This is a guest post by Jason Kent, P.E.
This is the second post of a two part series entitled Tips for a Successful Geographic Relocation in Your Engineering Career. Click here to read the first post in the series.
Being offered a position in a new location brings with it a lot of excitement and anticipation for your new life. Whether you are asked to relocate to a different office with your current company or if you accepted a new job in a new location, there are a number of steps you should take to ensure you are reimbursed for the total cost of the move and compensated fairly in your new location.
First things first. Have you visited your potential new office, talked to your new supervisor, and toured the area? Although it happens quite frequently and often works out just fine, it might not be a good idea to take a job sight unseen. You should at least request a one-day or overnight trip to visit the office, talk to your supervisor and peers in your working group, and drive around the area to get a feel for where you might be living. Check out the local rental and real estate listings to find properties in your price range and see if you like the neighborhood. I’ve heard stories of people who have arrived at their new city or town and learned too late that they didn’t like the location, the city was too large or too small or too far away, or they didn’t interact well with their supervisor. In most cases you will have to reimburse your company for at least a portion of the moving expenses if you voluntarily leave within a short period of time, typically up to 1-3 years. Make a visit so that you’re sure it is a commitment you want to make. In my opinion, this step is important enough that if your company won’t pay for the trip, you should consider paying for it yourself. You may be able to claim it as a moving expense or a job hunting expense per IRS guidelines.
Salary adjustments. Your next step is to determine what your reasonable salary should be in your new position. The National Society of Professional Engineers (NSPE) conducts an annual Engineering Income and Salary Survey. This survey, which has been conducted for 60 years and includes input from thousands of engineers across the United States, provides information on salary by geographic location, experience, educational level, gender, engineering discipline, and other factors. Engineers of all experience levels are encouraged to participate in the survey for free. If you are an NSPE member, you can participate in the survey and enjoy free access to the report. If you are not a NSPE member or a survey participant, it is rather pricey to access the report – but think of it as an investment in your future salary history.
Cost of living adjustment. After you understand the range of salaries for your engineering discipline, experience level and location, use a free online tool provided by the U.S. Government to determine the difference in cost of living between your current and your prospective new locations. The U.S. Census Bureau’s annual Statistical Abstract of the United States includes a cost of living index of more than 300 U.S. urban areas. The index breaks down the relative price levels of consumer goods against the nationwide average. Composite values less than 100 mean relative prices less than the national average, and composite values above 100 are above the national average. For example, an engineer in Tampa, FL, an urban area with a composite index of 92.4, is considering relocating with her company to Baltimore, MD, which has a composite index of 119.4. The difference in cost of living between these two urban areas means that the engineer will need a salary increase of 27.0% in order to maintain her relative level of purchasing power. On its website, the Census Bureau annually updates an Excel spreadsheet that includes the large list of urban areas.
Moving expenses. Next, you will need to have an idea of what your moving expense will be. Most major moving companies have quote requests or cost calculators on their websites. It is a good idea to obtain quotes from at least three of these companies. You should use this information when you negotiate your moving expenses with your company. One commonly overlooked item during moving expense negotiations is that the IRS typically considers moving expense as taxable income. To offset the taxes, it is common practice to receive a “gross up” by increasing the moving cost by a percentage relative to your tax bracket. The calculation to determine your “grossed up” benefit is to divide your moving expense by one minus your tax bracket percentage. For example, if your estimated moving expenses are $12,000 and your tax bracket is 28%, you should be reimbursed $12,000/(1-.28) = $16,667. Your company might ask to “true up” the moving expense before the end of the year in order to make the reimbursement more accurate based on your year-end tax bracket. Also, keep in mind that non-reimbursed moving expenses are tax-deductible; check IRS Publication 521.
Other reimbursements. You should also check with your company’s supervisor or Human Resources department to see if you will be allowed other special situations, such as reimbursement for other miscellaneous expenses such as car registration, PE registration, etc. House-hunting trips are sometimes allowed, and should include payment or reimbursement of airfare, food and hotel for you and your spouse to find a place to live in your new location. In some industries, companies will purchase and sell your home for you or pay the substantial expenses involved with a house sale. This benefit is very rare and typically reserved for senior executives, so early-career engineers should not expect this benefit…but it might not hurt to ask!
Public employees. Finally, a word of caution for engineers that are state or federal employees. Be sure to ask your human resources staff exactly what they will pay for, what you should pay for, and for which expenses you can expect reimbursement. If at all possible, get this in writing, and do not deviate from it without permission from the HR manager. Relocation expenses are strictly controlled and monitored at the federal level and in most states as well, so you should not put yourself in a position where you will not be reimbursed for an incurred moving expense. Unfortunately, I am speaking from experience. While working for the federal government one summer when I was in graduate school, I deviated from the relocation guidelines and was subsequently denied all relocation reimbursement, turning an otherwise enjoyable and prosperous summer into a disappointing money-losing venture.
Being offered a position that requires a geographic relocation can create a lot of work for you in a short period of time. Following these steps will ensure that you consider all financial circumstances/expenses when negotiating with your employer.
Jason Kent, P.E. is a Portland, Oregon-based professional water resources engineer and manager with a consulting firm. In his 13-year career, Jason has tackled engineering problems such as dam removal, bridge scour, flood waves, and stream restoration design and management issues including hiring, training, and marketing. He is also a public speaker on topics including engineering career development and volunteerism, and has contributed to multiple blogs and magazines. Jason may be reached at [email protected] or on LinkedIn.