If you’re accepting a job in a new city or state, experts agree that it’s important to use any change in cost of living as a part of your salary negotiation. Knowing the true costs of a city, such as the price of gas, a gallon of milk, or the rent for a two-bedroom apartment, will help job seekers to determine an ideal salary range.
Using NerdWallet’s Cost of Living Calculator, Katie Donovan, the founder of Equal Pay Negotiations, determined that moving from Boston to San Francisco requires a 20 percent bump in pay to maintain the same lifestyle. “Understanding this is crucial to ensure that you don’t accept a 15 percent raise and actually put yourself at a lower level of living for a promotion,” Donovan says.
According to the Cost of Living Calculator, if a student is living in Boston they will pay an average of $3.59 per gallon of gas, whereas the same gallon of gas will cost them $4.04 on average in San Francisco. Changes in daily and monthly expenses will come in handy in determining a proper budget and desired salary that makes sense when accepting a job offer in a new city or when relocating for a promotion.
Being aware of any increases in cost of living will also help employees to better evaluate salary data that they find on websites such as Glassdoor and Salary.com, David Bakke of Money Crashers says. It’s important to note that salaries for the same job in Los Angeles will often be higher than those in Houston, and to take this into account when determining what you think you’re worth.
What if I receive a low offer?
In the case of a low offer, doing your research and knowing the cost of living in a new city or town will help you present your future employer with an informed case as to why you deserve higher pay. Donovan offers an example of how to make one’s case: “Thank you so much for the offer but unfortunately it seems low. I wonder if that is in part due to my salary history being in Boston instead of San Francisco. Have you adjusted for the 20 percent increase in cost of living?” Using the numbers will show the employer that you’ve done your homework and help to strengthen your case.
“You’re not going to offend the interviewer or HR staff member—they know it’s part of the process,” he says. “If you feel you’re worth more, then ask for a higher starting salary.”
If you receive a low offer, don’t be afraid to counteroffer and ask for what you think you deserve, Bakke says. “You’re not going to offend the interviewer or HR staff member—they know it’s part of the process,” he says. “If you feel you’re worth more, then ask for a higher starting salary.”
Keep in mind that the first offer is never the best offer, Donovan advises. Knowing how much more you need to make to maintain your lifestyle is good for your own edification so that you don’t accept an offer that’s too low. But if you really want to get more money, make sure to speak to the company’s bottom line: Instead of bringing up weekends worked and time spent away from family, Donovan says, talk about money saved because of a revised process that you developed while working weekends—that’s when management will find the money needed to budget for a higher salary.
What if the offer is too low?
Whether you’re negotiating salary for a new job offer or a current job, always keep in mind how you will—or already do—add value to the company, Annkur Agarwal of PriceBaba says. Negotiating properly and achieving your desired salary is the first step toward feeling comfortable in your new environment. If you move from Boston to accept a job in San Francisco, where housing is 75 percent higher, but you only receive the average 10 percent salary increase, you may find you’re unable to pay your rent or mortgage. Accepting an offer that won’t meet your cost of living could be detrimental to your work performance, warns John Swartz, the regional director of career services at Everest College.
If personal needs are not met, “it could impact job performance and eventually lead to the candidate and the employer parting ways,” he says.
This could lead to the employee looking for a new job in an unfamiliar city and potentially having a relocation package revoked. By using tools such as the Cost of Living Calculator and doing your market research, employees will be better prepared for a move to a new city and ready to negotiate effectively.