While research shows a growing number of millennials choosing to purchase homes, the majority of this demographic still prefer to rent, especially in metropolitan areas, which are far more attractive to skilled employees looking for work/life opportunities in vibrant cities.
Of course, as the experts say, living in these locations ain’t cheap. Especially in New York City, where the median rent for a two bedroom apartment is $1,638 in the metro area and $3,895 in Manhattan. Groceries in NYC cost 28-39% more than the national average and public transportation is about 75% higher than the average city.
Companies certainly feel that this can be a deterrent to mobile employees, which is why cost-of-living allowances are on the rise. According to Worldwide ERC’s recent Relocation Assistance, U.S. Domestic Moves survey, 39 percent of companies reported using such allowances in 2016 versus 32 percent in 2012. Among companies reporting difficulty in transferring employees to high-cost areas, the most frequently cited reason (by 80 percent of respondents) was “very high housing costs.”
Of course, the high cost of housing isn’t the only challenge facing mobile employees; keeping the broadest population of skilled talent mobile requires companies to address a number of concerns, including family issues and spouse/partner careers. In fact, different groups of demographics bring about different issues:
• Millennials: Progressive companies are taking advantage of the attributes of those entering the workforce that make them ideal for mobility, such as their value on life experiences over upward promotion, flexibility in work environment and familiarity with new technologies.
• Early and Mid-level Career: Employees are opting to rent in high cost locations rather than purchase. Since they are not “planting roots” through homeownership, support services are critical. Consistent communication is also important to keep the employer on top of any concerns that could result in the employee leaving the job or, worse, being recruited by a competitor.
• Dual career families: Although spouse/partner careers and family issues remain the top reasons for reluctance to move, only 5% of companies (according to CERC’s 2016 survey) report plans to increase spouse/partner career provisions and just as many expect to reduce assistance in this area. Companies are advised to extend support such as school search, career assistance and area orientation to address challenges.
• Executive-level: High cost areas tend not to be as much of a challenge and compensation is a bigger hurdle that is typically addressed outside of mobility. However, these employees have a very critical set of needs and require a VIP-level suite of services and support. Typical online tools and self-service approaches that are utilized by other employees don’t address the specialized needs and high expectations of this demographic. Accordingly, companies are advised to have heightened processes in place for senior-level employees designed to expedite the move and address unique requests.
It’s important that the company provide support services in addition to benefits such as technology, area orientations, and destination services of a local agent. Where they get creative? Roommate matching, pre-decision assistance, delayed home purchase benefits and even allowances (COLA) to help employees get acclimated to the area. For more info, see our other posts on Cost of Living Assistance.
In the end, employees may be willing to trade off a long commute (by choosing to live in a reasonable location outside the city) if the fit with the company is right.