If I were to do it, I'd take the mileage of the drive as the most important factor, as companies in the US know the addresses of employees. Then I'd assume a gas price of $4.5/gallon at all times (Midwest prices aren't like the coasts) and assume a gas mileage of 25mpg. The person is paid this every day of the year without exception
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Offering to finance all or part of the tickets is a good option IMO. My company offers the German "job ticket" or whatever it was called again to a percentage.
If it were me I'd just get an average commute, provide a stipend of gas or transport costs within your city, e.g. 15km distance, or a monthly pass for local area transit. If I'd want to relocate someone I may offer a signing bonus to help with moving and settling costs.
It's a reasonable expectation that if your job is at a workplace in Toronto, being within city limits is not an unreasonable expectation.
The compensation could be capped at 15 miles or 30 minutes or something, which would encourage people to live closer to work.
I would negotiate that with them because maybe Bob doesn't care but Alice does or vice versa. Now if I was either bob or Alice. Yes I'm calculating fuel, maintenance and meal cost into pay.
I like the idea of the commute being included in the work hours. When you start driving to work, that's when you're clocked in.
Alice lives closer so she can get to work faster and get more done sonce the company only loses 20 minutes of Alice-time.
Bob is farther so thats 70 minutes of Bob-time not doing work during his shift.
Maybe companies will begin to factor in the lost time of commutes and hire more locally. It could get more organized.
I am sure people's time is being wasted by inefficiency. Like, company X has several factories in the state. How many people from city A are working in the factory at city B while B's commute up to city A?
Lots to think about. Traffic, time, privacy? I dunno. Just thinking as I go :)