Raleigh, NC Is Poised for Growth, Competitive for Workers
Ranked No. 12 on ThinkWhy’s LaborIQ™ Rankings Index, Raleigh, North Carolina, like much of the country, has a tight labor market. With low unemployment and a growing labor force, wages have experienced a four-month slide. This presents challenges for both job candidates and organizations both competing for roles and talent, respectively.
ThinkWhy It Matters
The Raleigh employment landscape:
- Negative year-over-year wage growth for four consecutive months
- Historic growth in the Arts, Entertainment and Recreation subsector of Leisure and Hospitality, driven by downtown resident population surge
Rising residential real estate values, making for good investments
Raleigh is a competitive, highly educated and increasingly technology-based market. Nonseasonally adjusted annual job growth increased 3.7 percent for December 2019, as the labor force grew by 22,300. Tech jobs are growing, consumers are spending, and local real estate is considered a good investment. The market is vibrant, attracting young, educated people – positioning Raleigh for further growth.
To remain competitive, Raleigh businesses can:
- Boost wages in industries experiencing robust job growth to compete with neighboring markets and retain talent.
- Utilize the Research Triangle to enhance investment in product research and development and employment of the educated and highly skilled talent in the area.
Use local educational institutions to upskill your existing workforce and use as a competitive recruiting tool (e.g. MBAs, MS Analytics and Data Science).
Average Hourly Earnings Growth (all private employees, December 2019)
Average hourly earnings in December 2019 decreased 0.2 percent from 2018, resulting in negative year-over-year wage growth for four consecutive months. In Raleigh, from 2009 through December 2019, the correlation between wage and job growth is -5.0 percent. This means employers in Raleigh are price sensitive, in that hiring goes up when wages go down and vice versa. As evidence of this, in the last couple months, tepid and even negative wage growth has been seen alongside substantial job growth. To attract and retain talent, Raleigh businesses are encouraged to understand this nuance and put forth competitive offers at the right time.
Unemployment Rate (December 2019)
Compared to previous years, the nonseasonally adjusted unemployment rate in Raleigh reached a low of 2.9 percent in December. In this area, it is common for the unemployment rate to spike at the beginning of the year and at the beginning of the summer, reflecting both seasonal workers added to the economy and the large number of students and educational workers studying and working within the Research Triangle. Also contributing to the unemployment increase is the influx of graduating students, who enter the job market each year and are typically briefly registered as unemployed upon graduation.
Though Raleigh employers have a strong talent pool to select from, they also compete for candidates with nearby Charlotte, North Carolina, which is No. 5 on the LaborIQ™ Rankings Index.
Job Growth by Industry (December 2019)
The metro’s top industry, Professional and Business Services, increased 5.6 percent in December. With a historic upturn in the Arts, Entertainment and Recreation subsector of 24.5 percent, Leisure and Hospitality saw a rise of 8.2 percent. According to the Downtown Raleigh Alliance, the downtown residential population has grown 39 percent since 2015. With this growth, the number of restaurants, bars, hotels and numerous parks have grown, which has increased the need for arts, entertainment, recreation, food service and hotel labor.
Raleigh has become a vibrant economy. Wake County Economic Development identifies Life Sciences, Advanced Manufacturing, Clean Technology and Technology as target industries for Raleigh investors. These industries will require an educated workforce, which is an area where Raleigh excels. Fueling the local talent supply, the metro boasts an Educational Attainment of 40.3 percent (associate degree and above), which is above the national rate of 37.0 percent.
Raleigh businesses should utilize the proximity to top research institutions in the Research Triangle as a wise investment in intellectual property and technology research. Companies can consider using available profit and capital investments to sustain future product development. This proximity to research and education is a unique offering compared to other cities and can be used to benefit area businesses.
Education and Health Services, at 3.4 percent, came in just below the metro annual growth rate. This industry falls within the region’s economic development focus. This supersector is unlikely to see a shortage of investment, particularly in the Health Services areas, given that the coronavirus is surfacing as a global threat.
Cost of Housing
According to the National Association of Realtors, the median home price in Raleigh in Q4 2019 was $291,400. The Urban Land Institute ranks Raleigh/Durham, North Carolina second for overall real estate prospects in 2020. As of 2018, the National Association of Realtors projected Raleigh’s Affordability index of Existing Single-Family Homes to be 162.4. This number indicates that a typical family earns more than enough income to qualify for a mortgage loan on a single-family home.
Raleigh 2020 Outlook
The Raleigh market is expected to decrease to 1.3 percent job growth in 2020. The unemployment rate is predicted to remain steady at 2.9 percent, while wages are expected to rebound at 2.6 percent growth. Within the metro, Mining, Logging and Construction will experience the most job growth, and despite its strong performance in December 2019, Leisure and Hospitality will shrink in 2020. Raleigh will benefit from positive population growth, composed mostly of domestic migration. This reflects the overall health of the market, and as indicated, there will be demand for economic development.