Remote Work Series, Part 4: How do you calculate compensation for a domestic remote work move?

    Jul 22, 2022 @ 10:02 AM / by Weston Hicks

    The Capitol and Reflecting Pool in Washington, DC.

    Next up in the AIRINC remote working series we focus on the U.S. When considering a remote work location, it doesn’t always involve an international move. The U.S. is so vast that many people gravitate to the financial and big corporation centres, such as New York and San Francisco. But the effect can be similar to a cross-border move as taxes and cost of living can vary dramatically between states.

    How does New York compare to Denver?

    Let’s compare someone in New York earning USD 130,000 who’s moving to Denver, Colorado where the expectation is a salary of around USD 100,000. The thought of leaving the buzz of the big apple for the rocky mountain park trails and the gateway to Colorado skiing may appeal to the more adventurous of us!

    New York City, USA to Denver, Colorado USA

    us dom remote work

    How do you achieve purchase power parity?

    Overall, the person would need around 20% lower compensation in Denver to achieve the same purchasing power as in New York. The cited USD 100,000 would be too low, but a salary of around USD 106,000 would achieve purchase power parity. The AIRINC remote work calculator can run these calculations for an international move or a domestic relocation basis across the globe.

    Are you moving key talent?

    As always, the proof is in the numbers. There will be locations where the cost base is lower, and the question is, will the person accept a lower gross salary as a tradeoff for the lifestyle aspects? Or is the person such a key talent that they drive a hard bargain, and the company is prepared to maintain the same New York Salary in the lower cost location. Whatever the outcome, companies should be prepared for more negotiation on this topic and have the supporting data to aid their compensation decisions.

    Next time, we will examine the rising interests in cross-border remote work in Asia. Stay tuned!

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    Topics: Mobility Policy, Global Mobility, Remote worker, Mobility Outlook Survey, Technology and Tools, Salary Evaluation Tool, United States, Domestic Moves, COVID-19 Recovery, remote work, Compensation

    Weston Hicks

    Written by Weston Hicks

    Weston joined AIRINC in 2012 working with clients in a client facing role. Over that time he has assisted many clients with challenges including on-site surveys. He has transitioned into a product marketing role that allows him to engage clients and prospects via presentations and webinars.