Whenever you move to a new location, you can expect your salary to change. That's because labor markets often differ from one city or town to the next. But that's not the only factor that could impact your bottom line. Even if you relocate to take a job with a higher salary, you may not actually make more money—because your cost of living and other expenses could wind up increasing, too.
Look At The Labor Market
If a company in a different area of the country offers you more money to do the same job, it may be because that area has a stronger labor market.
A "labor market" refers to the pool of individuals looking for work in a given geographic area and the pool of employers with open positions to fill in that same area. Many factors affect the strength of labor markets in different regions, including:
- The ratio of open positions to qualified applicants.
- Concentration of industry or business segments in the area.
- Common pay scale practices in the region.
These factors are bound to have an impact on the amount you’ll earn in your new location, but your cost of living will likely be different in your new hometown, as well.
Figure Out Your Costs
One reason a company in a different part of the country might offer you a higher salary is because they know there's a high cost of living where they're located. Cost of living is based on the price of goods and services consumed there.
The main factor is housing—because housing is one of the most expensive things we pay for in any city or town. However, cost of living also considers taxes, food, clothing, transportation, healthcare, and anything else people spend money on regularly. If your new location has a higher cost of living than your current location, you can expect to pay more to maintain the same standard of living.
So, let's say you're offered a new job in a new city with a new, higher salary. More money is always good, right? Not necessarily. Before you accept the job, be sure to determine how much it will cost to maintain your current standard of living in your new location. Look at how much you currently spend on housing, food, and utilities. These costs could be very different in the new location. If these things cost significantly more than you're paying now, make sure your salary increase covers the difference.
Should I Stay, Or Should I Go?
Remember, the labor market and the cost-of-living factors do not necessarily change in concert with each other. Some locations will have strong labor markets with low costs of living. In other markets, either could be weak or strong, high or low. The key is to figure out whether your potential move would net you more disposable income or less.
You'll want to calculate the sum of your change in salary and the sum of your change in cost of living. These resources from the U.S. Department of State can help you determine if your net financial change will be positive or negative. Just remember, a positive change doesn't necessarily mean you should move, nor does a negative change mean you should stay. While knowing this information will help you make a well-rounded decision, other factors—like your potential for career advancement and proximity to your family and friends—may play a role in your decision, as well.