As companies expand and pursue new opportunities, they must relocate employees across the United States. Domestic corporate relocation costs arise when a business recruits new hires, reassigns staff to different company locations, and supports projects requiring onsite personnel.
Employee relocation has become integral to organizations’ strategies to tap into new talent pools, enhance team collaboration, and ensure project success. However, understanding employee relocation costs is vital to achieving a return on investment for business objectives.
Relocation costs can accumulate quickly and significantly impact a company’s bottom line. To plan a successful budget for corporate relocation costs, businesses must understand all the services that are part of the cost of relocating. Organizations that successfully manage employee relocation costs also have a strong U.S. domestic relocation policy with multiple benefit tiers.
For example, one of the biggest determinates of relocation costs is whether the employee rents or owns their home. Employee renters do not require expensive home sale programs but have other housing expenses, such as breaking a lease, home-finding services, and temporary housing.
Renters are about 40% of relocating employees, so it’s important to build relocation budgets that cater to this group. In this article, we will explore the average U.S. domestic relocation costs for employee renters. This detailed breakdown of relocation costs will help businesses estimate expenses and ensure a great relocation experience.
Choosing Relocation Cost Tiers For Employee Moves
When determining relocation costs for employees, companies categorize the employee into a relocation benefit tier. One of the most significant factors is whether the employee rents or owns their home. This distinction determines the type of relocation services provided and the overall relocation costs.
Employee seniority also shapes relocation benefits. Higher-level employees receive more comprehensive packages than entry-level workers.
Family size also impacts the cost of relocation. Larger families require larger homes, bigger household goods moves, and family-specific relocation services.
Finally, the move’s origin and destination also affect employee relocation costs. For example, relocating from an urban area entails different expenses related to housing, transportation, and logistics. The distance between locations also increases the cost of relocation.
How Much Does Relocation Cost For U.S. Employee Renters?
On average, the starting relocation cost for U.S. domestic employee renters is around $30,000. However, this figure significantly varies by the employee’s relocation policy tier, current location, destination, and related relocation needs.
For instance, moving from a high-cost urban area to a more affordable location may reduce some expenses, while relocating to a bustling city may increase costs due to higher housing demands.
To provide a clearer picture of this average relocation cost, let’s break down the expenses by each service included in a corporate relocation package for U.S. renters.
Relocation Costs For Employee Renters By U.S. Domestic Service
Here’s a detailed breakdown of the relocation costs for U.S. renter employees for a domestic move:
Cost of U.S. Domestic Corporate Household Goods Move
Hiring a professional corporate mover is a significant portion of corporate relocation costs. The average cost to move the contents of an employee’s rented home is around $15,000. Companies typically set a cap of $20,000 for this tier of household goods moving. NRI Relocation helps companies select a reliable and professional corporate moving company at the best price.
Storage costs are sometimes necessary during an employee move, but they generally require prior approval from the employer.
If the employee requires vehicle shipping to the new location, the average relocation cost for auto shipment is about $1,500. A corporate relocation company like NRI Relocation hires a vehicle shipper who guarantees safe and timely delivery.
Cost of U.S. Temporary Housing
If an employee needs temporary housing during relocation, the average expense for furnished corporate housing is approximately $5,000 per month. Most U.S. renter relocation policies limit corporate housing costs to one month.
Temporary accommodations are necessary if the destination home isn’t ready when the employee is due to begin their role or assignment. Corporate housing provides a comfortable and convenient transition between employee’s old and new homes.
Employees can request an exception from their company if they need temporary housing beyond 30 days.
Cost of Employee Rental Assistance & Real Estate Services
U.S. renter employees need specific real estate services.
If the employee needs to move before their lease ends, companies may allocate around $2,500 for lease cancellation costs to ease the financial burden of breaking a lease.
Companies pay approximately $1,000 for rental finding assistance. This expense covers rental agent services and guided tours of potential new homes.
Cost of Employee Travel to New U.S. Location
U.S. domestic travel costs for the employee and their family, including home-finding trips, incidental expenses, and the final move, generally amount to around $5,000. These relocation expenses cover transportation, meals, and lodging.
Companies may offer flexible employee reimbursement options through company payroll or managed through NRI Financial Services.
Miscellaneous Allowance
The miscellaneous allowance category accounts for unexpected and variable employee relocation costs that may arise. These unforeseen expenses can cover anything from minor repairs in the new home to additional travel costs to specialty relocation services.
Relocation packages typically combine the miscellaneous allowance with the $5,000 for travel expenses outlined above.
Cost of Relocation Package Tax Gross-Up
Relocation benefits can lead to various tax liabilities. Therefore, companies offer gross-up tax assistance. This service helps employees avoid a significant tax burden due to relocation benefits.
The tax gross-up relocation cost is based on the value of the relocation services package. NRI Relocation clients can report and calculate these figures through NRI Financial Services to maintain transparency and accuracy.
Cost of Corporate Relocation Service Fees
Lastly, the employer must consider the service fees of hiring a corporate relocation company like NRI Relocation. However, the relocation service cost savings and efficiencies provide more value than the service fees. The relocation company will inform the client of the service costs upfront to ensure complete transparency.
Quotes for the Cost of Relocation For Your U.S. Employee Renters
Understanding the cost of relocating U.S. renter employees helps companies manage their corporate relocation costs effectively. Relocation expenses can vary widely based on individual circumstances. A clear grasp of these employee relocation costs allows businesses to budget and allocate resources.
For companies wondering, “How much does it cost to relocate an employee?” experts like NRI Relocation can provide invaluable insights. Corporate relocation professionals can accurately estimate relocation costs and account for all aspects of the move, from logistical arrangements to potential tax implications. Working with a relocation company results in better financial planning, relocation cost savings, and a more positive employee relocation experience.
Fill out the form below to recieve a quote tailored to your employee’s unique situation and needs. Providing NRI with the specifics of your employee’s move will allow us to offer a more accurate corporate relocation cost estimate.