You got a promotion in a new city! Will you really earn more?

Imagine this: you just got a promotion, boosting your pay by 20%! To accept the offer, you will have to move from Peoria, to Chicago, which is about 170 miles away, according to Google Maps.

At first glance, it looks like the promotion would be great for your bank account.

But will it?

Let’s look at the data.

According to the Cost of Living Index’s Click to Compare tool, we see that housing costs are a whopping 86% higher in Chicago than Peoria, with 2-bedroom apartment rentals costing an additional $2000+ per month. Yikes!

Additionally, transportation, food, entertainment, and healthcare costs are all going to increase.

Indeed, even though you got a 20% pay raise, this “promotion” will cut your real income by about 9%!

You probably knew it would cost more to live in Chicago. But did you realize you would earn less after an increase in pay?

This is a tough situation. What should you do?

• Always make data-driven decisions: perhaps you can use this data to negotiate a higher salary.
• Explore other ways to get compensated: ask if your employer will offer more vacation time, more 401(k) matching etc., in lieu of an increased salary.
• Think twice before accepting the promotion: if it means earning less in real dollars, it might not be the right move for you after all.

Getting a promotion is an exciting opportunity for many reasons, including (and especially) when it comes with a boost in pay. However, as we can see from the example above, all pay raises are not created equally. Now that you are armed with accurate cost of living data, you know what you will really earn in a new position, empowering you to make a smarter decision and plan accordingly.

To learn more about other products or how your organization can become a data collection participant for the Cost of Living Index visit www.coli.org.