Thoughts on Job Relocation
Interested in a job on the other side if the country. What is the board input on relocation costs? Does this relocation payment eat into bonuses the first year? What about tax benefits given the new tax structure? I would be moving from San Diego, to Boston. No family, so cheap relative to fam costs. Thoughts? (And yes, there are no UM or B1G alum at new job, so they won't see this)
A complex question for sure! I think you are on the right track. You need to evaluate the professional opportunity, the company, and the upward mobility. Then, as you mentioned, factor in the taxes, the commute, the weather and housing (I imagine Boston might be a bit cheaper than San Diego...or at least a wash). Another consideration, is are there other companies in the Boston area that you could go to if your current position you would be moving for ends up not being what you expected. I would think Boston would have more opportunities than San Diego.
Also, as far as I know, you would be taxed for any monies they give you for your move.
I wish you the best with your decision! It sounds like a fun adventure and a perfect time in your life to do it.
Pretty sure that you will be taxed for relocation costs.
Nevermind, answered below
If they are a decent employer, they will factor in taxes when paying you for your relocation and pay you more to account for that.
Under the new tax laws, moving expenses are taxed as income, so make sure you keep that in mind when asking for an amount.
The place where I work recently hired two new guys from out of state and the first guy got the unpleasant surprise of seeing his moving stipend cut down by 30% or so after taxes.
Yes. Having moved for a job a few months ago, I was just going to post about relocation expenses now being treated as taxable income, but you beat me to it. (My new employer warned about the effect of the new tax law ahead of time, though.) It's still good to have such expenses either handled directly or reimbursed by the employer, but not as good as when they weren't taxed as employee income.
Excellent point. That's a definite negative as regards the new tax law.
Moving expenses (if moving 50+ miles) also used to be an above-the-line tax deduction on one's 1040. Very helpful for those who were moving on their own, with no employer assistance. That's also no longer the case.
Bummer - the new tax law isn't really incentivizing worker mobility - but it is what it is.
Some employers gross up the relocation costs of EEs (mine does if it's not a personal need relocation) to help with the tax implications.
Probably not a wide spread practice, but worth knowing ahead of time when making the decision.
March 26th, 2019 at 11:02 AM ^
Yup, mine does too. We offer a lot of sales managers who have to move across the country to take a position and relocation costs are always part of the deal. Grossing up relo costs is really the decent thing to do when taxes can significantly impact the actual amount of assistance received.
The silver lining to moving expenses being taxable income is that it will boost your Social Security wages for the year. When it comes time to collect SS (if SS still exist when you retire), you will receive higher SS payout due to the increased income in the year that you relocate.
Does the company have a formal policy? Most major companies have some sort of mobility department that manages relocation both domestically and globally. This is my line of work, so if you have specific questions feel free to ask/PM. Bottom line is the amount you feel the tax will be dependent on your company's policy. Some cover taxes for their employees while others don't. Do you know if they will be administering any formal benefits, or just paying you a lump sum to move? Or are all the costs associated with the move yours to bear?
When I relocated in 2011 I got a lump sum relocation bonus that was provided by my employer as income. After taxes it basically paid for the U-Haul trailer, security deposit, and first month's rent.
I relocated in August and was eligible for our standard bonus that pays out in February, however with our plan the bonus is a % of wages earned during the calendar year. As a new employee I was "on probation" for 90 days, so those first 90 didn't count towards my bonus. I also did receive a raise in April (when all US raises kick in) of my first year, but it was the smallest raise that I've received in all my time here.
Your new employer should be able to clarify all those details for you.
Our raises used to kick in April as well. But slowly the company moved it to align with the calendar year.
OTOH, I am not sure if others in the company are getting another raise in April as well. Hmmm. something to think about.
I've been thinking about making a similar move. I love Michigan, but the lack of major competitors puts some serious downward pressure on my salary. My company's attitude is pretty much "quit if you don't like it", mainly because there aren't a lot of options for my line of work locally.
I've started looking around and it seems that I can make A LOT more on the coasts than I do here. The whole thing seems like a pain in the ass though with the kids and school and having to sell the house.
Good luck OP.
I was in a similar spot when I was looking around recently. While there are certainly a lot more jobs in NY and CA that fit what I do, and they all pay 25-40% more, the things you have to give up and deal with to get that higher income just really weren't worth it to me.
Because sure, I could make more money, but I'm going to be living in an apartment that's half the size of my house that costs 50% more a month AND I'll likely triple my commute time on top of that.
And then after the new job shine wears off, you're basically stuck in a more expensive city with a shittier housing situation, with a different set of things you don't like about your job.
I was going to say, you'll give back your higher pay and then some in cost of living. It generally is not cost effective to live on the coasts. Quite the opposite. You'll pay more to live in places that are in much higher demand and your bump in pay will not usually make up for it because the supply of labor is enough such that companies don't have to pay a commensurate premium.
This chart here by the Harvard Center for Housing Studies demonstrates that very clearly. The key quotes from the article:
"The report also notes that price-to-income ratios vary considerably across the country. As our interactive map shows, the median sale price in 2017 was more than eight times greater than incomes in 12 metropolitan areas, all of them in the West (Figure 1). Ed: This is what I call the sun tax. Price-to-income ratios topped 10.0 in both the Santa Cruz and San Jose metro areas and neared 10 in Los Angeles. On the other hand, ratios were well below 3.0 in much of the Midwest and Northeast, including Youngstown, Syracuse, Toledo, and Pittsburgh."
People should live where they want to live in terms of quality of life - and in most places it costs to do so - you don't get subsidized to live in high demand places. If Michigan is a place where you have high quality of life (as I'm sure many of us on this blog do), consider yourself super lucky.
A lot of recent research has suggested this is true - monopsony power in local markets means that even with an overall improving labor market, some areas are able to capture far more wage growth. OP, if your industry has more competition for workers in Boston (ie, biotech, academia, etc.) then you might be better off long term there.
I've lived in Boston for the last few years for graduate school and its alright. Winters aren't great but they're not as bad as Michigan. No happy hour is the biggest bummer, and the food scene isn't particularly strong, but the culture is fun and it's home to a lot of smart people.
They just don't have happy hour in Boston?
Illegal to offer drink discounts. But once you spend some time in Boston you'll see folks have no problem getting sloshed, so not sure the policy works as intended.
That's so weird. I figured happy hour was invented in Boston lol.
There are a lot of puritan/blue laws leftover out here. A lot of people want Boston to be a "big city" like NY or Chicago, but the T doesn't run through the night and the bars close at 2.
As someone who moved out to Boston from the bore that is Lansing, rides the T to work, and generally enjoys the atmosphere (when not listening to some Townies yell about the SOXXXX!)... this is a little too spot on and I hate you.
Upvote for knowing that Onion article exists.
March 25th, 2019 at 10:29 PM ^
NORM!!!
Bars/restaurants can't discount drinks by law, but they discount food to try get people in the door.
i live in newport beach and manage my family office. if i remember correctly, you're in compliance. i was thinking about ramping things up and raising funds to get back in the game. i might be in the market for a "compliance" officer to do rails of coke with and crack the whip. based on your mgoblog persona, this seems like a perfect fit. any interest?
Damn, guess I should have checked back in yesterday.
But yes. I'll pick up a bunch of blow on the off chance you see this response.
I'm relocating back to Michigan for Ross and a new job down the road (currently living in Boston) mostly because of proximity to family. Cost of living will help as well.
Is the situation in Michigan deteriorating or just lagging behind the rest of the country? I know Michigan isn't Boston, but it has to be better than most places that aren't top 10 economic powerhouses like Boston, NYC, SF, LA, and Chicago, right? Or am I going to get killed coming home?
March 26th, 2019 at 12:20 AM ^
better than most places that aren't top 10 economic powerhouses like Boston, NYC, SF, LA, and Chicago, right?
Ummm hell yes!
For work I fly to San Jose M-F. 650 sqft studios are going for over $3500 a month here.
Fuck that.
As someone who has resided on the East Coast for longer than he remembers after living in MI for most of his life, DO NOT be seduced by the salary differences unless they are extremely different from your MI salary base. Almost everything costs more, you'll have less flexibility in terms of housing stock/options, and taxes tend to be higher. It's certainly worth it for a job opportunity that you like, but don't assume you'll see much, if any, of that money.
Remember that you're going to pay a lot more in cost of living on the coasts. When my son moved to California he thought he was getting a substantial pay raise. The cost of living pretty much made it a lateral move. He likes living in California so it turned out ok.
This is the main thing to weigh, COL vs QOL.
The salary bumps are going to be eaten by COL, so unless relocation is a real game changer career-wise due to clustering or for a great one off opportunity, it is really about what you want. Some people find a way to stretch $40k a year so they can live in Brooklyn. Some people making $150k a year stash it all away and live in ranch houses in suburban Milwaukee and drive used cars.
If you want/need the buzz of a bigger city or some west coast nature paradise, it might be worth it to take the lateral move.
Huh. I had no idea that there was so much interest in Haberdashery on the coasts.
As someone who lives on the west coast in a major city, I can tell you the cost of living quickly eats into that salary increase. My brother, still in Detroit area, and I make similar money, have similar net worth, but he is so much more liquid than me, I feel a lot poorer than him. Main reason is because I have to pay 3x more on mortgage for equivalent housing. That quickly eats into disposable income.
@4god
Exactly. SoCal is extremely expensive. But ask yourself if a nice sunny 70 degree day in the winter, or a low humidity 80 degree day in the summer is worth it when the east coast is swamped with humidity. You have to weigh the benefits. I like skiing and golfing on the same day but would also move back to Michigan for the right situation.
I'm semi-retired and living in Ann Arbor for a few years because my kids were here doing medical residencies. All else being equal, and that is often not the case, looking at how far your dollars will go is a big deal.
Unless one is making megabucks, one of the first things to consider if one has children is to see if you have the opportunity to move somewhere where public schools are good, as the savings from not having to go to private schools is huge.
The second thing is the tax structure of the state where the new job is located. The OP lives in Cali, so he is aware of how painful taxation can be. High state income taxes, sales taxes, property taxes, gas taxes, etc. can eat up a tidy sum.
States have to get revenue form somewhere, so it's best to open up Excel and makes some notes. And then go play the lottery.
March 26th, 2019 at 12:44 PM ^
Received offers in Pittsburg and Maine. So quite different COL. But yep, I'm spreadsheeting and know all about SoCal COL. Both jobs give a raise and less COL, just trying to adjust for which is better.
Where do you live in Michigan? I've lived in both Seattle (back before it was crazy expensive) and LA. Yes, you can get a lot more money out there, but cost-of-living in both of those places has become absurd.
It is possible if you live in some places in Michigan that it could still be a good move, as certain cities (like AA) are very expensive vs. the local salaries. But if you are in a more affordable part of Michigan, even a large bump in salary isn't going to offset the large cost-of-living increase, especially when it comes to housing.
That being said, living in both Seattle and LA was awesome, so.......
I would use one of those city cost-of-living calculator to see what type of salary you would need to have equivalency with your current location. When I was back in MI I got a job offer out in San Francisco for 20% more money that I had ever made and 50% more than I was getting offered in Ann Arbor, but after I did the research, I realized that that huge salary really didn't mean anything in SF because it costs both arms and a leg to live there.
I mean, I would say that it depends on how you're living now and how you want to live somewhere else.
Me? I don't really have the inclination to be a homeowner, I don't want to mow a lawn and be responsible for the upkeep of the place. Neither does my fiancee. Kids are at least 5 years off. I find Ann Arbor and suburban Detroit hopelessly boring and fantasize about something more urban and interesting constantly. I also live pretty well in A2 on my relatively modest salary. The fiancee has a specialized degree in a field that is very saturated and low paying here.
It's not a hard trade off. Give her a 20% raise, to the level that's average for her work in bigger metros, and keep my salary the same and give us Chicago without putting much of a dent in our day to day lifestyle. Give me a 10-15% raise along with that and we come out more or less ahead.
I'm in Royal Oak, so it's fairly expensive, but not A2 or Birmingham expensive (although it's headed in that direction).
I could honestly increase my salary by about 80% taking a job in NY, CA, Boston, etc. All of the cost of living calculators I've used show me coming out way ahead as long as I don't live in Manhattan or San Francisco. The one thing that worries me is the schools. Royal Oak has good enough public schools that I didn't have to go private for my kids. That's not the case in most major metro areas.
Remember to take into consideration how much more the cost of living is on both coasts. COL is cheap in Michigan.
You can make a lot more on the coasts, but you'll also SPEND a lot more on the coasts. There is no free lunch, as they say.
Some of these questions can only be answered by your prospective new job, and may be something you can negotiate for. Relocation costs for going cross country are pretty high, and SD to Boston is just about as far as you can go distance wise. It may make more sense to just leave some of your old stuff and buy new stuff in Boston.
Taxes are lower in MA than CA, but cost of living is also a little bit higher in Boston.
Boston is also ass weather wise for like 5-6 months out of the year.
In general switching jobs is a pretty solid way to move up, but just remember that you're often trading one set of issues that annoy you for a whole new set that will annoy you shortly. So make sure your income and title bump are enough to offset that. Because the grass is always greener on the other side until you're the one that has to start tending to that grass.
I think the relocation information is probably best handled with the new potential employer. Their HR departments should be able to discuss (and negotiate) with you and at least answer your questions around whether or not relocation eats into bonuses, which is likely an employer policy, not universal.
My relocation package was something close to $35k if memory serves, inclusive of moving costs covered ~$15-18k, perks ~$5k, visits ~$2k, closing benefits ~$10k, etc.
All of that should be on the table for negotiation (i.e. if you are willing to move yourself cheaper than a moving company would, ask for the money in a stipend/sign on bonus; if you don't plan on buying a home and using the closing cost benefits, ask for the money in apartment finding fees or short term corporate housing).
I re-located for work this past summer, from Metro Detroit to Chicago. The hiring company covered all of the costs of my move plus a little extra as a re-lo bonus. It was absolutely worth it, as the job I'm in now is outstanding and my lifestyle is a major upgrade from my previous situation in Metro Detroit.
However, you have to remember that any re-lo bonus is counted as taxable income, and it was not a pretty situation for me come tax time earlier this year. I still got a federal refund, but it was significantly less than I expected, even given all of the tax changes this year. This didn't occur to me at the time, and I could have done a better job of knowing that would come back to bite me in the future. Just be very aware of your tax situation, should you take a re-lo bonus.
I've "fully" relocated twice where I moved across the country for a job w/o know the area or people. I'm single w/ no family so the moving itself wasn't tough, and I like to explore so to me the same job type and pay but in a different and more interesting location is a selling point to me - which may not be true for other people.
For the record I did a move to Mountain View/SF right out of AA. Packed up everything and went out there w/o a place to stay and just a job offer. I also moved to Seattle based on a job offer w/o knowing the location at all. I think it's healthy to see different parts of the US/world just because places can be so different and you can grow a lot from it.
Relocation pay is good, but I've never used that as a selling point. IIRC I got taxed like it was a lump sum bonus, so it was even more taxed than usual pay. I would focus on the salary (always go up for potential growth in future years too), yearly benefits, and the location.
Some advice, look at commute times for areas you'd want to live, if you're single you may want to live in trendy areas. Make sure traffic doesn't get bad during rush hour, both SF and Seattle get really bogged down so a 20 mile commute becomes an >hour. Make sure you are able to handle the weather, I've never lived in the NE but I hear the winters can be brutal. Figure out the cost of living delta and make sure you can still make it work while paying all your bills and everything (one thing I wished I did before moving to SF) because a salary looks good until you're sinking half of it into rent.
Long story short, is there any reason to stay in SD and not go on an adventure/see something new?
PS I don't know about Boston, but the tax structure in WA (no income tax) was a huge bonus that I never truly realized until I started getting paychecks - so good idea looking into that.
Leaving San Diego?? For Boston? Take one last drive out to Point Loma and burn it into your memory. Good Luck friend.
Depends what you do and what your industry is. I'm going to guess biotech with San Diego and Boston which is the field I am in as well.
At lower job levels or at smaller companies, there aren't "relocation packages" so to speak. I'm still fairly early in my career. When I moved for jobs, I just got lump sum bonuses (like signing bonuses) that counted as ordinary income on my tax return. The relo or signing bonus didn't affect my performance-based bonus. What was affected was if I joined the new job during the middle of the evaluation period... you either get a prorated bonus and raise or no bonus at all.
I think you can write off relocation costs if you have enough itemized deductions to offset the standard deduction (just van, hotels, and transport costs - rental deposits or down payments do not count!). For me, the standard deductions were greater than the relo costs. But the missus and I did the relo frugally.
Good luck tho. Boston seems to be faster paced than SD, but wayyy worse weather. I've been on the west coast for about a year now. There's a lot to be enjoyed here, but it definitely comes at a cost (housing, traffic, homelessness).
Leaving SD for Boston, out of your mind? Ok, mid June through end of September are great, but the rest of the year....! Definitely will save on taxes and gas, about $1 less per gallon. When you Boston, are you talking about the city or the general area? Working and living in Boston/Cambridge is expensive: housing, parking, commuting etc.... Living outside 128 and between 495 offers some flexibility on cost. Public transportation, T and commuter line aren't bad, better commute coming into South Station v North. Traffic is brutal. At least airport is similar, close to downtown.
Yes, no happy hour and bars close early. No Gaslamp District!
I am very sorry to thread jack but didn't want to start a new one for this. Does anyone remember a running back for Michigan named Mike Cade? I think he was here for only one year in the late 70's or early 80's. He is from Arizona. I am trying to find some information of him. Thanks.