Additional Common Topics (Listed Alphabetically) > Area Related Topics > Definition of Geographic Area (Cost of Living)

ERI's definition of geographic area for cost of living analyses can be explained by answering the following question:

How are the geographic areas defined for cost of living analyses? When I look at data for "Beijing, China" or "Washington, DC" is this similar to the metro area or regional figures reported by other sources?

ERI defines all cities as "within the city limits." Surrounding suburbs, smaller cities and towns, are reported separately. The primary reason for this is the unique housing prices found within even adjacent cities and towns, although other cost elements may also vary, including city/county income tax rates, property taxes, sales tax, consumables prices, health care costs, transportation costs, etc. For this reason, our data may vary significantly from sources that average multiple areas into regions.

ERI discourages use of regional averages when analyzing cost of living, although the Relocation Assessor will allow for user-defined averages of selected benchmark living areas, for example, three livable neighborhoods within 25 miles of a branch office that management has defined as a reasonable "living area mix" to which COLAs are pegged. An "average housing price" for a metro area is worthless information in most analyses, but reviewing an area's range of housing prices may afford some insight to relocation management and the relocating employee. The Relocation Assessor facilitates such analyses with a browse function that will load areas located within a certain mile radius to a branch office or in selected counties to the COL Table by Earnings and then sort by costs these selected cities to provide a feel for the range of costs in a given, defined "area."

When considering "downtown" costs as opposed to "surrounding suburb" cost of living, there are a few other considerations which may be helpful for ERI subscribers. Using the example of Washington, DC:

1.	Are employees really living within the city limits of Washington, DC?

2.	Is the COLA unreasonably high because downtown costs are being reviewed rather than a benchmark suburb?

3.	Where, in fact, are most employees at this earnings level typically living?

4.	Are employees at this earnings level typically renting or owning?

Two-city cost of living differential results may be altered significantly simply by viewing different combinations of Washington suburbs in comparison with one another or by selecting different specific neighborhoods within the city. For example, the two-city overall cost-of-living comparison will vary greatly with different choices for base city and destination city per the widely diverse home prices represented below (these areas are all within 20 miles of downtown Washington):

•Washington Office

•Washington-Wesley Heights neighborhood, DC

•Falls Church, VA

•Washington, DC

•Washington-Georgetown neighborhood, DC

•Capitol Heights, MD