Tuesday, April 10, 2007
Your Home Can Be A Ball And Chain
The recent housing slump, unlike previous slumps, pervades the entire nation. That means that, wherever you live now, you will have a hard time selling your house to take a job in another part of the country. If you bought your current house just a few years ago, it will be harder for you to break even if you do find a buyer. Many would-be mobile Americans are facing financial loss if they take a new job elsewhere, and few corporations are willing to help pick up the tab. "Many Fortune 1000 typically pay closing costs," says one relocation consultant in Virginia, "as well as giving employees payment for money they lost by selling their house quickly." But smaller companies can't afford to shell out that kind of cash. Relocation reimbursement is becoming rarer all across the board. Many companies may still help out high-level new hires, but not people in the rank and file, who increasingly have to fend for themselves.
Renters have it a little easier. According to one source, "the average cost [in 2006] to transfer a current employee who owns a home was $64,235... For a renter, the cost was $18,736." Ironically, taking on new hires costs a business less than transferring some loyal, longtime employee from one office to another. The solution for many corporations has been to hire local workers at the new office, while downsizing veteran workers at the old one. The housing slump therefore scores a double-whammy on the average American white collar worker. It not only depletes the equity that constitutes a large portion of his nest egg for retirement, but imposes a burden on him that makes it easier for his company to lay him off rather than take him along when it reorganizes.
The increased volatility of the corporate world in general often means that the job you take a thousand miles away may be pulled out from under you almost as soon as you get there. This, plus the difficulty of selling one's current home, has induced many workers to rent their old houses out while renting a new house at their new - and perhaps highly tentative - work location. This introduces a level of instability and logistical complexity into many workers' lives that most would prefer not to deal with, but they often have no choice. Needless to say, rents remain high and renting offers no equity and hence no financial future.
There may be a bright side to this crisis. As the article at the link below notes, it is cheaper for a corporation to equip employees to telecommute from their current homes than to help them sell their old ones and find new ones. Telecommuting has been gaining credibility for years now. It has become an increasingly acceptable option for many employees, and is part of a growing trend towards flexible work environments of all varieties. Nonetheless, many executives and managers have clung to an anachronistic and slightly irrational need for face-to-face meetings and on-site supervision of their employees. Come on, people, your employees are adults! Adults with money invested in houses they don't want to lose. It used to be that you weren't allowed to vote unless you owned some land. I mean, if you can't trust property owners, who can you trust? It's about time that corporations acknowledged the maturity of their employees by allowing them to telecommute from wherever they happen to live, especially if they've already proven that maturity by setting down roots.
"US workers saddled by houses that won't sell" from The Christian Science Monitor