Red-hot US jobs mar­ket drives some to seek cooler op­tions

Gulf Times Business - - BUSINESS -

When Sean Luan­grath joined Po­catello, Idaho-based In­ergy So­lar a few years ago, the plan was to move the por­ta­ble so­lar bat­tery maker to his home base of Salt Lake City so he could build it with easy ac­cess to Sil­i­con Slopes’ tech tal­ent and ven­ture cap­i­tal.

But when the new CEO looked at the labour costs, he ditched that plan and de­cided in­stead to rely on labour drawn from lo­cal col­leges and the nearby Idaho Na­tional Lab­o­ra­tory.

By next year he plans to dou­ble the pay­roll to 50 employees as he moves the com­pany’s man­u­fac­tur­ing op­er­a­tions from China back to eastern Idaho.

Laun­grath says he likes be­ing the rel­a­tively big­ger fish in a rel­a­tively smaller pool.”There’s less com­pe­ti­tion for do­ing stuff like this in this neck of the woods.”

But Luan­grath’s de­ci­sion also re­flects the re­al­ity of a US labour mar­ket that is by some mea­sures the hottest in decades.

The na­tional un­em­ploy­ment rate held steady last month at 3.7%, a 50-year-low, fig­ures re­leased by the US Labour Depart­ment showed on Fri­day.

And though job gains fell short of ex­pec­ta­tions, at 155,000 in Novem­ber they were still twice what some es­ti­mate is needed to keep up with pop­u­la­tion growth.

Wages are also up 3.1% na­tion­ally in the 12 months to Novem­ber, Fri­day’s re­port shows, though that masks much faster growth in big­ger cities, es­pe­cially those with tech-heavy labour pools.

Four of the top 10 coun­ties with the big­gest wage gains in the sec­ond quar­ter of 2018 were in the greater San Fran­cisco Bay Area, re­cent data from the US labour depart­ment shows.

And across the coun­try many labour mar­kets are so tight it is pinch­ing com­pa­nies’ growth, ac­cord­ing to anec­do­tal data re­leased by the Fed­eral Re­serve last week.

The Fed­eral Re­serve Bank of Minneapolis, for in­stance, re­ported that “labour avail­abil­ity was widely seen as the big­gest ob­sta­cle to short-term growth.”

Scarce labour pushes up wages, and “wage gains are likely to con­tinue ris­ing through 2019,” said An­drew Cham­ber­lain, chief econ­o­mist at on­line job­site Glass­door.

But, he said “it’s a very di­verse wage pic­ture across the US.” And that has cre­ated open­ings for some com­pa­nies will­ing to branch out.

A lit­tle over a year ago, ex­ec­u­tives at e-com­merce com­pany Fives­tars re­alised they had a prob­lem: the job mar­ket in San Fran­cisco was get­ting too hot, and the customer sup­port staff they would need for their next bout of ex­pan­sion were nowhere to be found.

So they headed for El Paso, Texas. By Oc­to­ber the on­line re­tail mar­ket­ing firm had hired 65 employees in the bor­der town, about a quar­ter of their total work­force. Labour there is not only less ex­pen­sive, ex­plains vice pres­i­dent of busi­ness op­er­a­tions Matthew Curl, but it is eas­ier to hire and keep peo­ple.

In San Fran­cisco, it had re­cently taken him two months to hire just one customer sup­port agent, who then left within a week for a slightly bet­ter pay­ing job.

El Paso is “ev­ery­thing we’d hoped: a sta­ble labour mar­ket with ex­pe­ri­enced peo­ple that know what they are do­ing,” he said.

El Paso’s av­er­age weekly wage grew 2.4% in the sec­ond quar­ter of 2018, to $733, US Labour Depart­ment fig­ures show.

That com­pares to a 4.4% in­crease in Salt Lake, to an av­er­age weekly wage of $1,010, and a 9% rise in Sil­i­con Val­ley’s San Mateo, to an av­er­age weekly wage of $2,357. With growth like that, more com­pa­nies may try to solve their hot labour mar­ket woes with a move to a cooler spot like the El Paso desert.

In­deed, the trend may al­ready be hap­pen­ing: early this month Cu­racubby, a Berke­ley, Cal­i­for­nia-based startup that au­to­mates billing for schools, an­nounced it will open an of­fice in El Paso in Jan­uary.

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