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As 2018 begins, American employers are competing for top talent during one of the most significant labor shortages in recent history. This labor shortage has been compounded by the ongoing Covid-19 pandemic effects, shifts in employee preferences for hybrid versus in-person work, an aging workforce and a shortage of qualified workers with key skills to fill vacancies. Yet recent trends may indicate that a cooling off period is coming for the US labor market. The January Job Openings and Labor Turnover Survey (JOLTS), released in early March by the US Bureau of Labor Statistics, shows that job openings are falling, layoffs are rising and layoffs are falling.
These trends have been front and center in big tech, where more than 1,500 tech firms have laid off nearly 300,000 layoffs in corporate and technical functions over the past two years. Mass layoffs have not been limited to large tech employers—automotive, consumer and industrial products companies in the past six months; financial Services; Life science sectors and more have announced intentions to reduce workforce in corporate and technical job roles. Even with these emerging signs of a cooling labor market, we are a long way from the days when employers enjoyed an abundance of talent in the works and workers outnumbered job vacancies. US job opportunities are still strong at more than 10 million as of January 2023, which is almost double the number of unemployed people looking for work. Even if the labor market cools marginally from its current state, employers will need to continue competing for key talent.
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So, what can CEOs do to hone their talent in these tough times? First and foremost, it is imperative to recognize that not every sector is experiencing the same labor conditions for every job role. Labor conditions and the costs associated with specific job functions vary widely across the United States, and locations that may offer favorable conditions for attracting and retaining software engineers may also offer jobs for technicians, financial analysts, or other functions. May be less suitable for construction. Employers should let their talent needs drive their geographic footprint, rather than basing themselves on existing locations or available office space that a company may be eager to fill.
In the attached chart, we evaluate labor costs and labor availability for software engineers, financial analysts, and manufacturing technicians in six U.S. metros. The performance of each city in terms of labor cost and talent availability varies by job category.
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summary result
Austin, TX: Austin has enjoyed years of investment from large tech firms and other high-profile companies moving operations into the area. While there may be opportunities for labor cost savings in the region over more established centers such as Seattle (40 percent cost savings for software developers) and New York (50 percent cost savings for financial analyst roles), Austin’s growing yet relatively limited labor The pool is struggling to meet the demands of employers across multiple functions. Recent mega-project announcements are also putting pressure on Austin’s construction talent; The market’s fewer than 700 technicians can command a nearly 10 percent premium in labor costs over the national average.
Dallas, TX: Dallas is one of the fastest growing labor markets in the US and has attracted cross-functional talent attracted to the area’s relatively affordable living costs and a large presence of well-known company headquarters, business centers and other functions. . Employment opportunities. Dallas presents strong positions for corporate-leaning work, including financial analysts, where the market performs on a par with New York, but at 50 percent of the labor cost.
Denver, CO: Despite its strong population growth over the past few years, Denver’s labor market has weak performance indicators and relatively high costs for the job roles assessed. It has a relatively small pool of talent in each role, characterized by a high degree of competition among employers. Companies specifically looking to deploy a manufacturing facility may want to think twice about Denver as a location option: with fewer than 400 manufacturing technicians and a 3.3 percent decline in employment for this role over the past three years Also, this type of skill is comparatively rare in India. Market.
New York, NY: As a long-established center for financial institutions, professional services and other major industries, New York is generally one of the highest cost locations for most job functions in the US, especially corporate roles. For. Companies looking to hire financial analysts can find strong pools of relevant talent in New York, but can capitalize on similar high-performing labor markets for these roles at a fraction of New York’s cost. While there are some 2,000 manufacturing technicians in the labor market in New York, this population has declined by more than 8 percent over the past three years, creating a weak labor market condition for this job role.
Phoenix, AZ: While Phoenix has enjoyed decades of investment in office and manufacturing jobs across industries, competition for talent has reached peak levels, with the unemployment rate for software developers and financial analysts below 1.0 percent. Compared to other locations, Phoenix has a low labor supply, slow employment growth and a placement quotient comparable to the US average in these two job functions, creating challenging conditions for attracting talent despite relatively competitive labor costs. Where Phoenix shines is in manufacturing talent – it is one of the few under-rated markets with a growing manufacturing technician workforce and a strong concentration in relevant skills.
Seattle, WA: Like New York, Seattle is one of the higher cost markets in the US for job assignments assessed, especially for technical talent and manufacturing technicians. As a well-established hub for software developers with major large tech employers in the market, Seattle exhibits highly favorable labor market conditions for this job assignment, but at a significant cost premium compared to the US average. . With recent tech layoffs, Seattle labor costs for software developers may not increase much over the next few years, but are unlikely to become competitive with labor costs in Austin, Dallas or Denver anytime soon.
Every company has a unique story of how it came to establish its footprint of operations, many grew either organically or through acquisitions. However, labor markets that have historically been understaffed for certain aspects of business may now present significant challenges to talent recruitment and retention or may be too costly to maintain the necessary operations. Before expanding or closing any labor market, CEOs need to direct their teams to evaluate existing and new location opportunities based on the specific talent needs of the business and a holistic view of cost and non-cost factors. it occurs.
NOTE: Methodology and Chart Interpretation: Each chart reflects relative labor market conditions and labor costs in six US metro areas that are specific to the indicated job function. Labor availability (X-axis) includes the following non-cost factors: employment level, three-year change in employment level, location quotient (occupation concentration), and unemployment rate for each specific occupation. Each factor is scored on a scale of 1-5, with five ranked the best performing and one ranked the worst. Labor cost (y-axis) is the average annual base salary for a specified job function in each location, indexed to the US average (US = 1.00). Locations with an index value greater than 1.00 have a higher cost than the US average for a specified business, while an index value less than 1.00 indicates a lower cost than the US average for a specified business. Labor market and cost data were obtained from the US Bureau of Labor Statistics through JobsEQ, data up to 2022 Q3.
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