TWO LOCATION COMPARISON
Explanation for
Transferees
Purpose of a Cost-of-Living Allowance
Relocation cost-of-living allowances, also called COLAs, provide financial assistance to an
employee to help them acclimate to a new location where total living costs are higher than the
origin location. This isn't a permanent, recurring payment. COLAs are only meant to offer a level
of assistance until the family can acclimate financially to the destination location.
The Standards Approach
Clients use Motus to determine differences in the cost of living between the origin and
destination locations. To determine these differences, Motus uses a "standards approach."
The standards approach means that Motus measures cost differences. For example, we
measure costs for the same size home in each location. By measuring these differences
between locations, we can determine the change in the cost of living.
Motus recognizes that family size and income must also be considered. For example, a typical
household with a family size of one and an income of $100,000 spends differently than a typical
household with a family size of four and an income of $50,000. Motus refers to an employee's
family size and income as their "profile." Using family size and income profile, Motus
determines the spending patterns used in the Two Location Comparison (TLC).
QUESTION
Why not use an employee's
actual expenses and home size?
ANSWER
The Motus approach is based on a standard set of
parameters and not employee specific lifestyle choices.
Using these standards provides results that are consistent
and fair to all employees who share the same profile.
