Author Topic: Relocation Salary Adjustments  (Read 2876 times)

RidetheRain

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Relocation Salary Adjustments
« on: November 21, 2017, 01:01:30 PM »
I've started applying for positions in a new state recently (hoping to move out of Los Angeles!) and I'm trying to get an idea of what kind of salary I should be expecting/requesting. I'm aiming for a similar position to what I have now - just in Texas (Dallas/Houston depending on the job). Obviously, I have to expect a salary dip since the cost of living is so ridiculously different. Thirty percent is what an online cost of living calculator estimates. I'm currently doing well on the top end of the salary range for my job and location.

I'm a little at a loss as to what I should do with all this information. Expect more than a 30% decrease because I'm being paid unusually well currently? Expect a smaller decrease because moving jobs is usually a salary bump? Wait and see what I can get? I don't want to be unreasonable when negotiating comes around, but I also don't want to be ripped off.

GnomeErcy

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Re: Relocation Salary Adjustments
« Reply #1 on: November 21, 2017, 01:13:28 PM »
I'd use a number of sources like COL differences (30% like you said), Glassdoor for salary comparisons (your specific industry/role may pay similarly even though the cost of living is less), etc. Also keep in mind that your specific cost of living differences will be different based on your lifestyle. ex: if transportation costs are 19% less as an aggregate between LA and Dallas, but you have an hour drive in LA now vs a 5 min bike in Dallas, obviously your difference is basically 100% (or close) less.

Ultimately if you're expecting them to throw out a number then let them, and be prepared to counter with facts to back up your request.

If you need to throw out the first number that's a little different and I'd make sure to do my homework before negotiating salary..

https://www.expatistan.com/cost-of-living/comparison/los-angeles/dallas? maybe check that out
« Last Edit: November 21, 2017, 01:17:59 PM by GnomeErcy »

terran

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Re: Relocation Salary Adjustments
« Reply #2 on: November 21, 2017, 01:40:31 PM »
Remember that if you're anything close to being mustachian the cost of living adjustment should not be applied to your entire salary. Say you make $100k (after taxes for simplicity) and spend $30k. For a non-mustachian applying the 30% COL adjustment to the full income and saying they want an income of $70k might be appropriate. For a mustachian, they would need a salary of $100k - $30k x 30% = $91k to still be able to save $70k and maintain their lifestyle (now by spending $21k).

simonsez

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Re: Relocation Salary Adjustments
« Reply #3 on: November 21, 2017, 01:47:09 PM »
One heuristic is to use the General Schedule (GS) for various localities.  Even if you aren't a federal employee it should be a decent proxy.

https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2017/general-schedule/

For example, say you are a Grade 11 Step 1 in LA at $67,845.  This same grade and step in Dallas would be $64,161.  You can divide those two to get a ratio and apply it to any salary level.

RidetheRain

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Re: Relocation Salary Adjustments
« Reply #4 on: November 21, 2017, 03:41:25 PM »
That's all really great advice. I'll definitely be looking at the government schedule for a baseline.

I'm hesitant to adjust my assumptions based on mustachian living because the bulk of my current budget is rent (half of all the money I spend each year goes to rent). Depending on the office location I could be cutting that expense more than in half.

jane8

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Re: Relocation Salary Adjustments
« Reply #5 on: November 22, 2017, 01:31:42 PM »
Texas doesn't have state income tax, so you may want to account for that (if you haven't already).

Not necessarily pertinent to your question but for Dallas, consider your commute (I know this is a MMM board so you may have already) and that most 1 bedrooms (relatively decent, relatively safe) are at least $1K+.  Public transportation is an option too though can be time intensive/impractical depending on job/housing location.

RidetheRain

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Re: Relocation Salary Adjustments
« Reply #6 on: November 22, 2017, 03:32:03 PM »
Texas doesn't have state income tax, so you may want to account for that (if you haven't already).

I didn't even think of that! Considering I paid over $8k in state income tax last year I should definitely take that into consideration (carefully! I also deducted it from federal)

Since I pay more than $2000/mo in rent right now plus utilities (and it's a ridiculously good deal) so I'm not scared of Dallas prices. I'm going to compare any offer amount to the nearby housing prices. I'll probably reject any offer that is a greater % of my pay than it is now. I have a few baseline ideas of apartments in different suburbs and parts of the city based on rent.com that I'm using to estimate acceptable salaries. Is that reasonable? I don't know how much I should tie my expected paycheck to housing prices. It seems like fuzzy logic.

Additionally, I'm not sure if I should factor in my 401k match. A lower salary means less total dollars matched even at the same percentage. Obviously, this is deep into negotiation territory here, but I don't want to forget the whole point of working: retiring!

ixtap

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Re: Relocation Salary Adjustments
« Reply #7 on: November 22, 2017, 03:43:03 PM »
You do need to look at the total compensation package. 401k match, health benefits, ESPP...

Fomerly known as something

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Re: Relocation Salary Adjustments
« Reply #8 on: November 23, 2017, 04:50:07 AM »
One heuristic is to use the General Schedule (GS) for various localities.  Even if you aren't a federal employee it should be a decent proxy.

https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2017/general-schedule/

For example, say you are a Grade 11 Step 1 in LA at $67,845.  This same grade and step in Dallas would be $64,161.  You can divide those two to get a ratio and apply it to any salary level.

This is great as well because the government schedules are based on "Cost of LABOR" not cost of living.  So even with a lower cost of living say in Houston or Detroit, one should expect a higher salary proportionally.  I mention these two cities because when I was a Fed in NYC we bitched about the Houston COLA and Detroit because I was amazed when looking to transfer to see the Detroit COLA was almost equal to the Chicago COLA although Detroit is much cheaper.

chasesfish

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Re: Relocation Salary Adjustments
« Reply #9 on: November 23, 2017, 10:21:42 AM »
I'm happy to give some specific advice comparing California to Texas.

If you're moving to Dallas/Houston, the EXACT location of your office makes all the difference in the world.   I did the analysis moving a few years ago from a lower cost of living area into Dallas.

You should figure out what is your take home pay, then what's your cost of housing with a comparable commute, then how much do you have left afterwards?   I personally paid a lot for housing to live within 10 minutes of my office.  Life's too short for me to commute anymore. 

In my completely personal opinion, that number needs to be at least four figures a month to give up the beach/mountains/outdoor activity available to you around LA.  People actually demand equal to premium salaries over the East and West Coast because of the quality of life.  You have to fly or drive five to twelve hours for recreation or weekend trips.  The city is built on a flat prairie.  We have great air transportation, but its still a pain in the ass to get places.

There is no state income tax, which is nice, but I moved from an income tax state with low property taxes into a $15,000/year property tax bill.  The big cities in Texas tax at just over 2% of the property's value per year, which creates expensive housing payments and expensive rent.   Insurance isn't overly cheap either, hail storms cause car and homeowners insurance to be expensive.

TrMama

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Re: Relocation Salary Adjustments
« Reply #10 on: November 23, 2017, 12:10:13 PM »
Another good thing to do would be to make several different versions of your current budget, but with figures from the new location(s). The COL calculators will get you a ballpark value, but an actual budget comparison will tell you how much your specific numbers will change.

Once you know how much you need to maintain your current standard of living, it'll be easier to figure out if a particular job is offering enough to make the move worthwhile.

RyanAtTanagra

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Re: Relocation Salary Adjustments
« Reply #11 on: November 24, 2017, 02:24:01 PM »
I would say don't accept a pay reduction.  There are people that will move from a LCOL area to a HCOL area for a few years to take the pay bump, then move back, not taking lower pay.  Depends how good you are in your field and how in demand top performers are.  But when I move out of the Bay area I'm going to start with the assumption that I'm worth what I'm worth regardless of location.  If you start off assuming you're worth less, you've already limited yourself.

TomTX

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Re: Relocation Salary Adjustments
« Reply #12 on: November 25, 2017, 07:28:06 AM »
I've started applying for positions in a new state recently (hoping to move out of Los Angeles!) and I'm trying to get an idea of what kind of salary I should be expecting/requesting. I'm aiming for a similar position to what I have now - just in Texas (Dallas/Houston depending on the job). Obviously, I have to expect a salary dip since the cost of living is so ridiculously different. Thirty percent is what an online cost of living calculator estimates. I'm currently doing well on the top end of the salary range for my job and location.

I'm a little at a loss as to what I should do with all this information. Expect more than a 30% decrease because I'm being paid unusually well currently? Expect a smaller decrease because moving jobs is usually a salary bump? Wait and see what I can get? I don't want to be unreasonable when negotiating comes around, but I also don't want to be ripped off.

Screw that.

If you're making $150k now, you should aim for a 10% salary increase.