Category: Relocation Challenges

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Relocation Best Practices Relocation Challenges Relocation Management Relocation Policy Review Relocation Programs

5 Terms to Include in a Competitive Relocation Package

family enjoying pizza in their new home with moving boxes around
a young family move into their new home and have pizza for their first meal

Make your relocation offer competitive by including these policies

Every year millions of people move for new jobs. Relocating for your professional career is familiar, but the relocation industry has changed since the Covid-19 pandemic. When it comes to offering relocation packages to employees willing to move for a new position, studies show that employees are more reluctant to move if there is a higher cost of living in their new destination. 

Another factor for employees not wanting to relocate is the start date. Companies often ask employees to be in their new seats within 30 days of signing the offer letter. So, what can companies do to work around these distresses? 

Companies who are asking talent to relocate for a position should look into offering employee relocation packages. These packages help offset the stress of moving by providing financial assistance and corporate housing so that the employee can relocate as seamlessly as possible. 

While every company has different opinions on what should and should not be covered regarding talent mobility, a few basic policies should be included in every relocation package. Here are five terms to make your company’s relocation package appealing to applicants so that they cannot refuse your offer:

1) Real Estate Programs or Lease-Break Assistance

A survey by Worldwide ERC showed that selling a home for less than it is worth is the most expensive part of relocating. When time is limited, employees are often forced to accept a lower sale price or pay a financial penalty for ending a lease. Often, employees are scared they will get stuck paying two mortgages or rent payments for multiple months, which could hurt them financially. 

If companies want a shot at landing top talent for an open position, they will include financial aid coverage for breaking a lease. If the employee can get out of their current rental at little or low cost to them, they are more likely to accept your relocation offer. 

For applicants who are homeowners, offering home sale assistance and home-buying assistance programs in the relocation package would be a massive perk for them. Standard relocation real estate programs include BOV, GPO, or Direct Reimbursement. Each of these programs has different pros and cons. But every moving employee will have different needs, so options can make any offer even more appealing.

2) Moving Expenses

This one may seem too easy to list, but it is essential. Very few people save thousands of dollars regularly if they may have to move unexpectedly. So, if an employee is mulling over your offer, the price of moving may be daunting in the back of their mind. But if your company were to cover or assist in the moving expenses, it could quickly put those thoughts to the rest of the employees. 

There are numerous ways to assist an employee with relocation costs. Most companies go the route of reimbursement programs, but there are packages where the company will handle everything on behalf of the employee so that they do not have to worry about it. Again, each different kind of program will have its pros and cons. 

It’s worth noting that no matter which method your company chooses to use for handling relocation expenses, some relocation technology can help keep spending within a budget.

3) Transportation Costs

Moving can be costly, by car or plane. Visiting the new spot before relocating is necessary to find housing and get to know the area. Relocation packages typically include reimbursements for two or three trips. This can also be a chance for the transferring employee to search potential neighborhoods and schools for their family.

4) Tax Implications

Relocating employees can face an unanticipated problem with taxes concerning relocation benefits. An employer may give a ‘relocation lump sum’ to cover relocation expenses, which is taxed as extra income at the employee’s ordinary tax rate.

Employees with a 25% tax rate will be taxed $2,500 on a $10,000 lump sum. This can be a financial strain, so many companies increase the lump sum to cover taxes.

5) Miscellaneous Expenses

One last suggestion to make a solid offer to a potential candidate is to have a miscellaneous expenses policy in your relocation package. Employees may incur costs when relocating. Ask them what expenses they anticipate and offer assistance to cover them, such as vacation days, spousal income loss, and packing services.

GMS Specializes In All of These Terms and Conditions

Look no further if your company needs help updating or creating employee relocation packages. Global Mobility Solutions (GMS) has been helping companies with their relocation services needs since 1987. Our expert team will listen to your wants and needs, then assist you in putting together the best relocation policies to make all your offers to new employees appealing for them to accept a relocation assignment. We specialize in helping companies provide their employees with the terms mentioned above. 

Reach out to us today to set up a free consultation. Within 24 hours, one of our business development managers will be in touch to get you started on setting up the most competitive relocation package in your industry.

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Global Relocation Tips Global Relocation Trends Household Goods Relocation Best Practices Relocation Challenges Relocation Management

Many Ocean Shipping Lines Are Moving to Aircraft

airplane flying over large shipping containers
Airplane flying above container port.

Many household goods shipping companies are investing in air travel

As shippers look for more efficient ways to ship household goods worldwide, ocean freight companies are increasingly turning to air cargo. Although airfreight represents only a tiny section of the broader cargo industry, the pandemic has caused it to become more prominent due to supply chains, travel bans, and consumer spending issues.

 

Air travel has become increasingly important for companies engaged in maritime trade due to the recent pandemic. With more people shopping online, household goods shipping companies are struggling to keep up with demand. This has caused ships to be idly anchored at congested ports, unable to dock for weeks at a time. Further complicating matters is a shortage of workers assigned to load and unload vessels. Containers that could be used to hold exports are instead sitting unused, while exporters with plenty of goods to ship need help to get containers.

 

 

The three dominant European container shipping companies (AP Moeller-Maersk, CMA CGM Group, and Mediterranean Shipping Co.) have primarily avoided airfreight, feeling that it is an expensive distraction from their core businesses of operating giant vessels, container terminals, and related logistics operations around the world. However, executives claim that many customers are now opting for air shipping because it is more cost-effective and reliable. Maersk, the world’s largest container shipping company, began an air cargo division in April last year and now has a fleet of 15 planes.

 

Ocean Freighters Turning to Buy Air Planes

Boeing and Airbus are now part of this equation as they started selling freighter versions of their newer widebody planes. These freighters are more fuel-efficient than older cargo jets. And to show the rising demand for converting old passenger planes into freighters, it should be noted that some have been booked up for years.

 

In recent reports, Maersk is anticipating free cash flow to be about $19 billion by the end of 2022. The company plans to obtain seven Boeing 767s (purchase three and lease four) by the new year. The idea would be to have aircraft fly routes between Asia, the United States, and Europe. 

 

Last year, Maersk moved into the air cargo game and increased volume by 100% after purchasing German air freight company, Senator International. In addition, Maersk has been buying airplanes for its air cargo division, which was formerly called Star Air. The division, contracted by United Parcel Service Inc. and Germany’s DHL to fly freight, now operates with 15 Boeing-made 767 freighters.

 

Also, earlier this year, CMA CGM, the world’s third-biggest ocean shipper, agreed to share cargo space with Air France-KLM. And on top of that, CMA CGM said it would buy a 9% stake in the airline.

 

Numbers released by the International Air Transport Association (IATA), last year, the airfreight industry grew over 21%. This means that revenue will increase to $289 billion in 2022, up from $238 billion last year.

 

Boeing reported that about 400 freight planes had been added to the world fleet in the past three years. This is an eye-opening 20% rise. Boeing is now estimating that the global freighter fleet will increase to about 3,600 by 2040. To put that number in perspective, it is currently around 2,000.

How Increased Airfreight Will Affect Global Mobility & Relocation Industry

In the past, airfreight for relocations was too expensive, and many relocation companies didn’t even consider it an option. However, the lowering costs and the congestion of ports have now made a more realistic answer for many.

 

As airfreight rates become more affordable, international relocation companies can choose to ship household goods by air. With more employers turning to lump sum packages for relocations and ocean shipping delays being a common factor, transferees are leaving more of their belongings behind when they move abroad for a work assignment. The fewer belongings the employee brings means the quicker they can move, meaning the more likely they are to choose airfreight for their next relocation. Although the airfreight method is still quite costly, it eliminates many relocation delays, significantly improving the transferee’s experience.

 

Global Mobility Solutions (GMS) is the industry leader in Global Mobility, which is why we stay on top of all topics regarding relocation. Visit our Knowledge Base to learn more about hot topics in the relocation industry. And feel free to reach out to us with any questions regarding the household goods shipment.

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Home Purchase Labor Force Relocation Best Practices Relocation Challenges

What Is an iBuyer?

Fastest-selling housing markets

Explanation of an iBuyer and why transferees shouldn’t use them

There is no doubt that selling or buying a home can be complex. More prominent real estate companies started buying and selling homes through iBuying. This newer way to sell houses and property popped up. 

But what is an iBuyer? How does it work? Is it worth it for me to sell my home to one? 

An iBuyer, in simple terms, is a real estate company that leverages technology to buy and sell homes in hopes of making a quicker sale than the traditional real estate process would. The main reason is that with iBuyers, people can buy and sell homes almost entirely online, and the buyer may never even step foot in the house before signing the dotted line. 

While some iBuyers have been around since 2014 but mainly due to the Covid-19 pandemic, iBuyers started to take a hold of a decent portion of real estate transactions. The main reason is that home buyers and sellers could show or search for houses online and take virtual tours. Then they could make offers and complete the process online before getting to their new destinations.

iBuyers vs House Flippers

Many people confuse iBuyers as being in the same realm as house flippers. Flippers typically buy properties at low prices and then relist the house for a higher price in hopes of making a profit. 

iBuyers look for homes that are more market-ready than those houses flippers purchase. iBuyers tend to make a more fair offer for what the property is worth during the market’s value. Fees are short. All iBuyer companies have fees worked into their submission. 

Should I Use an iBuyer?

Often, people who are in a hurry to get to their new destination turn to iBuyers. They think that because their process is more accessible than the traditional way, they can be on their way sooner. But relocating for a job, using an iBuyer, is probably not the best route because you could be leaving money on the table. 

If you are relocating for a new position, the first step is to review any relocation benefits offered by your new company. For example, employee relocation packages often offer home buying and home selling programs. This means there could be special programs that help moving employees sell their current homes and buy a new house in their new destination. 

When employees take a relocation job, they often think they will not have enough time to sell their home before their start date. This would make many believe that an iBuying company is the way to go. But any reliable relocation management company (RMC) would strongly side against iBuyers. 

Advantage of an RMC over iBuyers

Some of the most sought-after relocation benefits are home sale programs. In basic terms, relocation home sale programs provide assistance to homeowners so that they can move to their new city for the desired or assigned start date. Each RMC will have different terms and conditions for its offered real estate programs. But most programs will include payments to cover real estate commissions and closing costs. Therefore, every home selling assistance program differs depending on the seller’s/buyer’s situation. The type of program a moving employee can use also depends on relocation policies specified in the employee’s offer letter. Direct Reimbursement, Buyer Value Option (BVO), and Guaranteed Purchase Offer (GPO) are three of the most commonly offered relocation home sale programs. 

Each of these programs offers different advantages to transferees. Direct reimbursement is the most common program. This home-selling program is where the employee will list and sell their home on their own and be reimbursed by their new company for closing costs and other fees. 

The BVO program is where the RMC will buy the home from the moving employee and sell it to a buyer with a competitive offer. Finally, the GPO program is the handiest; this is where the employee will list and try to sell their home independently. If, after a set amount of time (typically 30-120 days), the employee is unable to sell their home, the RMC will purchase the home from the employee so that they can make it to their start date on time.

GMS Employs Real Estate Experts

Global Mobility Solutions (GMS) has been the industry leader in relocation since 1987. We’ve assisted in millions of moves since and have taken pride in making a seamless relocation process with top-notch customer service. We understand that selling a home in a tighter time frame adds to stress. 


That is why GMS only employs the best real estate experts to help our clients sell and buy homes promptly while getting checks next to all their needs on their list. With over 30 years of experience, GMS knows how to get relocating employees moved on time without leaving too much money on the table. For more information on our home-selling programs, please reach out to set up a free consultation on how GMS can help. Or check out our Knowledge Base for more insight on other services GMS can offer those looking to relocate for a new job.

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Domestic Relocation Trends Global Relocation Trends Household Goods Relocation Challenges

Household Goods Summer Update

Big truck of delivery company with cargo is driving on forest road in the mountains at sunset.

The HHG Industry & The Summer of 2022

While the summer household goods moving season is heating up, 2022 is shaping to be hotter than usual. The summer of ‘22 is the perfect storm which includes a range of issues the industry has been battling for some time, such as driver and labor shortages, not to mention the high gas prices as of late. Today, there is a range of new challenges, compounded by the lingering events of the pandemic and higher fuel costs.

These factors boil down to several key areas:

  • Increased Volume
  • New Storage Challenges
  • Challenges with Materials & Supply
  • Air & Sea Freight Cost Volatility
  • International Port Delays
  • Continuing Driver & Labor Shortages

It is important to remember that many of these challenges are beyond the control of the relocation and household goods (HHG) industries. So let’s dive into today’s major challenges facing the household goods transportation industry.

Increased Household Goods Move Volume

Move volume is up across the industry, an increase over currently elevated levels that have been present for the past year. Corporate relocation volume is up over 2022 and has been approaching pre-pandemic figures from 2020 and 2021. 

Additionally, U.S. military moves have been restarted, accounting for a large portion of typical HHG traffic. Previously, these moves were on hold throughout 2020, with few exceptions for emergency or national security moves. As a result, military relocation volume has suddenly jumped, nearing its typical summer volume.

COD/Consumer business

Volume began to skyrocket in 2020, with consumers deciding that they wanted to make significant life changes during the pandemic. This was accelerated by work-from-home policies, with companies allowing their workforce to live and work from anywhere with an internet connection.

Due to increased demand, COD pricing has become elevated. This increase in consumer pricing will continue to harm those relocating employees that are provided a lump sum benefit in place of a comprehensive relocation package. Their moving budget will no longer stretch as far as it may have in previous years, placing these transferees in a tight spot.

Heightened increases in consumer moves have caused a resurgence of “rogue movers,” fly-by-night moving companies who prey on individuals looking for cheaper moving options. This increases the risk that transferees who receive lump sums as their sole relocation benefit may fall victim to similar scams as they try to conserve their funds for moving.

HHG Storage Challenges

Household goods storage capacity is not something that the industry worries about very often. As a result, few in the business today have encountered it before. Well, hello, summer 2022, we’ve got ourselves a shortage of storage!

Storage Capacity for Personal Property

HHG shipments that required storage options have declined for more than a decade. In the past, the real estate market was well balanced, and most shipments were delivered directly to the transferees’ new homes, bypassing the need for storage entirely. 

This decline in storage needs pushed many in the industry to downsize their warehouse spaces to lower overhead costs, shifting to smaller, less costly facilities.

Today’s red hot real estate market has caused an increased overlap rate for the typical transferee’s relocation timeline. In 2022, homes are still selling quickly, forcing employees to move out sooner than anticipated. Once at their destination, the highly competitive market prevents employees from finding suitable housing promptly. It has become common for homes to be sold before the family can even view the property. This translates to extended stays in temporary housing for the family while their household goods are put into storage until a home can be secured. While many around the country expect the real estate frenzy to cool off, there’s no way to level out numbers until that happens.

Additionally, some shipments must be stored further away from the transferee’s ultimate destination, leading to potential costs beyond what would typically have occurred with a closer storage facility.

HHG Labor Constraints

Storage in transit deliveries for corporate relocations is typically handled by local labor that the local destination agent arranges. The existing labor shortage that the industry has been dealing with has been compounded by the effects of the pandemic, further restricting supply. This limited labor pool specifies the development of creative solutions for operating trucks.

Materials & Their Impact on Household Goods

As many have seen in the news, the cost of simple building materials at your local hardware store has almost quadrupled over the last year. This is another excellent example of supply and demand playing out in real time.

Lumber

The cost of lumber is up, spiking as high as 347%! Primarily, this has impacted the housing sector, with builders and consumers taking a hit on the cost of new builds. In addition, the household goods and storage industry has dramatically increased the cost of 3rd party crating.

Additionally, as new storage vaults and warehouses are being built/bought to meet demand, higher costs, limited availability of materials, and a slower building pace result.


source: tradingeconomics.com

Corrugated Cardboard

The ideal packing material for most household goods moves, the cardboard box, has been steadily increasing in price for a decade now, thanks to the rise of the eCommerce and flat-pack furniture giants.

Costs have continued to rise in concert with the rise in demand for household goods. However, there is good news – While the price is rising, supply currently appears to be meeting the demand for packing materials.

Fuel Costs

Another newsworthy item is extremely high gasoline costs have risen in recent months, exemplified by the interruption of supply pipelines on the East Coast. As a result, clients have raised concerns regarding gasoline prices and how this would translate to HHG move costs. However, the rise in gasoline costs does not directly correlate to the price of diesel, which the household goods industry runs on.

  • Most household goods transportation equipment runs on diesel and not gasoline.
  • Diesel pricing was rising until February and has leveled off considerably since then.
  • There are fuel surcharges on all interstate HHG moves, a process that has been in place for over two decades.

Fuel surcharges are determined by the average price of a gallon of diesel as calculated by the U.S. Department of Energy on the first Monday of every month. The new fuel surcharge (if a change is required) goes into effect for shipments loading from the 15th of that same month through the 14th of the following month. This helps to level off any volatility in fuel prices.

Blog - Chart - Gas Diesel Prices

HHG Air/Sea Freight Pricing Volatility

Supply and demand have caused air and sea freight pricing to remain volatile around the globe. This has been compounded by the overall reduction of flights, leading to limited availability to air freight transport. However, many in the industry are hopeful that we’ll be back on track within the next 12 months. 

Also, lift vans, a typical wooden container used in international shipping, are in short supply. These containers wear out over time and need to be replaced. However, with the ongoing lumber shortage, replacements are more costly and more challenging to come by.

Continuing HHG Driver & Labor Shortages

Driver and labor shortages continue to plague the moving and storage industry. The HHG industry has made sustained attempts to attract talent with varied results. The uptick in volume and the increased costs of doing business have led to a more acute awareness of these shortages. As a result, the industry has explored the need for alternative modes of transport (such as small containerized shipments) and continues to utilize these methods.

What Can Companies with Household Goods Shipments Do?

Many of the relocation industry’s HHG transportation challenges are simply out of anyone’s control. Simply put, TIME has become the critical factor for many of these challenges. It will take time for these issues to unravel themselves:

  • Material supply will catch up with demand
  • The housing market will cool which will lessen storage demand
  • Over time, international ports will catch up with their backlog

However, for companies that need to relocate their employees, time is a powerful ally. Now, more than ever, companies should work to initiate their employees’ HHG services as early in the move process as possible.

  • This will allow your relocation team to set the right expectations upfront and help ensure your employees arrive at their destination as quickly as possible, ready to work.
  • The earlier companies can initiate relocations for their transferees, the sooner HHG services can be scheduled and coordinated.
  • The more accurately a transferee can project their final move date, the more quickly the move can be added to the list of summer moves.

GMS Is Prepared, Let's Talk!

Do you have questions about the household goods industry? Let’s talk!   Global Mobility Solutions (GMS) is a leader in global workforce mobility. We help companies build and operate competitive relocation programs for talent acquisition and retention strategies. 

Our goal is to make every relocation experience smooth for those moving. Our services can help every step of the way, from pre-decision, to moving day, to getting settled in the new destination – GMS is here for you.

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Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

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Global Relocation Challenges Global Relocation Tips Relocation Best Practices Relocation Challenges Visas and International Travel

Immigration Options for Remote Work Policies

woman filling out visa and immigration paperwork
Close-up of person carry information from passport to usa visa application form. Man planning to move abroad. International and legal immigration concept

Companies can still be held responsible for immigration rules on remote employees

There’s no doubt that the Covid-19 pandemic changed the remote work options for millions, maybe even billions, of employees worldwide. Companies sending their employees to work from home worked out well in numerous industries for organizations and employees alike. Employees like the flexible work schedules that remote work policies offer, while companies were initially surprised but overall pleased with their productivity. 

 

There’s still some debate about whether companies should remain in full-time remote work settings or urge employees to return to the office. While many organizations decided against a full-time office return, some factors should be weighed in. Again, there is no denying that offering remote work flexibility helps hire and retain top talent, but from the company’s standpoint, they need to make sure all of their bases are covered. 

 

Are companies responsible for immigration regulations if their employees live in a different country than the headquarters? For example, does it make a difference if the employee relocates independently or is asked to do so for a global assignment? 

 

Companies should arm themselves with visa and immigration knowledge when creating remote work options for their workforce. Here are some immigration matters to keep in mind as employees turn to the digital nomad lifestyle: 

Employees with H-1B Visa

Employees with H-1B status can only work at the specific locations listed on their Form I-129 petition or Labor Condition Application. However, they can also work remotely if their home is within a reasonable commuting radius from their employer’s office (if their home is outside of the MSA listed on the LCA or not within a reasonable commuting distance, then an amended H-1B Petition would need to be filed by the employer to allow for this working arrangement). If working remotely full-time or in a hybrid arrangement, they will be asked to post a Notice of LCA at two locations in their new home for up to ten days. The employer can then update what is known as a Public Access File with records of the posted LCA, including the new location and the dates for the work assignment. 

 

In the meantime, H-1B employees traveling as digital nomads face various immigration issues due to the location-specific requirements of the visa type. It’s also important to point out that remote employees’ H-1B site visits still happen. So, those employees who work in a remote environment may be able to attend a site visit at their house.

Employees with E and L Visa Status

Entrepreneurs and investors who want to start a business in the United States or transfer multinationals from other countries around the world to a U.S. location often use E-2 visas, which must be issued according to bilateral treaties. In addition, the E-2 visa applicant must have the same nationality as the company’s ultimate owner.

 

The L-1 visa requires foreign and U.S. companies to share a joint ownership group. The foreign company must have also hired the employee in a managerial, executive, or specialized position for at least one year out of the immediately prior three years. The employee also must arrive in the U.S. to take on a similar managerial position. 

 

USCIS and other governmental agencies usually require evidence of a permanent, physical office address when evaluating E-2 or L-1 petitions. However, this may challenge companies/employers who do not have a physical location or address. In addition, USCIS also requires a physical mailing address for most forms, which could be troublesome for U.S. companies composed of digital nomads. 

GMS Has Visa and Immigration Specialists Standing By

When companies put together remote work policies, it is essential to have visa and immigration specialist assistance. Organizations do not want to expose themselves to fines, additional taxes, or other compensation obligations because of a lapse in immigration paperwork. Working with Global Mobility Solutions (GMS) can assure companies that their visa needs are up to date. Our team has over 30 years of experience in helping companies put together relocation packages emphasizing immigration regulations. 


Set up a free visa assessment consultation with one of our experts to ensure that your company is covered on all fronts when moving employees worldwide. And for other help on visa and immigration topics, check out our Knowledge Base.

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Properly managing a visa and immigration program involves meticulous coordination, precise communication, and worldwide interaction with government agencies, corporate personnel, and relocating employees.

At GMS, we provide you with peace of mind in knowing your mobility program is fully compliant and being managed by the best in the industry.

Request a no-pressure, courtesy consultation from a GMS Mobility Pro. We’ll be in touch within 1 business day.

Categories
Relocation Challenges Relocation Programs United States Economy

IRS Increases Mileage Rate for Second Half of 2022

young woman filling up her car at the gas pump
woman filling up at the petrol pump

With Gas Prices on the Rise, IRS Increases Mileage Rate

The IRS announced in early June 2022 that they raised the optional standard mileage rate for the final six months of 2022. As a result, when taxpayers file for this year, they can use the new rate to calculate the deductible costs associated with driving for work and other certain purposes. 

The new rate is an increase of 4 cents, pushing it to 62.5 cents per mile. The rate increase comes with the recent spikes in gas prices. Typically the IRS adjusts mileage rates once a year, usually in the fall. But because of the hard-pressed times of fuel prices, the IRS felt the need to act earlier this year. As a result, for travel that took place from Jan. 1 through June 30, 2022, taxpayers will have to defer to the previous rate of 58.5 cents per mile when filing taxes next spring. 

“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.” 

What the Mileage Rate Increase Means for Transferees

Like almost every other industry, high gas prices have an impact on relocation services. The tiny bit of good news here is that moving expenses are tax-deductible. So, this higher mileage rate can help offset moving expenses for those relocating for a new job or promotion. 

Many companies use Capped Relocation Policies. These policies are implemented to have a pre-approved, maximum budget that the company is willing to cover for their moving employee. This policy is meant to provide a measure of consistency with relocation costs.  

But the problem occurs in months like these when gas prices set higher costs for all aspects of the relocation process. With higher prices at the pumps, that means shipping household goods becomes much more expensive. Companies working under capped relocation policies should update their talent mobility programs ASAP, to ensure they provide enough coverage for new employees. 

If candidates feel they are not getting enough bang for their buck regarding relocation coverage, they may turn down the job offer. It is hard for companies to hire top talent in today’s market.

GMS Wants to Help with Relocation Costs

Global Mobility Solutions (GMS) team of expert relocation specialists always stays up to date with industry trends such as the mileage rate increase. We also specialize in assisting companies in updating or even creating relocation policies that make the process affordable for companies and beneficial for employees. 

GMS is here to answer any relocation-related tax questions, and we are always available to set up courtesy consultation meetings to review and update current relocation packages. Our goal is to ensure that your company is relocating your employees in the most cost-efficient way possible. Feel free to reach out to us today or check out our Knowledge Base, which is full of information on the relocation process.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Buy a Home Choosing a Relocation Company Corporate Relocation Domestic Relocation Domestic Relocation Challenges Relocation Challenges

Rising Interest Rates Impact Job Relocation Transferees

couple going over interest rates options with lender
Couple discussing new financial strategy

Some options to include in relocation packages to help offset high-interest rates costs

As we enter peak move season, many are taking notice of the rising interest rates on mortgages. There is no doubt that this affects anyone who is relocating for a new position. In addition, interest rates have a significant say in the bottom line of monthly mortgage costs, which could sway a transferee’s decision on a home purchase. 

Add rising interest rates to the significant increase in average home prices, and the impact on purchase power shifts for many who are relocating to a new state. But why is this happening? And what can companies do about it to help employees in their relocation process? 

While there’s no magic relocation package that can include a lower interest rate or first dibs at bidding on a home, there are a few workarounds that might be able to ease the process for the transferee.

Will Interest Rates Continue to Rise?

Many real estate experts would predict that interest rates will continue to rise in the immediate future. With rates going up, the Federal Reserve has begun to pull back on the purchase of mortgage-backed securities (MBS). This will likely hike up interest rates because the return rate on mortgage bonds has to be higher to bring in investors. 

The Federal Reserve controls the percentage of the Fed funds rate. But that does not mean there is a direct correlation between short-term interest rates on funds from banks and consumer interest rates. If it becomes more expensive for banks to borrow, they are more likely to pass that cost on to consumers through higher interest rates. This is the main reason for those predicting interest rates to rise in the coming month.

It’s worth mentioning that interest rates were low for so long to boost the economy while the world dealt with the COVID-19 pandemic. This favored higher home prices because lower interest rates meant that buyers’ budgets could be stretched further.

Updating Relocation Policies Can Help Offset Higher Interest Rates Costs

Hiring and maintaining top-level employees can be challenging. To get the right person in the right seat, companies should look into offering relocation packages to ensure they have the best chance of landing top talent. But what should be included in a talent mobility package to help offset these higher interest rates? 


Here is a breakdown of some different relocation policies that can help transferees on the real estate front.

Please note that all numbers and figures used are for example purposes only and not to be used as quotes for the home buying process.

Offer to Pay for Points

It is common for companies to include prepaid interest assistance in their relocation benefits. Buying points is a way of lowering the interest rate on a loan by putting money down upfront. If companies can include this option in their relocation packages, it could save thousands of dollars over the course of the loan. 

For example, let’s say the home the moving employee is looking at is $300,000. To keep the example easy we’ll just say the loan rate is 4%. If the company is willing to add prepaid interest assistance in their benefits, the company could pay $6,000 upfront to buy two points, which gets the interest rate down to 3.5%. While this doesn’t sound like such a difference-maker, it could save the home buyer just over $30,000 on a 30-year loan. 

Add a MIDA to the Relocation Package

Another great option to help transferees deal with high interest rates is to have a Mortgage Interest Deferral Assistance (MIDA) program included in the relocation benefits. This is another form of buying points down, but instead of paying for the decreased points upfront, the company would offer to pay the difference in interest between the former mortgage and the new mortgage. 

How this works is let’s say the moving employee has a current interest rate of 5%, but due to the market conditions when they move for the job, the interest rate they get locked into is 6.5%. The business could pay the employee the price difference on the monthly payment. This can help the employee stay afloat financially and still have some wiggle room when searching for a home in their new destination. Typically MIDA has a cutoff of about 1-3 years once the transferee’s relocation process is complete.

Include a Dollar-Based Mortgage Subsidy

This option works best for companies who want or need to know how much they will spend on mortgage assistance for moving employees. A dollar-based mortgage subsidy works because the organization is willing to pay a total of $25,000 to help the transferee with mortgage and interest rates. Instead of giving all the money upfront, the company could provide the employee 40% in the first year, 30% in the second year, then 20% in the third year, and finally, give them the last 10% in the fourth year. 

This strategy is popular for relocation managers because it lowers the transferee’s monthly mortgage payment while the company knows precisely how much they are spending upfront for the four-year option.

Work with GMS for Relocation Needs

Global Mobility Solutions (GMS) has been the relocation industry leader since 1987. Our expert team of relocation specialists has helped countless transferring employees get from point A to point B. In addition, we take pride in offering companies a way to tie in real estate programs into their relocation policies that provide options to help with rising interest rates. 

Many pre-decision services can also help the moving employee gain some buying power for their new home. For example, when working with GMS, clients have access to the best relocation technology, such as our mortgage calculator. 

When working with GMS, companies and transferees are not tied down to work with one mortgage broker. Instead, we work with a long list of vetted and qualified lenders to ensure moving employees get the best rates. In most cases, transferees can get lower interest rates than if they shop independently. In addition, our extensive lender list gives transferees different home buying and selling options for relocation. 

GMS knows firsthand how hard it can be to hire and retain top talent, so we want to help create competitive relocation packages that make the talent mobility process seamless for employees. Reach out to us today to schedule a free consultation on how our team can help set up mobility programs.

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The Relationship Between Frictional Unemployment and Relocation

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What Is Frictional Unemployment?

Frictional unemployment is the technical term for someone who is “in-between jobs” because they plan to move to a new position. Economists use this term for employees who leave their jobs voluntarily or involuntarily. There are other types of unemployment, but frictional is unique because it is seen as a natural part of labor turnover rates.

The majority of frictional unemployment is when an employee leaves their job for a new one. Career changes also fit into this category. Students who recently graduated and trying to obtain full-time positions are also considered under frictional unemployment.

Because frictional unemployment is natural in a healthy economy, it doesn’t always compel a negative impact. In most cases, this type of unemployment can be beneficial. If a higher-qualified employee chooses to explore new opportunities, companies receive applications from candidates. And in many cases, a set relocation strategy offers a significant offset to minimize time and costs for an employee moving to a new destination.

Examples of Frictional Unemployment

There are different situations that would constitute frictional unemployment. Again, because frictional unemployment numbers are high in a healthy economy, it can be suitable for companies and employees alike. The only obvious downfall on the employees’ end is that any type of unemployment can be scary and stressful. The longer the unemployment stent lasts, the harder it is on the employee and their family. Here are some everyday situations that reflect frictional unemployment:

Personal Transition

Maybe the most common example of frictional unemployment. A personal transition can include taking time off to care for kids or an ill relative to a complete career change. As always seen as voluntary unemployment, personal transitions can last just a few days to a long extended time. Career changes usually involve new training or going back to school, so they can take years in some instances. 

Another prime example of personal transition unemployment is an employee who leaves their job to start their own business. As people can save and set a foundation for their business, they do their best to time an exit from their current position to take a shot at their dream business.

Geographic Move

There are numerous situations that would fit in this category. The most seen is someone who accepts a new position in a new state or country. No one can just move overnight and be ready to work the next day. The relocation process takes some time in which usually the employee is not working, so there is a small gap in employment before the new job starts. However, if an employee accepts a promotion or corporate relocation assignment from their company, there could still be a minimal employment gap. 

Geographic move unemployment matters also occur when an employee’s spouse or partner accepts a job in another location. The employee then gives resignation notice due to the move and then searches for a new job. 

Another callout for this type of frictional unemployment might be if an employee wants a fresh start in a new home, but the company won’t allow a transfer and doesn’t offer remote work options. Obviously, this also fits into voluntary unemployment. In most cases like this, it is recommended from a professional point of view that the employee already have a position lined up in their new destination before relocating.

Skill Matching

Skill matching refers to an employee leaving their job for a position where the skills, responsibilities, and requirements are on the same level. This situation usually occurs when an employee feels underappreciated or underpaid at their current company. Sometimes, the employee will apply to open similar positions to get the pay raise they hope to reach. Or if the employee feels the new company can offer better career growth opportunities. 

Skill matching frictional unemployment happens in a thriving economy when employees have more power in salary negotiation.

Up-Skilling

Up-skilling frictional unemployment is highly similar to skill matching. The big difference is that the employee is taking a new position because they cannot advance at their current company. The most straightforward call out here is an employee who holds an entry-level job moves to a new organization to go into a manager-level role. Or a manager-level employee wants to be promoted to a director or president-level role. This switch usually happens when an employee is topped out and looking for a higher salary and more responsibilities. 

Again, up-skilling is easier done in an employee-favored economy during hiring frenzies. But, just like skill matching, the number of days unemployed is minimal and on the employee’s terms.

Entering the Workforce

Recently graduated college students who have yet to find a full-time job count in frictional unemployment rates. Younger job seekers who are applying and interviewing for positions usually make up the highest rate of this example. This situation for frictional unemployment is the most dependent upon the health of the economy. In a healthy economy where job openings are plentiful, graduates have more options and a better chance of limiting their unemployment days. 

It is not uncommon for someone who may have been a stay-at-home parent looking for their first career job since caring for children. And military members whose service time has concluded, now on the job search fit into this category also. 

How a Relocation Strategy Can Reduce Frictional Unemployment

Setting up corporate relocation policies can help companies cut down on frictional unemployment. These set policies help quicken the timeline it takes for an employee and their family to move. If the company develops its strategies with a relocation management company (RMC), processing time and costs can be managed better. Companies tend to work with relocation specialists who can provide coaching for the process and a prepared list of vendors who work in the services needed, such as movers and real estate agents. 

Frictional Unemployment can hinder companies that relocate new, existing, or promoted employees if they do not have a strategy in place. The company suffers because the moving process drags out; there are numerous days when the position is not filled. On the flip side, the employee suffers because this is time they are not getting paid. But being prepared with relocation packages to offer employees gets them from point A to point B within a reasonable timeline.

GMS Has Taken It to the Next Level

Global Mobility Solutions has been assisting companies with their relocation strategies since 1987. Our team of relocation experts knows how to help companies prioritize their global mobility needs. In addition, we have set in a new Employee Choice Program allowing employees to relocate without their company providing financial sponsorship. 

This program is meant for companies to retain top talent for positions allowed to work remotely. In addition, companies can enable employees to relocate while not having to pay for the process. GMS offers this program to companies so that their employees can utilize our list of relocation vendors at great prices. Please fill out this form to get more information on this new program put together by GMS. Then one of our relocation experts will reach out to let you know how your employees can take advantage of the Employee Choice Program. 

GMS is here to help with any relocation needs, and our Knowledge Base is full of hard-hitting blog topics that can answer many levels of questions. 

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Why Relocation Services Should Include Spousal & Partner Support

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The Importance of Providing Spouse & Family Support for a Successful Relocation Process

Relocating for a job can bring many new opportunities to one’s professional career. But moving to a new destination for a job can also mean uprooting a partner, or even an entire family. When a candidate accepts a new position and agrees to move for the job, many negotiate to get relocation costs covered by the new company. Companies that are regularly involved in the talent mobility process work with relocation management companies (RMC) to construct relocation packages that are enticing and helpful to employees. 

But do these relocation benefits ever include any support for the transferee’s spouse or family? Any modern RMC representative would highly recommend including partner/spousal support and family support offerings to recently hired employees. There are many reasons companies should be happy to help ease the transition for their new employees’ families. For example, if the employee knows their family will have an easier time moving, they are more likely to accept the position. Finding the right candidate quickly cuts down on the time of the job search. Also, knowing their family will be taken care of during the relocation process because of special relocation benefits, the employee can have their mind on their work. 

There is no one size fits all relocation package. Each talent mobility assignment is different and should be treated as so. With that being said, there are numerous relocation services that RMCs can provide to moving employees’ spouses and other family members. Let’s look at some of the more common programs worked into the relocation process.

Area Orientation Trips

Orientation trips are a relocation benefit that tends to get overlooked. Many RMCs would recommend that companies cover at least one or two (if not more) orientation trips for the employee and their partner/spouse. The main reason to add this into a relocation package for the employee to utilize it as a house-hunting trip. Including this service helps the employee and their family get somewhat familiar with the lay of the land for their new destination. These trips can also be used to check out different schools and activities for those relocating with children. Taking a tour of a local school might help the family decide which neighborhood they might want to settle in. If the transferee’s kids play sports or participate in other after-school activities, then take advantage of the trips to meet and greet with coaches and directors so that they are not starting from square one once arriving in the new city. Area orientation trips can give kids and spouses a new, exciting spin on the move if a dream house is discovered while house hunting.

Spousal Career Services

Another perk that should be included in relocation packages is career services for the moving employee’s spouse or partner. It’s not unusual for a domestic partnership to make up a dual-career household; this means if the family is moving for one person’s job, there is a chance the other will have to quit or alter their career. But there are ways that companies can work with RMCs to include spousal career services in their talent mobility benefits. These programs can offer comprehensive career assistance along the lines of: 

  • Quick Start Job Search Preparation (marketing tools, job search assistance manual)
  • Job Search Assistance (market information, access to searchable data)
  • Personal Branding (online profiles, personal website, blog, video)
  • Partnering Services (online courses for job search execution)
  • Resume Writing Services (resumes, cover letters, LinkedIn profile)

Spouses who are moving with their partner can use this time to their advantage. Some people hold off on a career change, but right after a relocation could be a perfect time. If the moving spouse has to resign from their current position anyway, then it could be a new beginning they need to switch industries or positions, maybe even start their own business. In very lucrative relocation offerings, there may even be grants and financial support benefits for the employee’s spouse to get special training for a new job. And sometimes, some RMCs might even work in entrepreneurial opportunities for relocating partners.

Language Training

For international relocation services, language training might be one of the most essential benefits needed. Those who relocate to a new country with a spouse and children will more than likely have to learn a new language. Learning a new language can be difficult if the family has not been preparing for it for a few years leading up to the move. Companies that plan to interview, and ultimately hire, global candidates should seriously consider covering or reimbursing for classes and tutoring for the employee and their family members to learn the language of their new home. Language training programs give the spouse and family a better chance of adjusting and liking their new surroundings making it more likely that the employee can succeed at their new job as well.

GMS Offers Relocation Services with Spousal Support

For international relocation services, language training might be one of the most essential benefits needed. Those who relocate to a new country with a spouse and children will more than likely have to learn a new language. Learning a new language can be difficult if the family has not been preparing for it for a few years leading up to the move. Companies that plan to interview, and ultimately hire, global candidates should seriously consider covering or reimbursing for classes and tutoring for the employee and their family members to learn the language of their new home. Language training programs give the spouse and family a better chance of adjusting and liking their new surroundings making it more likely that the employee can succeed at their new job as well.

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How to Overcome Relocation Challenges

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Downtown Denver, Colorado, USA Drone Skyline Aerial Panorama.

The most significant obstacles when relocating an employee

Relocating employees can be a trying process. There are lots of moving parts involved. From handling the company’s needs to the employees’ wants, along with the vendors’ schedules, there are various pieces to fit perfectly to make the relocation process as seamless as possible. Like with any other corporate process, some challenges may occur. Relocation challenges can affect both the company and the relocating employee in many ways. 

While each talent mobility assignment is different, companies can stay ahead of these obstacles by setting relocation policies. These policies are typically built in collaboration with and managed by a relocation management company (RMC), which provides the services through a vetted vendor network. Having relocation packages ready to go can help, but that does not mean that relocation challenges will not arise through the employee’s move. 

Global Mobility Solutions (GMS) has provided companies with comprehensive and award-winning relocation services for employees since 1987. With that said, we’ve overcome our fair share of challenges while assisting people through the relocation process. Our qualified team developed unique solutions to these challenges in each case, ensuring a stress-free move for our transferees and their families. These challenges listed below are not a definitive list for potential issues that may pop up, but are some of the more common relocation challenges:

Relocation Costs

Probably the most direct challenge to point out is providing new hires or promoted employees with relocation benefits will cost the company money. But, again, working with an RMC can help assure that the company offers the right amount of benefits while paying an affordable amount. You have to spend money to run a business. If you do not provide any financial backing to an employee for a move, you are only shrinking your talent pool because only local candidates will apply. This makes spending money to relocate employees worth it, knowing your company can get the right person in the right seat.

Buying and Selling Homes

A primary concern many employees have before moving is selling their current home and buying a new house. While the real estate market is up right now in most major cities around the US, there is still a chance that the employee may need time to prepare their home to be sold, or it could be on the market for a while. This may affect the employee’s available start date. Additionally, when relocating to a new state, it can be difficult for most people to buy a new house without freeing up the equity from their current home.

When putting together relocation packages for your relocating employees, including real estate sale programs such as a Direct Reimbursement or Buyer Value Option program is strongly recommended. These special home selling programs give employees more options during their move and are an excellent way to overcome this relocation challenge.

Job Start Date

Another tricky situation many run into when hiring out of state is knowing when to set the employee’s job start date. Because each relocating employee will have different needs, it can be hard to know precisely how long the process will take. Once the job offer letter is signed, employees typically put their two-week notice in with their current employer. Then the question becomes, what period of time is reasonable to expect the employee to be at their destination? Timeline differences may arise between a college graduate who is a renter and a VP homeowner with a large family. Consideration should be given to each employee and their situation.

A good workaround for employees moving with families is to offer corporate housing options. This allows the employee to get to their new destination to start work and have a reliable place to live for about 30-90 days while their family is given more time to finish the move at the origin location.

Household Goods Shipping

When an employee has to move, they’ll need their household goods to get from point A to point B. This step of the relocation process can be a headache if not handled correctly. The last thing the employee wants or needs is to have their belongings show up late due to a kink in the system. If working with an RMC, it is worth asking how they vet their moving companies and what they look for when assigning movers to employees. Significant cost savings can be realized through a competitive bidding process where the RMC gathers multiple quotes from moving companies for company approval.

GMS Can Help Overcome Relocation Challenges

While all of these relocation challenges widely vary, the best way to cover all of them is to work with a qualified RMC such as GMS to help write and manage your relocation policies. Our team’s goal is to help make your employees’ relocation process as stress-free as possible. We have team members who specialize in both domestic and international relocation. 

Feel free to reach out to us today to get started on a courtesy consultation with our industry experts, where we can review and provide feedback on your current relocation programming. If your company does not currently offer talent mobility benefits, we can also help you in your efforts to create a competitive relocation benefits program. Don’t let relocation challenges keep you from hiring and obtaining the top talent in your industry.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

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