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Motus Living Communities Guide

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HOW DOES IT WORK? Let's take a look at a few examples to understand how living communi es play an important part in calcula ng the right cost of living differen al. Let's say there are two employees moving from a suburban Atlanta headquarters to a downtown San Francisco office. They both have the same salary and family size. Using the suburban work site for the pre-move loca on and the downtown office for the post-move loca on will ar ficially inflate the differen al (unless both employees opt to live in downtown San Francisco, near the office). Addi onally, the company doesn't want one employee to get more financial support than the other just because one employee wants to live in downtown San Francisco while the other wants to live in the suburbs. Using employee choice introduces unwanted bias into the comparison. Consider two employees reloca ng to the Los Angeles / Orange County area. The first is a homeowner who makes $75,000 and their new work site is in Laguna Beach. Based on their income and homeowner status, Laguna Beach, an expensive coastal community, is not an area where someone of their socio-economic status would or could purchase a home. Rather, they would likely live in other communi es surrounding Laguna Beach. Running a report through a tool or calculator specifically using Laguna Beach would significantly overcompensate this individual. Why? Because it's much more expensive than the areas where that employee would typically buy a home. EXAMPLE 1 EXAMPLE 2 Same size family & salary as Employee 2 Wants to live downtown Same size family & salary as Employee 1 Wants to live in the suburbs Two employees moving from Atlanta to San Francisco Two employees reloca ng to Los Angeles/Orange County Area The second employee is also a homeowner but is an execu ve making $400,000 annually. Their new work site is in Anaheim which is a large inland community. While this execu ve could choose to live in Anaheim, it's much more likely that they would opt to live in other communi es with housing more common and typical of their socio-economic level. In this scenario, if the company were to use a tool or calculator specific to Anaheim, they would significantly undercompensate that employee. EMPLOYEE 1 EMPLOYEE 2 New work site is Laguna Beach New work site is Anaheim EMPLOYEE 1 EMPLOYEE 2 Makes $75,000 annually Makes $400,000 annually EMPLOYEES WITH DIFFERENT SOCIO-ECONOMIC STATUS EMPLOYEES WHO PREFER DIFFERENT LOCATIONS

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