you negotiate that into your regular salary?

[molson]

I don't know how it works generally, but when I lived in NYC in my 20s, it was more about compromising your standard of living than making more money to maintain a standard of living you might have elsewhere.

In NYC, I had four roomates, didn't own a car, didn't travel, etc, things that otherwise would have been different if I lived anywhere else.

And I think that's true of a lot of people - in NYC, you rent a 1-bedroom apartment for what your mortgage payment might be somewhere else.

At the top levels of high-demand people and industries though, I'm sure they're taken care of, and that skews the average salary numbers somewhat.

[Radii]

I never got to the point of a job offer but for a time 5-6 years ago I had a couple phone interviews for software development positions in San Francisco and Los Angeles, both cities with significantly higher cost of living numbers than Atlanta. The salary ranges that were being discussed in the early stages were just WAY off.

Based on cost of living calcs at the time, the LA salaries were coming in about $30,000/yr too low to even be considered a lateral move, much less a raise. Jobs in San Francisco were coming in $60,000-$75,000/yr under what I would have needed to give them any consideration at all.

Who knows what would have happened if I got closer to a firm offer, but it was enough to make me extremely weary of moves to higher cost of living areas.

[jeff061]

The closer I've gotten to Boston(slow migration from eastern CT) the more money I've asked for, with success. The small sample of people's who's skill and salary level I know of seem to be making more around here as well.

I did run into a problem once where my superiors wouldn't pay me what I ask for, and I chalked it up to nearly the entire company, all of management, being based out of Columbus and not taking Boston costs of living into consideration.

[Klinglerware]

If you are looking for a job, then generally you will see salaries that are in line with cost of living for that region.

It might be a different story if you already have a job and a transfer to another region is on the table. I'm guessing it would depend on the organization. A lot of them do cost of living adjustments, but probably a lot of them don't. My company, for example, doesn't for domestic transfers (but may do a cost-of-living adjustment for an international assignment in an expensive country). On the flip side, I don't think there are many companies that will force you to transfer to a less expensive region of the country and make you take a downward adjustment. I've known a few people who did transfer out of metro NYC and are almost living like kings in their locations.

[Hammer755]

I would think that for the most part, salaries are adjusted in areas with a high cost of living, but not nearly enough. The cost of living index in LA is over 150 (100 = US average), but I doubt whether a person could find a 50% salary increase by moving there.

My company makes no salary distinctions for cost of living within the US. They offer a salary uplift for working internationally based on exchange rates and the safety factor of a country, but offer no distinction domestically.

[ColtCrazy]

When we were looking into moving to England for teaching, we looked at salary. The school is about a 20 minute train ride out of London. The school pays for housing and has a cafeteria and the salary is roughly 8K more than what I make now. IF we ate at the cafeteria most of the time and with housing, it was doable. The problem is the cafeteria's food was sub par on a good day. We'll probably look at doing it in 3-4 years when the kids are older and my wife gets some teaching experience in. If we could both teach, it would be a sweet deal.

[M GO BLUE!!!]

I currently live in the Bronx. I make a little more than I would elsewhere, but still have to work an extra part-time job in order to have any spending money. The apartment I live in I refer to as "The Cave," as it gets very little natural light and no air circulation at all. I regularly get mice and have a roach problem worse than I ever thought possible.

I was actually happier when I lived down in Harlem in the studio apartment that had something living in the ceiling and a bathroom ceiling that would need to be replaced annually due to water damage.

I am currently looking for a job in my hometown of Detroit. I won't make that much less, but would only have to work one job and would live a much higher standard of living. NYC is great if you have money. I'm sick of living in a "The Cave," but have no other option at my pay rate.

[Young Drachma]

Denver doesn't really compare, because of the real estate costs.

[flere-imsaho]

I'll bet that the only time companies really figure a cost-of-living ratio is when they're moving someone internally from one city to another. Say LA is twice as expensive as Denver, they'll pay you double (maybe) to move.

Otherwise yes, you do get paid more in expensive cities/areas, but due more to other, common-sense factors.

1. You get paid more because the "going rate" for the area is higher due to cost-of-living expenses that can't be ignored.

2. However, you don't get paid as much more as you'd think because the pool of candidates the company has to select from is also probably higher (supply vs. demand) - there's a reason it's a more expensive city - people want to live there.

3. All that (above) can come to naught if you have an especially in-demand skill. For instance, I've seen people earn in Madison above what they'd earn in Chicago because there was basically no one in Madison who could do the kind of work they could do.

[Mizzou B-ball fan]

Several years ago, we had a friend that had just finished medical school here in the Midwest and they took a residency at a hospital in Manhattan. Residency is notorious for working you long hours for minimal pay. His pay was relatively small, but they did give him a $2,500/month stipend for housing so he could live close to the hosipital since he was often on-call.

[claphamsa]

Funny you say this... I was just talking about a similar thing with a friend this weekend. when i moved to DC and got a job, we started talking about money, and I asked them for an ammount that would have been nice in Philly, and my boss said "youll never be able to live on that here!" so they paid me more than I asked for. I had no idea DC was so much more then Philly!

and according to the GSA SF is the most expensive

[Fidatelo]

Back in '01 I transfered from Winnipeg to Montreal, and received no cost-of-living increase from the company I worked for at the time (EDS), despite Montreal being a pricier place to live. That said, the move was at my request, so I didn't really have much bargaining power.

I did apply for a couple different jobs while I was there, and the salaries seemed pretty comparable to what I was earning already. I'm not sure if those companies just didn't pay as well as EDS in general, or if I would have been forced to deal with less disposable income had I chosen to stay.

I think my gut feeling is that people in expensive cities get kind of screwed pay-wise, but there is a reason those cities are so attractive and it goes beyond money.

[revrew]

flere-imsaho was right on. Another factor to consider is the cost of doing business in these cities - many companies locate there to access the talent pool, but can't handle the expense of paying their employees to match the cost of living.

I worked in Chicago (in a field with too large a talent pool), getting paid typical Midwest rates (not Chicago rates), until I got fed up with it and moved to a rural area, where I make the same amount of money, but the cost of living is a fraction of Chicago.

As a sideline, IMO, many of these companies are foolish to be located in such expensive cities and really should consider moves to smaller, less expensive cities. There's more talent and quality of life in a college town like Ames, IA, than many of these companies realize.

As an employee entering the private sector, I might recommend, however, doing what I did: Get a foot in the door with a big city, big name company - even though you won't be paid quite enough for the area - then take that resume and reputation to a smarter company that'll pay you for your experience but is located in a smaller community. The lateral move in pay will actually be a major step up in standard of living.

[Logan]

Originally Posted by Mizzou B-ball fan

Several years ago, we had a friend that had just finished medical school here in the Midwest and they took a residency at a hospital in Manhattan. Residency is notorious for working you long hours for minimal pay. His pay was relatively small, but they did give him a $2,500/month stipend for housing so he could live close to the hosipital since he was often on-call.

Hope that pay was enough where he could afford the rest of the $3200/month for his 1 BR.

[Mizzou B-ball fan]

Originally Posted by Logan

Hope that pay was enough where he could afford the rest of the $3200/month for his 1 BR.

Barely. And he was married. I believe the two of them crammed into a studio apartment.

[Samdari]

Originally Posted by claphamsa

and according to the GSA SF is the most expensive

The GSA computations are a joke. They intentionally underreport the cost of living in/around DC. There are so many federal emplyees there that accurately representing it would cost too much.

Not that I am trying to say anything about the cost of living in SF, just trying to say find a better source.

[sterlingice]

Originally Posted by revrew

As a sideline, IMO, many of these companies are foolish to be located in such expensive cities and really should consider moves to smaller, less expensive cities. There's more talent and quality of life in a college town like Ames, IA, than many of these companies realize.

I don't understand why more companies don't do this. Lawrence, KS is the same way and it has the bonus of being 30 minutes away from a major metro area in KC. You have fairly inexpensive resources, a city that has a good per capita wage but low cost of living, and a highly educated population. It sounds like a perfect location to locate a business, particularly if it's something that specializes in churning through entry level employees.

Same with any midwestern college town, actually- Columbia, Lincoln, Iowa City, Madison, etc.

SI

[kcchief19]

Generally speaking, the market usually does a reasonable job of determining the salary. Most employers will pay what they need to pay in order to attract the appropriate workforce. In NYC, that will often mean paying more than for the same job in Kansas City.

There are exceptions, and it depends on how you rank in the market too. You might be the best lawyer in Joplin, Mo., and make a killing but in NYC you'd make less money. Your compensation in one market vs. another can vary greatly.

[kcchief19]

Originally Posted by sterlingice

I don't understand why more companies don't do this. Lawrence, KS is the same way and it has the bonus of being 30 minutes away from a major metro area in KC. You have fairly inexpensive resources, a city that has a good per capita wage but low cost of living, and a highly educated population. It sounds like a perfect location to locate a business, particularly if it's something that specializes in churning through entry level employees.

Same with any midwestern college town, actually- Columbia, Lincoln, Iowa City, Madison, etc.

It does happen but there's a finite level of resources available in these towns too. Columbia is headquarters for two different insurance companies and a third has a huge operations center there. MFA Oil is also based there.

But I think a major employer going into Columbia would fine the talent pool pretty thin after that. If you're goal is attract recent graduates, it might not be a great strategy -- I think most graduates tend to want to move away from the college town after school, and most probably return to their original hometowns.

Also, will executives choose to put a location in a small town if it means they have to move there? What kind of incentives are they getting? Bigger cities will usual give bigger tax breaks than small towns.

[claphamsa]

Originally Posted by Samdari

The GSA computations are a joke. They intentionally underreport the cost of living in/around DC. There are so many federal emplyees there that accurately representing it would cost too much.

Not that I am trying to say anything about the cost of living in SF, just trying to say find a better source.

i would be thrilled if they upped our locality

[Dutch]

Originally Posted by Samdari

The GSA computations are a joke. They intentionally underreport the cost of living in/around DC. There are so many federal emplyees there that accurately representing it would cost too much.

The DC area, Maryland in particular, is the motivation behind this entire thread actually.

[Logan]

Originally Posted by Samdari

The GSA computations are a joke. They intentionally underreport the cost of living in/around DC. There are so many federal emplyees there that accurately representing it would cost too much.

Not that I am trying to say anything about the cost of living in SF, just trying to say find a better source.

They do the same thing in NYC. They remove Manhattan from the calculation of cost of living in the area because they make the claim that it's too expensive to live there, so everyone lives outside the city, which then brings down the cost of living.

I get a 33% geo-pay raise over my base because I work in the area (it was 23% about 2.5 years ago), and while it's nice, it doesn't accurately reflect the difference over what someone who gets a 0% geo bump feels when it comes to costs. People who live outside the city and get the same 33% as I do obviously do much better overall.

Some co-workers like to argue that it's my choice to live in NYC, so I shouldn't complain. That's obviously true...but the government reimburses me $5/day for my travel from home to wherever in NYC I'm working, and the government reimburses those co-workers upwards of $50/day when they come into the city, taking into account train tickets, mileage reimbursements, etc. I'm saving the government money by living in NYC and not getting anything for it (which I don't care about, but I bring it up in response to the previously stated "your choice" argument).

[claphamsa]

Originally Posted by Dutch

The DC area, Maryland in particular, is the motivation behind this entire thread actually.

im a fed, and my I have 23 K (or so) in locality to my check.... and I do think people tend to make more than in other places, not sure if its ENOUGH more. the low end still make low end money!

[lordscarlet]

You definitely will make a different salary based on where you live. Wade lives about 3 hours away and the salaries in Hampton Roads aren't even comparable to those in DC, really. Are they in line with cost of living? I'm not sure that it equals out, but you will get more for working in the DC area than you will in other positions in other parts of the country, even one that is two metropolitan areas away.

[claphamsa]

there is a reason alot of people drive in from places like fredneck and port royal! id rather pay to live in civilization!

[lordscarlet]

Originally Posted by claphamsa

there is a reason alot of people drive in from places like fredneck and port royal! id rather pay to live in civilization!

There's a reason I live inside the District.

[claphamsa]

I live about a mile from the line... my commute is about 25 min in, and 40 min out.... works for me I walked home from capital hill once.... 8.3 miles. not a bad walk.