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Bang for Your Buck? The Cities Where a Paycheck Goes the Furthest in 2017

When looking at jobs in different local markets, a dollar is not always a dollar—and sometimes it isn’t even a dollar. Paychecks go further where housing and other costs are lower. This is the dilemma job seekers face: The places with the highest salaries also have the highest cost of living.

Salaries are highest in San Jose and San Francisco, but that doesn’t take into account the cost of living. When you factor in how much more expensive it is to live in the Bay Area, the rankings flip entirely. It turns out that when salaries are adjusted for cost of living, they tend to be higher in smaller metros than in the largest ones. Adjusted salaries are highest in Birmingham, AL, Jackson, MS, and Fresno, CA—places where what you’re likely to earn buys the most. Big cities like Miami, New York and Los Angeles are among those where your salary won’t stretch far.

So should job seekers write off metros where salaries don’t keep up with the cost of living? Not necessarily. Some people want a huge city, despite the high costs. If that’s you, consider Detroit or Atlanta, and check out the list below. In fact, a low average adjusted salary just might be a signal that a city is special for reasons other than money. Plus, places that look like a worse deal today might offer greater job security tomorrow.

Living large in Birmingham, and just getting by in Honolulu

Big salaries and high prices go hand-in-hand. The five metros with the highest salaries—San Jose, San Francisco, Washington, DC, Fairfield County, CT, and New York—are among America’s most expensive places to live. That makes sense. If there were some magical place with fat paychecks and low prices, people would flock there—flooding the market with workers while bidding up the cost of housing—and the magic would fade.

But salaries and prices don’t all even out in the wash. To find where salaries go furthest, we calculated the average salary for all jobs with annual-salary information posted on Indeed between August 2016 and July 2017 in each of the 104 US metropolitan areas with at least 500,000 people, and then adjusted for each metro’s cost of living.

When we adjust for living costs, those big coastal metros with high average salaries no longer look like a good deal. Instead, as noted, the highest adjusted salaries are in Birmingham, AL, Jackson, MS, and Fresno, CA. Not a single big coastal metro ranks among the top 20, but plenty of smaller metros in the South and Midwest do. The only California metros among the top 20 are far from the Pacific—in the Central Valley metros of Fresno, Bakersfield, and Modesto, where housing is much cheaper than on the coast.

Where do salaries stretch the least? Poor Honolulu. Its salaries aren’t that high to begin with and, after adjusting for its high cost of living, it’s the most expensive metro in the country. Honolulu is expensive not just because of housing costs. Housing actually is more expensive in San Francisco and San Jose, but housing accounts for only one-third of the typical American’s total expenses. In Honolulu, physical goods cost more because they have to be shipped to the middle of the Pacific. Altogether, Honolulu’s adjusted salaries are the lowest in the country, more than $7,000 below the next lowest, Tucson, AZ—a bigger gap than the difference between top-ranked Birmingham and Baton Rouge, number 20.

After accounting for cost of living, some of the metros with the highest unadjusted salaries tumble into the bottom 20, including Washington, DC, and New York. Not San Jose and San Francisco though. Unadjusted salaries in these Bay Area metros are so high that, even after adjusting for local prices, they still rank in the middle of the pack, nowhere near the bottom 20.

Making ends meet in the big city

If you’re looking for a rule of thumb for where salaries go furthest, start with this: Adjusted salaries are higher outside the largest metros. Even though you’ll see more money on your paystubs in bigger metros than in smaller metros, those big-city salaries are outweighed by an even higher cost of living. Suppose though you’re one of those people who wants to live in a major metro despite the higher costs. Where’s the best deal?

Among the 15 largest metros, Detroit, Atlanta, and Dallas offer the highest salaries after adjusting for the cost of living. San Francisco ranks fourth and is the highest-ranked large coastal metro. Miami and New York bring up the rear, with Miami’s average salary 15% behind that of Detroit.

So why isn’t everyone moving from Miami to Detroit—or, for that matter, from Honolulu to Birmingham? For starters, many people are tied to where they live. They don’t want to move away from family or friends, or maybe they have a professional practice or family business that depends on local customers. Then too, some places are so appealing that people want to live there even it means taking a financial hit. No wonder that the three places with the lowest adjusted salaries—Honolulu, Tucson, Miami—are desirable places to be when work is done. Maybe beaches and sunshine can compensate for a salary that doesn’t go as far.

What’s more, adjusted salaries aren’t the only measure of local labor market strength. Salaries may go farther in Knoxville, TN, than in North Port-Sarasota-Bradenton, FL. But job growth is sluggish in Knoxville, while it is booming in the Florida metro. In addition, many occupations are clustered in particular places. If you’re in the movie industry, Los Angeles might be your best spot even though most other metros have higher adjusted salaries.

Finally, if you’re thinking not just about the present but also about the future, there might be job security reasons for staying in a place where adjusted salaries are relatively low. In metros where adjusted salaries are higher, a larger share of local jobs are what economists call “routine,” which means they are at greater risk of being automated and disappearing. That paycheck in Bakersfield, Scranton, and Chattanooga might go far today. But what if a robot does the job tomorrow? Today’s good deal might turn out to be a deal that’s too good to last.

Jed Kolko is chief economist at Indeed. This post was powered by research from the Indeed Hiring Lab

Methodology

Salary data are from all job postings with annual salaries on Indeed between August 2016 and July 2017. Unadjusted average salaries are based on a fixed-effects regression model that accounts for the different mix of job titles across metros in order to make an apples-to-apples comparison of unadjusted salaries.

Local cost-of-living data are from the U.S. Bureau of Economic Analysis regional price parities for 2015 (released June 2017). These cost-of-living data reflect local differences in the price of housing, other services and physical goods.

All 104 U.S. metropolitan areas with at least 500,000 people were included in the research and rankings. The largest fifteen have 3.4 million people or more—Seattle and up. Fairfield County, CT, refers to the Bridgeport-Stamford-Norwalk metropolitan area.

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About Mildred Blankson

I am a Human Resource Professional with a Masters Degree in Human Resource Management. I have several years of experience in Human Resources and i hope this blog will be a great resource in helping you find the perfect job or candidate that you seek.

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How to Leverage Company Benefits to Recruit and Retain Top Talent

One-third of organizations have increased their overall benefit offerings in 2016, according to a research report compiled by the Society for Human Resource Management (SHRM). As recruiting and retaining top talent continue to become increasingly difficult for employers, robust benefit packages play a key role. When salaries and perks (think: free lunch) are nearly equal from company to company, employees are likely to opt for the company that offers the best benefits and greatest opportunities.

Medical and financial benefits aside, employees are looking for lifestyle and career benefits. SHRM reported that the top reason employers increased benefits in 2016 was to remain competitive in the marketplace—and the three biggest focus areas for change were in the health (22%), wellness (24%), and professional and career development (16%) categories. Robust benefit packages that include career development, health and wellness, and flexible working options provide a platform for employers to stand out. Nearly one-third of employees look for external positions because they desire “overall better benefits,” second only to higher compensation.

The type of benefits you offer speaks volumes on how you treat and support employees, which always manifests by way of your external employer brand. It’s not enough to say “we have great benefits,” because “great benefits” are now table stakes. Companies have mastered the art of talking about perks, from catered lunches to team building activities. Failure to talk about the real support and development opportunities you offer to employees might translate to missed opportunities. So how can hiring managers and recruiters promote employee benefits to help with recruiting and retention?

#1: Kick “industry standard” out of your vocabulary

When recruiters and hiring managers list their company’s benefits and summarize with the catch-all phrase, we offer “industry standard” benefits, it’s not enough. When all else—compensation, vacation days, and perks—are even, offering a standard benefits package won’t help your company standout enough to secure commitment from a top employee. Even though it might be tempting to default to a quick response, it pays to provide more detail about the benefits your company offers, in length, during the interview process.

And even more importantly than providing a laundry list of benefits (but kudos to you for that list!), explain how these benefits fit in with core company values. For example, if you offer flexible work arrangements and flexible hours, explain that these arrangements support your company’s value of work-life balance. If you provide a gym membership or showers at work, talk about how it enhances company culture or creates opportunities for employees to get the exercise they desire in a convenient way.. When recruits begin to see how your benefits support their shared values and interests, they’ll see the benefits you offer are much greater than “industry standard.”

Employers hoping to keep a competitive edge are offering more than the “industry standard” at every stage of the employee journey, including at severance – according to a recent study by RiseSmart. If you’re on the cutting edge of severance offerings, use those benefits to differentiate your company form the competition.

#2: Talk about goals in the recruiting and interview process

Before an employee is even hired, find out what they’re looking for in their employer and what their short and long term goals are. Ask questions like, “Where do you see yourself in 5 years?” and “How are you hoping your employer will support you along your career journey?” Employees, many of whom are seeking opportunities for career development and continuing education, need to know you plan to invest in their individual career goals.

A Career Builder survey found that 45% of employees, regardless of generation, plan to stay with their employer for less than two years. During their tenure, they expect to benefit and grow with each new role and and at each new company. It’s important to convey to prospective employees that you invest in each individual employee, regardless for how long they plan to stay in the role for which they are being hired.

#3: Amplify the employee voice

Remind employees early on that they have a voice to share about company culture and employee benefits. Glassdoor, for example, recommends employers invite new hires to reflect on their first few months at the company. Whether this leads to internal feedback or a public review, it can assist efforts aimed at creating a positive employer brand.

L’Oréal recently launched a #LifeatLoreal hashtag to encourage employees to share photos of their experiences at work. The campaign all stemmed from the idea that people would trust their peers on social media when it came to L'Oréal being a great place to work. Employees posted a wide variety of pictures, including snapshots of various benefits and perks in action—such as flex days and catered lunches. Encourage employees to share the experiences they enjoy the most on the social channel of their choice.

#4: Keep employees engaged with benefits

On average, salary is only about 70% of an employee’s total compensation. When employees don’t take advantage of the benefits offered by the company, it’s equivalent to leaving 30% of the total compensation package on the table. Employers who keep employees engaged with benefits are more likely to see benefits manifest as part of the employer brand. An employee is highly unlikely to leave a Glassdoor review that mentions a positive benefit if she has never actually utilized the benefit.

Try hosting monthly or quarterly Q&A sessions to discuss available benefits. When you roll out a particularly hefty benefit, such as a new 401K offering, or an update to parental leave policy, give employees ample opportunity to ask questions. You could also share success stories from employees who have taken advantage of a particularly niche benefit, such as an hour of free lawyer services, to showcase how the benefit is used and encourage other employees to check it out.

#5: Benefits are the forgotten negotiation tool

If you are a hiring manager or recruiter engaging with a candidate, think beyond salary, or equity. Everything is negotiable, from vacation days to health insurance choices. Savvy employees, especially as the war for talent continues to heat up, will use benefits as negotiation tools—but don’t shy away from doing the same thing on the employer side. It’s often easier to offer more benefits than to secure additional salary for an employee.

Don’t be afraid to talk about your full complement of benefits, including your severance benefits. Prospective employees may feel more comfortable about joining a company that will take care of them, in the event of a downsizing or restructuring event. You may want to consider offering perks like outplacement and career transition services to employees who leave voluntarily as well as those who are involuntary subjects of a layoff. Knowing that you are invested in their career, even after they leave, will help you create a workforce of dedicated, engaged, and satisfied employees.

The world is small and everyone is connected. When you invest in employees, it leads to a positive employer brand. In the new Employee Relationship Economy, former employees will someday become vendors, customers, brand evangelists, recruiting references, or even boomerang employees. In a world where the employee/employer relationship is no longer finite, it’s important to convey your full support for employees’ career endeavors at every stage of their career journeys -- beginning early in the recruiting and interview process.

In every recruiting conversation, highlight your dedication to each employee’s career. When you frame up your organization’s benefits in context of how they fit in with the employee’s journey, it’s easy for the candidate to see how your company would support his journey. Communication about employee benefits can go a long way in the recruiting process—and will have a direct impact on your employer brand. If you offer much more than “industry standard,” you should be screaming it from the rooftops. Your current and prospective employees deserve to understand just how committed you are to their personal and professional journey.

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