Looking at a job that would require relocation? Consider financial and nonfinancial factors when deciding whether it’s worth pulling up stakes
When Todd Mark was offered a job in Dallas, he had to consider lots of factors to determine whether it would be worth it for him to move his family from their suburban Atlanta home.
The Mark family – 7-year-old Katie, 3-year-old Josh, and parents Todd and Lucy – left suburban Atlanta for Frisco when Mr. Mark took a new job.
Ultimately, the Marks decided to move to Frisco in December, when Mr. Mark accepted the position of vice president of education at Consumer Credit Counseling Service of Greater Dallas.
Mr. Mark’s experience and how he arrived at his decision to move illustrate the financial and nonfinancial checklist you must cover before deciding whether to relocate for a job.
Todd Mark took a $6,000 loss on his old home rather than leave his family in Georgia while waiting out the housing slump. ‘For that amount of money, the smart thing was to take the bird in hand, sell the house and let’s move on,’ he said.
A key aspect you need to look at is the difference in the cost of living between your current home and the area where the prospective job is.
Under that umbrella, the most important factor is housing costs, which have taken on paramount importance in today’s housing slump.
“The home is typically the largest single investment most of us make as individuals,” said Katherine A. Trachta, senior director at Global Relocation Consulting in Dallas, part of Paragon Relocation Resources, a relocation company that serves employers. “If you are a homeowner and wish to continue to be a homeowner, it’s incredibly important that you do your due diligence before you say yes to that move.”
The housing crisis has left its footprint on workers’ decisions on whether to pull up roots for a new job.
The number of job-seekers relocating for a new position fell to a record low toward the end of last year, according to Challenger, Gray & Christmas Inc., a global outplacement consulting firm.
Just 11 percent of job-seekers relocated for a new position in the fourth quarter, according to the Challenger Job Market Index, a quarterly survey of about 3,000 unemployed workers nationwide.
That was down from 15.6 percent in the third quarter and 15.4 percent in the fourth quarter of 2006.
“It is no coincidence that job-seeker relocation sank along with home values,” said John A. Challenger, chief executive of Challenger. “In this market, the increased likelihood of selling your home for a loss takes relocation off the table for most job-seekers.”
In Mr. Mark’s case, he was faced with accepting $6,000 less than he had wanted for his home in Woodstock, Ga.
“I thought, ‘Do I have the ability to make it up on the purchase [of the new home]?’ ” Mr. Mark said. “The question was, if we hold out a month from now, six months from now, would it bring $6,000 in? Would it be worth my not seeing my kids, my family, for $6,000?”
And that’s where you must also consider nonfinancial factors.
“The reality is, given this housing market, I could have left my family back there for a year, we could have been carrying two mortgages, we’re talking about double property taxes and double utilities,” Mr. Mark said. “For that amount of money, the smart thing was to take the bird in hand, sell the house and let’s move on.”
The Marks bought their current home in Frisco for $29,000 less than what the sellers paid for it.
It’s bigger than their Georgia home 3,700 square feet vs. 2,900 square feet but the prices were comparable, Mr. Mark said.
The price of your home isn’t the only housing-related factor you need to take into account. You’ll also want to consider how much you’d pay in property taxes and the quality of the school district your kids would attend.
Mr. Mark discovered that property taxes are much higher in Texas than they are in Georgia. The taxes on his Frisco home are about $7,000 more a year than those on his Georgia home.
Though Texas, unlike Georgia, doesn’t have a state income tax, Mr. Mark said, “the property taxes here are going to be more than the property taxes plus the income tax in Georgia.”
“It was not a break-even,” he said.
But he understands that to get quality public infrastructure, you have to pay for it.
“When we shopped around, our first priority was it had to be an exemplary school district,” Mr. Mark said. “I said going in, ‘I don’t care about the tax rates.’ We wanted to price [homes] in a city that had a high enough tax bill that would support an exemplary school.”
Don’t forget to factor in any new commuting costs.
“I had to figure in the cost of gas and commuting and the cost of tolls,” said Mr. Mark, whose daily commute is about 27 miles one-way, compared with about 36 miles in Georgia. “I’m doing about $73 a month in tolls here.”
Salary and More
The tumultuous state of the economy also must be considered.
“As a broad general rule of thumb, if you’re relocating, you’ll want to see approximately a 30 percent pay increase, otherwise you’ll tend to lose money for the first two years because of hidden expenses such as turning on the utilities, first and last month rent, leases you might be trying to get out of, etc.,” said Dennis Grindle, director of the Career Management Center at Southern Methodist University’s Cox School of Business.
“In recessions, however, you’ll be doing well to see a 10 percent to 20 percent pay raise, so be cautious about relocating during difficult economic times,” he said.
Mr. Mark got a 20 percent pay raise at his new job. Although his former employer made a counteroffer, it wasn’t just money that led to Mr. Mark’s decision to move.
“It would be matching me financially but not offering me the opportunity of professional growth,” he said. “At that point, I realized that anyone would want a 20 percent raise, but to me, it’s much more alluring that in addition to having a raise, that I am going to be able to grow personally and be able to help implement the long-term strategic development of our organization.”
Of course, salary isn’t the only element of your total pay package. You also need to consider the benefits package offered by your prospective employer.
“A $10,000 increase won’t look as big if the company match for the 401(k) is diminished/not there, if health insurance is much more expensive, if parking isn’t included, the amount of vacation, sick days that accrue [aren’t to your liking],” Mr. Mark said. “Think of the overall value of the package.”
Another perk to consider is whether your new employer would pay the bills for moving and house-hunting.
If you have to pay all or part of your moving expenses for a new job, you may be able to deduct them on your federal income tax, depending on how far you move and the amount of time you spend on the job.
Generally, moves that are only short hops and jobs that are short term or part time do not qualify.
Family Matters
Last but definitely not least, ask yourself how your family would feel about leaving your home, as well as relatives and friends. Would your spouse be able to find a job in the new city? Does your new employer provide job-hunting assistance for spouses?
Don’t underestimate this aspect. Workers have turned down jobs because their families didn’t want to move.
“At the end of the day,” Mr. Mark said, “you really need to think about what will make you happy at work and what will create a successful and happy transition for your family at home.”
