Why Salary Is So Complicated

flickr: Unhindered by TalentWhy is it so hard to get paid what you're worth? Why is the guy sitting next to you making more money, or getting more vacation time, and why is it OK for companies to set your salary based on the cost of living but you're not allowed to use that as justification for a raise? It's all very complicated, that's for sure. As proof, take a peek into the mind of a hiring manager trying to move someone from DC to NYC. Calculators that show the relative cost of living in each city say that it's 50% more expensive to live in NYC than in the District, so maybe the person's salary should be increased by half. But salaries are only, on average, 8% higher in New York City than in DC, so maybe the worker gets just an eight percent raise. But is that fair? The manager goes on to say that the job is in NYC but he expects the worker to live outside the five boroughs and commute. How does that change salary expectations? Rent is lower, but that monthly LIRR or NJ Transit pass is not cheap. Karol Koenen of Runzheimer International, an employee relocation firm, suggested some tips: "Often companies will use a tiered model to adjust salaries. For example, if the cost of living difference in a location is between 0-10%, no adjustment to salary will be made. For 11-20%, a 5% salary adjustment will be made, etc." Or, she suggests, some companies provide a temporary cost-of-living benefit that expires after 3-5 years (though that sounds like a recipe for getting a worker to start job searching after 2-4 years). She adds that depending on how you calculate it, the cost of living difference between these two cities varies between 11 percent and 92 percent. Which explains why this stuff is so complicated.

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Why Salary Is So Complicated

Rachel Kaufman

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Rachel Kaufman