NEW YORK--(BUSINESS WIRE)-- Today, Mercer announced the results of its 2023 Cost of Living Survey with New York City remaining the most expensive city in North America for expatriates, ranking 6th worldwide, while Hong Kong retained the top spot globally out of 227 cities from across five continents. The survey found that all US cities have increased in the ranking, making it less affordable for employees, particularly for expatriates (expats) who move to the US for international assignments. As many global companies with US operations source a significant part of their workforce outside the US, combined with a tight labor market, a higher cost of living could impact expats’ willingness to relocate, further exacerbating staffing needs.

Mercer’s Cost of Living survey helps employers design efficient and equitable compensation packages for assignment locations worldwide. The survey found that all US cities have risen in the ranking since last year, primarily due to prolonged inflation and exchange-rate fluctuations, which is having a direct impact on the pay and savings of international employees.

In addition to a volatile economic climate triggered by COVID-19 and the introduction of aggressive national monetary policies to help tamp down inflation, a continued hybrid working model is causing many employees to reconsider their priorities, assess their work-life balances, and think about the places in which they have chosen to live.

While Mercer’s Cost of Living research primarily helps employers determine compensation strategies for international assignees, Vince Cordova, Partner in Mercer’s Mobility Practice, is mindful that current socio-economic conditions affect all employees and their employers.

“The US has had a cost-of-living crisis brewing for some time and a severe housing shortage in high-growth areas, but COVID-19 only exacerbated this issue. This will be a pervasive and persistent issue, not just for international employees, but domestic employees as well,” said Cordova.

“Inflation and cost of living impact everyone, and it’s imperative to keep in mind that those who make the least are impacted the most,” Cordova continued. “In developing pay strategies that are equitable and sustainable, employers need to understand how those factors impact these individuals as part of their broader rewards strategies.”

Pay equity and transparency are also becoming key factors for both employers and employees as states such as California, Washington, and New York have introduced legislation to disclose salary ranges in job postings. "Companies are still navigating their way in the pay transparency space, but more visibility on compensation factors will also help employees who are considering international assignments understand how they should be thinking about pay and how their financial wellness could be impacted by living in the US,” added Cordova.

More than ever before, employees are now armed with information to help them understand the value of their skills, experience, and education in a given market. “Competition in the global talent market is fierce, and with the cost-of-living crisis affecting both employees and organizations, employers need to be flexible. This has prompted multinational employers to reassess how they manage their workforces,” said Yvonne Traber, Partner, and Global Head of the Mobility Practice at Mercer. “Failing to implement competitive international compensation strategies in times of economic uncertainty and to align internal and external pay range will determine organizations’ competency in the ability to attract and retain top talents.”

Regional Insights

Behind New York City, Los Angeles (11 in the global ranking) is the second most expensive city in North America, followed by San Francisco (14) and Honolulu (15). The largest increases in the cost of living in North America were seen in Detroit (+27 positions), Houston, and Cleveland (both +24 positions). Canadian cities are at the cheaper end of the ranking for North America, with all of them having dropped since last year. Toronto is ranked the most expensive in Canada (90 in the global ranking), followed by Vancouver (116), and Montreal (135).

About Mercer’s Cost of Living Survey

Mercer's widely recognized Cost of Living ranking is one of the world’s most comprehensive studies and is designed to help multinational companies and governments determine compensation strategies for their international assignees. New York City is used as the base city for all city ranking comparisons and currency movements are measured against the US dollar.

The survey includes 400+ cities throughout the world; this year’s ranking includes 227 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. The data collected provides all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

Mercer 2023 Cost of Living Ranking

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Media: Ashleigh JangMercer +1 917 647 0070 Ashleigh.Jang@mercer.com

Source: Mercer