What is Geographic Differential?
‘Geographic Differential’ refers to the differences in the compensation package for the same job in different locations based on the differences in the cost of living at those locations.
It is usually provided as a supplement to the primary salary in order to compensate for the additional cost of living in a place where the cost of living is more.
This kind of additional compensation makes the employee feel valued and increases their engagement with the company. As engaged employees are always an asset for the company, it is in the best interest of the company to provide additional geographic differential.