Business faces a key question in 2019, and it’s about unemployment: How low can it go?
At the time of this writing, unemployment in the North Bay is extraordinarily low — and holding. For the past two months, the majority of the North Bay has experienced around 3 percent unemployment, with some counties dipping into the 2 percent range. California itself has seen around 4.1 percent unemployment for the past two months, down a few tenths of a percent year-over-year but still just above the U.S. national average of 3.7 percent.
All of this is to say, it’s a good time to be a job seeker.
It’s been a while since we’ve seen shifts in the economy such that job seekers have had such an upper hand when it comes to the job market. But now that we’re here, it will be imperative that employers take steps to make their brands impenetrable and their acquisition and retention strategies competitive.
In a recent study of workplace trends among more than 600 California employers and 500 California employees, which was conducted by my company, Nelson, we discovered that the top two challenges facing employers for 2019 are “talent acquisition” and “talent retention,” respectively.
Tied for third are “managing growth” and “competitive pressures.” This tracks with the trends we’ve seen in unemployment, explosive business growth and intense competition for talent here in the Bay Area.
While some are watching the stock market warily, the economy remains hot. So while as businesspeople we must plan with a recession in mind, we must also face the reality that right now if you want to get and keep talent — to manage your growth — you have to make your company and your offers as competitive as possible.
Challenges to hiring and retention
California has a unique landscape — and we’re not just talking geographically. In this state, we face a number of challenges to hiring and retention that other states don’t necessarily face.
For many Californians, the high cost of living in relation to wages means that many of California’s workers have to seek jobs outside of areas in which they can affordably live. And because the “Bay Area” is a sprawling and inclusive definition of a huge geographic region — we see a similar situation in Los Angeles — many “Bay Area” workers are actually commuting for hours at a time and across multiple county lines to get to work each day.
In the Nelson study, we found that 84 percent of companies say that their commute times are getting longer. As a result, nearly three-quarters of surveyed employers say that they have lost candidates and/or employees as a result of the commute.
In 2019, it is unlikely that the need for a long commute will abate. As more workers enter the state — especially, as the tech industry continues to attract workers — the Bay’s commute times may very well come to rival LA’s.
One of the reasons that the commute is so long is that California is facing a housing shortage. There is a dearth of affordable homes, so while the housing market has begun to cool after reaching its apex in June, it is unlikely that California’s housing problems will be solved by 2019. In fact, Governor-elect Gavin Newsom has suggested that the state needs to build 3.5 million more homes by 2025 to keep up with demand.
Joe Madigan is the CEO of Sonoma-based Nelson Companies.