Introduction
The cost of living can be defined as that cost used in maintaining a particular standard of living. The changes that often occur in the cost of living are normally operationalized by what is termed as the cost of living index. The calculations on the cost of living are normally used to make comparison on the normal cost of incurred in maintaining a particular standard of living in a completely different geographic region. And the geographic differences with regards to the cost of living can be measured using certain rates known as the purchasing power parity rates.
In economic theory, wage is termed as that price that is normally paid for labor. Wages includes all other expenses that an individual is compensated for the time and all the effort that that particular individual has made in the production and manufacturing of economic goods and services. Usually a high rate of pay does not necessarily translate to high annual income. This is particularly true with construction workers because these are the kind of employees who are paid high hourly rates but their annual incomes are usually still very low and this is because of the many irregularities in the that kind of employment.
Results from the pioneer investigation on the effects of high cost of living on the department of health claim that there were thousands of families in the United States that do suffer a lot as a result of high costs of living. For instance the costs of treating some common diseases like tuberculosis have really gone up. And this has made many desperate families especially the women in the family to be forced to work in the industries in order to increase the family income. Without such efforts the families will not be in a position to stay healthy. And since the cost of living is rising, there is also a dire need for people to work extra hard to in order for them to increase their wages (Hillary, 2000).
If in any case the cost of living is high and an individual is receiving small wages, then chances are high that such an individual will be living below the required living standards. Therefore as the cost of living rises wages on the other hand are supposed to be increased in for one to be able to live comfortably. But when the cost of living is low, the wages can still remain high or at a reasonable amount that will enable individuals to sustain themselves.
Impacts of costs of living on human resource department
According to the results of a recent survey carried out by the Northeast Human Resource Association, Boston is the most expensive place in the country and this is having a major impact on the human resource climate of Boston. The Northeast Human Resource Association (NEHRA) claims that this high cost of living in this metropolitan area really affects the recruitment of qualified staff by organizations. And as a result many human resource departments are failing to provide their organizations with talented staff who will serve them right. This high cost of living in this area is partially contributed by the growing high prices. And for example if an employee is been paid small wages and he is expected to reside around the organization in such a setting then the employee will actually be straining to live because of the high costs of living and this will definitely leading to relocation of the employees to a more suitable place.
About 52% of the human resource practitioners of the NEHRA find it very hard to take up their jobs in Boston simply because the cost of living is really high. From the surveys it is seen that the companies are facing much difficulties in terms of recruiting and maintaining college graduates. This is because they have to offer high salaries that will enable them settle with ease in Boston. This high cost of living actually does not surprise the people living in the area but it surprises those people relocating.
As a result many of the organizations located in this particular region are now opting for a relocation to another place where the cost of living is fairly cheap. Together with the organization are the employees who will always be moving to places where the cost of living is low and there are similar organizations where one can get employed and acquire a constant source of income.
The high cost of living can also be as a result of the Hurricane Katrina which lead to the increase in the gas prices which basically affected the common business. The Katrina destroyed almost everything and many organizations are now working towards reviving themselves. And for those organizations that have opted to relocate, they obviously expect that whenever they will be relocating to, cost of living will be more affordable and this will assist the organizations in achieving their set goals in the profit making industry (Morris, 2002).
The cost of living not only in Boston but also in other places highly determines the continuity of a certain business in an organization. Boston has just been used as an example where the cost of living is high. It is therefore very important for any human resource department to ensure that the organization is located in an area where the cost of living is low. Because if it does not ensure its proper location the organization will stand higher chances of not doing well in terms of business. There will always be movement of employees from organizations located in the areas where the cost of living is high to other organizations located in places where the cost of living is relatively low.
The combination of cost of living and the impacts of the same on human resource departments of organization determines the future of a particular business in the organization. It is with these two factors that one will able to give a proper location of his organization. Proper location will ensure that your organization does not not run short of employees as a result of high costs of living in the area where the organization has been located.
It can therefore be concluded that cost of living is a major factor influencing the general operation of organizations in that it will dictate the kind of employees the organization will work with under a given environment. It is this cost of living that has really shaped the operations of many human resource departments of various organizations. Due to this many organizations have ended up employing people who may are not well qualified for the positions.
References
Morris K., (2002). Business Organization. Cost of Living Index,23; 120-143.
Hillary K., (2000). Business Organization & Cost of Living. Boston: St. Martin’s.
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