A Cost of Living Comparison
Both San Francisco and Washington D.C. have seen significant increases in housing cost since this report was released in 2014. What occurs within the economic environment of San Francisco has a ripple effect on the Bay Area communities and beyond. Consequently, employers are faced with challenges of offering competitive and commensurate wages, while still keeping their margins profitable and not having to raise prices.
Cost of Living and Getting The Most for Your Dollar
The biggest single factor driving the cost of living in almost any region of the country is the cost of housing. Areas such as Sonoma County in the North Bay area are experiencing rising rents due to higher demand and limited availability. On a smaller scale currently, the prices of homes has been steadily rising in these same regions over the last 18 months.
Employees who must rent or want to buy a home, both face rising costs and rising competition. This can lead to more employees either demanding higher pay to "compensate" for the higher cost of living, or leaving employers for better paying companies.
This graphic illustrates the relative value of housing dollars by state. In essence, the more housing costs in a state, the lower your relative buying power. California is at the bottom of the list along with Hawaii.
(Image courtesy of The Motley Fool)
Payroll Management and Rising Wages
While most payroll managers and HR managers may not have the final say in determining their company's wages and salaries, they are still impacted. For companies doing business in San Francisco and Oakland, there are already stipulations in place to comply with an increased mandatory minimum wage that will be stepped up incrementally over the next three to five years.
In addition, the federal government, on the heels of President Obama's State of the Union Address last year, has been pushing for an increase in the federal minimum wage. They are advocating an increase to $10.10 from the current level of $7.25 which would impact all of the employers in the greater Bay Area outside of San Francisco and Oakland.
Monitoring these changes and maintaining compliance can be a somewhat complex task depending on the size and reach of your staff. Having employees in multiple states adds to the complexity of the process, as does maintaining contract employees or independent contractors.
Considering Outside Help
Now is a great time to consider the advantages of outsourcing your payroll management functions to a professional agency. Accuchex is a full-featured payroll management service provider and offers a variety of support and resources.