🦜 PerchPulse - The US Market Update August 2023 🦜

A warm welcome to the August issue of PerchPeek’s US Market Monthly update!

Here’s where you’ll find the hottest updates around employee relocation and international talent strategy, insights from our experts on housing and cost-of-living news affecting your staff, the latest trends in global mobility, and tips and tricks on ways to support your teams.

A fly-by summary

●      OpenAI CEO has called for urgent immigration reform in light of severe skills shortages in the tech industry - key guidance on the extent of the issue for People leaders

●      Inflation has fallen to 3%, its lowest level in two years, and gas and airfare prices have seen significant YoY declines - what this means for People teams and their assignees

●      San Francisco overtaken by San Diego as third most expensive US city for renting, and average 1-bed unit rent has fallen -2.5% YoY - latest stats and trends for GM leaders

●      PerchPeek’s guide to car sharing, a cost-effective and hassle-free alternative to car ownership, to share with relocating employees and help them explore on four wheels!

Talent strategy: OpenAI CEO calls for urgent immigration reform to help tackle skills shortages - important guidance for GM leaders seeking talent

In light of severe skills shortages in the US, the CEO of OpenAI has called for urgent reform of the immigration process for highly skilled foreign workers. To shed light on the extent of the issue, here’s PerchPeek’s summary for GM leaders dealing with employee immigration.

Over the last few months, we’ve been seeing that US companies are looking overseas for qualified talent to fill growing worker shortages, but are being hampered by immigration barriers.

The skilled worker shortage is an increasingly serious issue; in fact, management consultancy McKinsey estimates the US will be short of 300,000 engineers/tech workers by 2030!

Now, the CEO of OpenAI (parent company of ChatGPT) Sam Altman has called for immigration reform to help embrace the highly skilled workers keen to live and work in the US. In his words:

“One of the easiest policy wins I can imagine for the US is to reform high-skill immigration.

The fact that many of the most talented people in the world want to be here is a hard-won gift; embracing them is the key to keeping it that way.

Hard to get that back if we lose it.”

-        Sam Altman, CEO, OpenAI

In our June issue we reported that other tech leaders are on the same page and pushing for change. According to the Financial Times, tech companies including Intel and Samsung have written to Congress calling for immigration reform, including granting an exception for advanced STEM graduates from overseas so that they are not included in permanent residency quotas.

Altman’s warning is already becoming a reality in the sense that skilled workers are choosing alternatives rather than continuing to tackle the US immigration system. In July, the Canadian government offered up 10,000 work permits to H1-B visa holders in the US, and demand was massive - all 10,000 spots (one year’s worth) were snapped up in just two days!

PerchPeek insights

The US talent market is really tough right now, with immigration barriers derailing efforts to boost recruitment of talent from abroad, despite clear desire from candidates and employers for this.

Three key pieces of advice for People leaders look to push recruitment efforts forward:

  1. When sourcing talent for open roles, consider targeting those already in the US and in need of work (a lot of tech people have been made redundant recently), and transferring them to your location - this may be a low-cost option for recruitment
  2. The H1-B visa system is a lottery, so when the application window opens up again, make sure to keep applying to be in with a chance
  3. By submitting applications for work visas for foreign nationals, it'll keep pressure on the establishment to change the restrictions - so it’s super important!

It’s also important, when seeking overseas talent, to offer a comprehensive relocation package that includes immigration support, and to manage expectations well around timelines.

Cost of living: Inflation hits a two-year low, with gas prices falling significantly and airfares also down - latest stats impacting GM leaders

Living costs have soared over the last couple of years in the US and throughout the world, but the latest data shows prices are starting to stabilise. Here global mobility leaders can find out more about the changing economic landscape and uncover the implications for relocating staff.

So what’s been happening lately in terms of inflation, and which price rises are starting to slow?

Consumer inflation

●      The US inflation rate slowed to 3.0% in June 2023, the lowest since March 2021

●      It peaked at 9.1% in June 2022, on a par with Canada and much of Western Europe

Gas prices

●      Gas was the most significant driving factor behind the consumer price index decline, falling 27% vs. the previous year

●      The Labor Department’s energy index is down 27% over the last 12 months, driving nearly all of inflation’s slowdown

●      “Inflation's move lower highlights the fact that consumers are feeling less pressure at the pump.” - Peter Essele, Commonwealth Financial

Food inflation

●      Food inflation has also fallen month-on-month, from 6.7% in May to 5.7% in June

●      The 2022 peak was in August, at 11.7%

●      The US Council of Economic Advisers (CEA) predicts that grocery inflation will continue improving alongside headline inflation but remain elevated relative to its pre-pandemic levels for the rest of 2023

Airfares

●      The latest federal inflation report shows that airfares fell -8% from May to June 2023

●      This is one of the biggest month-on-month decreases seen in the last few years

●      Between June 2022 and June 2023, average flight prices fell almost -19%, the largest decrease in airfare since February 2021

●      This is also is the first month in over a year where airfares have fallen below 2019 levels

Sources: Forbes, Trading Economics, Numbeo

PerchPeek advice for Global Mobility leaders

As inflation recedes in the US, relocating employees may benefit from a more favourable economic environment, particularly through lower gas prices and airfares. It’s a great idea to share the latest cost of living data with employees to help manage their expectations well and make sure that life in their new city gets off to a flying start, with no unexpected cost crises.

A quick caveat: it’s important to note that falling inflation doesn’t mean that actual prices are falling; they’re still rising, just not as fast as they were previously - so employees are still being squeezed in terms of living costs, compared to a few years ago.

HR and global mobility professionals can also leverage these cost-saving opportunities around airfares and gas to enhance relocation packages, attract top talent, and ensure a smoother transition for employees seeking new opportunities in an increasingly competitive market.

Home-finding: San Francisco overtaken by San Diego as third most expensive US city for renting - latest trends and key stats for GM leaders

This month we’re shining our rental market spotlight on San Francisco, home to tech companies galore from Atlassian to Zendesk! Here’s PerchPeek’s summary of the latest unit prices and trends, and other key updates for People leaders supporting relocating employees.

Rental market update

Key trends at a glance (source: Zillow & Zumper):

●      San Francisco is no longer in the top three most expensive cities to rent in the US

●      The average rent for a 1-bedroom unit in San Francisco is $2,997 - down -2.5% YoY

●      San Diego has overtaken San Francisco for the first time on record and has now taken the number 3 spot - average rent has reached $3,175 per month, up +5.3% YoY

●      San Jose remains the most expensive market, with a typical monthly rent of $3,411, followed by the New York City metro area at $3,405

San Francisco - Breakdown by apartment type:

AI-powered home search

Property platform Zillow is in the process of rolling out new AI-powered features to help hopeful renters to find properties suiting their requirements more easily, drawing on massive amounts of rental pricing, geolocation data, market data, and data specific to the renter.

It’s a super exciting time for enabling more self-serving relocating employees in moving to the US. Watch out for more to come from PerchPeek on this topic!

PerchPeek insights

This latest data showing that San Francisco rent is stagnating ties in with the trends we reported on in our last issue on the US as a whole. The national median rent recently fell by -0.5% YoY, according to a Realtor.com report, which is the first annual rent decline in at least three years.

Yet when it comes to supporting relocating employees looking for homes, it’s important to note that falling prices don’t fix the property supply and demand issue. Indeed, there may be even more competition for more reasonably priced apartments, especially at this busy time of year!

To give employees the best chance of competing in this market and securing a home, it’s vital to equip them with proper support and guidance, such as advice on the best property portals, tips for standing out from the crowd at viewings, and documents to prepare in advance.

Support your talent: Help relocating employees get around and explore their new home with PerchPeek’s guide to car sharing in the US!

In many US cities, the infrastructure means that driving is more of a necessity than an option, and we’re excited to see new sustainable solutions popping up. Car sharing is booming in popularity, offering a low-cost, hassle-free alternative to car ownership and traditional car rental.

Here’s PerchPeek’s quick guide to how car sharing works and the top US providers, to share with relocating employees and help them explore their new home on four wheels!

What is car sharing?

To be clear, car sharing is different from ride sharing (a service offered by Uber and Lyft where you hire a private vehicle and driver to take you from A to B). As useful as this is for city living, we’re talking about on-demand car services where you do the driving!

Car sharing offers short term, instant access to cars to rent by the minute, hour or day.

Why might relocating employees choose it?

●      It’s cost-effective - pay only for the time you need, with fuel and insurance included

●      It’s convenient - pick up and drop off your car 24/7 at handy roadside locations

●      It’s sustainable - fewer cars on the road means less congestion and pollution

●      It’s easy - just sign up and download your provider’s app, use it to search, book and unlock your car, and hit the road!

Car sharing providers in the US

●      Zipcar - coverage in over 400 US cities, rates start at around $9-$10 per hour

●      Getaround - peer-to-peer model (users can rent out their vehicles), 12 states covered

●      Maven - San Francisco, Los Angeles, Detroit, Ann Arbor, starting at $8 per hour

●      Enterprise Car Share - available in 9 cities across 8 states, hourly rates $5-$10

●      Share Now - New York, Seattle and Washington, DC, $15.99 per hour or $69.99 per day

●      GIG Car Share - Sacramento, CA, and soon Seattle, $15 per hour

It’s also worth noting that Uber plans to launch its peer-to-peer Uber Carshare product in North America next year, starting with Boston and Toronto. The service will let users rent out their own cars to other users, who can use the app to browse and reserve vehicles and rent them by the hour or day, with insurance and fuel included. Wheel be keeping an eye on developments!

We hope you enjoyed this month’s update!

If you have any feedback, comments or questions about what's happening in your location, feel free to reach out via the form at the bottom of this page.

Thanks for reading, and see you next month!

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