Labor Data: San Francisco's Double-Edge Sword
ThinkWhy It Matters
Even with one of the highest costs of living of any U.S. city, the San Francisco metro area is still able to attract tech-driven companies and employees. The cautionary tale for employers is that the high cost of living and wage expenses will continue to put pressure on company budgets in order to lure skilled labor to the area.
For employers who can, alternative labor locations can and should be considered, much like the multiple locations that Salesforce.com has employed in many areas of the country.
The San Francisco metro produced 3,500 jobs in the month of June, down from 6,800 in May 2019. Like Dallas, the San Francisco metro area’s June 2019 annual job growth of 3.7 percent beat the five-year historical job growth of 3.5 percent. The unemployment rate remains the lowest among the 10 ThinkWhy markets highlighted this month at 1.8 percent during May 2019. The area’s unemployment is running approximately 200 basis points lower than the U.S., while job growth is approximately 200 basis points higher in June 2019.
For the first half of 2019 compared to the first half of 2018, the metro area is producing an annual average of 42,800 jobs. During optimal economic conditions, the metro area can produce approximately 50,000 jobs and the 10-year historical average job gain stands close to 36,000 jobs, so the area is outpacing its average job production.
San Francisco continues to see very impressive growth in tech-related jobs and “Bay Area employers are not seeing any clouds on the horizon,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
• June 2019 wages increased by 2.5 percent per year. This is low considering the current unemployment rate.
• Professional and Technical Services dominate industry performance with over 17 percent of total employment. The job growth in this industry in June 2019 was 7.1 percent, about 40 basis point higher than historical growth.
• Among blue-collar jobs, from June 2018 to June 2019, the Construction sector had 12.3 percent annual job growth and the Leisure and Hospitality sector had 3.8 percent annual job growth.
Home prices remain high in the metro area, averaging close to one million dollars, which grew 1.4 percent in Q12019, according to the National Association of Realtors (NAR). Demand for single-family homes outpaced supply during June 2019, as lack of buildable land continues to play a role for a lower supply of homes. However, multi-family supply has outpaced demand in June 2019 and apartment permits do not show signs of slowing. Apartment rents are growing at approximately four to five percent per year.