Labor Data: Wage Growth Needed To Retain LA Talent

July 23, 2019
Author: ThinkWhy Analyst

ThinkWhy It Matters

Often, the sheer size of a metro employment base tells us that an area is well-diversified, which is the case for Los Angeles. This area is one of the most dynamic economies in the U.S. with high-tech jobs, world-leading creative firms, aerospace, and advanced transportation and one of the largest manufacturing bases. For employers in Los Angeles, higher wages are a way of life. Now, to retain existing talent, employers require deeper pockets.

Coupled with the high cost of living, recruiting will continue to be a challenge for businesses in the area. Employers should consider remote work opportunities and outsourcing as part of their talent acquisition strategy. While job growth is still positive, it is not setting records or keeping pace with historical averages.

Los Angeles Metro Job Growth Momentum

The Los Angeles metro area’s monthly job gain decelerated slightly compared to April and May producing 7,300 jobs during June 2019. The metro area produced approximately 56,000 jobs from June 2018 to June 2019 for an annual job growth of 1.2 percent.

The unemployment rate in the area increased to 4.6 percent in June 2019* from 4.0 percent in May 2019. While higher than the national average, unemployment in the area remains similar to unemployment rates seen during June 2018. The pace of annual average job gain increased to 56,000 jobs in Q2 2019 up from 32,000 annual average job gain in Q1 2019. During optimal economic conditions, Los Angeles has the capacity to produce up to 140,000 jobs on an annual average basis.

Los Angeles is the only metro with June 2019 unemployment numbers reported by BLS.

“The California economy is slowing down,” wrote Jerry Nickelsburg, director of the UCLA Anderson Forecast, “The state is, quite simply, running out of people to be employed.”


• Wages increased by 8.4 percent, which tied Denver among the 10 ThinkWhy markets analyzed in June 2019.

• With wage growth of this magnitude employers are using compensation as a lever to pull and retain people to the area

Industry Performance

• Professional and Business Services and Healthcare industries are the top industries leading job growth in the metro area for June 2019.

• Among blue-collar jobs, Construction, Leisure and Hospitality, and Other Services industries are contributing to job growth in the area at a higher rate than the 10-year average.

Jobs-to-Permits Ratio

Single-family demand (jobs) outpaced supply (lagged permits) during June 2019 by a large margin, indicating single-family home prices should increase. Home price growth as reported by the National Association of Realtors during Q1 2019 stands at 0.6 percent.

With both the high level of home prices and increasing demand, cost of living in the metro should increase making it more difficult to acquire and retain talent. However, with the multi-family ratio slipping below the equilibrium, growth in rental rates will be constrained.

Gain more insight into employment statistics, including job growth and hot and cold employment sectors, with ThinkWhy's Major Market Activity Report for June 2019.