I would be really surprised if cost-of-living salary adjustments were near 100% of the increased cost, on average.
The way I think of it is this: Expensive cities typically make companies better able to find and attract talented workers in a close proximity, which is good for business, and they’ll have an incentive to pay extra for that. But a city is expensive because lots of people want to live there relative to the space available, and living in an expensive city is somewhat like buying an expensive car. To that extent companies would not pay for the increased cost—being able to live in that city is part of what you’re getting for working at that company.
My only “evidence” that the cost is only partially covered is only from my own job searching in various cities as a software engineer though. I don’t know what a wider reading of available data would indicate. But I suspect that cost-of-living is covered less than a simple reading of average salary/cost-of-living data, because part of that correlation will be that the average worker in a high-cost city is better than the average worker elsewhere. Also, if you account for periods of unemployment, being in a higher-cost city would hit harder during those times, which wouldn’t show up in salary/cost-of-living data.
One interesting thing is that, in my company, you do get a pay bump for cost-of-living increases if you are hired in, or are moved to, a more expensive location, but if you then move to a cheaper location within the same company, there is not an automatic cost-of-living salary decrease. I wonder if that could be a common practice in many large companies due to sticky wages.
I would be really surprised if cost-of-living salary adjustments were near 100% of the increased cost, on average.
The way I think of it is this: Expensive cities typically make companies better able to find and attract talented workers in a close proximity, which is good for business, and they’ll have an incentive to pay extra for that. But a city is expensive because lots of people want to live there relative to the space available, and living in an expensive city is somewhat like buying an expensive car. To that extent companies would not pay for the increased cost—being able to live in that city is part of what you’re getting for working at that company.
My only “evidence” that the cost is only partially covered is only from my own job searching in various cities as a software engineer though. I don’t know what a wider reading of available data would indicate. But I suspect that cost-of-living is covered less than a simple reading of average salary/cost-of-living data, because part of that correlation will be that the average worker in a high-cost city is better than the average worker elsewhere. Also, if you account for periods of unemployment, being in a higher-cost city would hit harder during those times, which wouldn’t show up in salary/cost-of-living data.
One interesting thing is that, in my company, you do get a pay bump for cost-of-living increases if you are hired in, or are moved to, a more expensive location, but if you then move to a cheaper location within the same company, there is not an automatic cost-of-living salary decrease. I wonder if that could be a common practice in many large companies due to sticky wages.