🦜 PerchPulse - USA Market Update August 2022 🦜

PerchPulse USA Market Update August 2022

The latest and most relevant info on talent, immigration, business, and cost of living in the US, to help HR people stay close to events and support their people strategy.

A big feathery welcome!

Hello and welcome to PerchPeek's August 2022 USA Market Update! 

PerchPeek’s relocation specialists are here to offer insight into top mobility challenges and industry trends. We’re always keeping up with the latest international market trends that matter most to HR leaders, their teams, and their employees, helping them move and support their employees globally. Each month, we curate a monthly newsletter that includes our research and insights to better assist as many HR professionals as possible.

Fly-by summary:

  • Record number of Americans are quitting their jobs, according to the US Labor market. Yet, massive worker shortages remain across industries.
  • Housing and cost of living have risen sharply due to supply-side inflation. Inflation in the US reached a whopping 9.1%, the highest since 1981. 
  • Rental prices are rising steadily due to the supply and demand imbalance, particularly in corporate cities such as Texas, New York, and California. 
  • The US is technically in a recession, having had two quarters of negative GDP growth in 2022. However, the government fails to admit this for political reasons and leading economic indicators including labor growth and wage increase. 

Talent & Migration

The US economy sees a strange dilemma with record quit rates and hiring reductions.

US Labor Department data shows that the number of people who filed for unemployment benefits dropped by 5,000 in the last week of July, although it’s still at a nine-month high. This year's increase in initial jobless claims, which coincides with a rise in job cutbacks and hiring freezes, is indicative of the persistently high unemployment rate.

In recent weeks, Silicon Valley tech companies have significantly reduced employment. Across 64 companies, 32,000 people were let go from their positions in July, whilst many others have announced they will enter hiring freezes due to the uncertain global economy. Other industries, including crypto, housing, and automobiles, are following suit.

Despite some large corporations delaying or freezing employment in specific areas, some companies are still hiring in highly skilled technical professions, such as Spotify and Alphabet.

US Labor Market: The US faces massive worker shortages

The pandemic has exacerbated the labor market's severe challenges, and recent data shows the economy is still yet to fully recover from the impact COVID-19.

The graph below indicates employment recovery is still behind pre-pandemic levels (1.8 percent below the pre-pandemic rate). 

Labor shortages across industries had been caused by colossal quit rates, knowledge gaps, and higher costs of replacing and training employees, given global economic challenges and many employees looking to new industries and professions in the post-pandemic world.

The table and graph below show how companies have experienced a gap in employment levels across almost all age groups, resulting from record high quit rates in the workforce.

The next table shows how the quit rate has rocketed to record levels in the past two years, almost double that of 2012. Employers are having to replace one of three workers per year.

With these impacts being felt in many industries, the effects are likely going to be felt or observed by your own teams. We’d recommend looking for immediate opportunities to provide additional motivation for your employees. These might include:

  1. Encouraging a healthy work-life balance.
  2. Incentivizing productivity.
  3. Eliminating toxicity in the workplace.
  4. Providing on-the-job training to help retain talent. 

States Are Using Relocation Benefits to Attract Talent 

Some states and cities are offering substantial relocation incentives to entice individuals to relocate to their area. The following states offer sizable relocation benefits: Alabama, Alaska, Arkansas, Georgia, Iowa, Kansas, Maine, Maryland, Michigan, New York, Ohio, Oklahoma, Vermont, and West Virginia.

Incentives include:

  • Maine is offering up to $40,000 in student loan forgiveness.
  • West Virginia is offering up to $12,000 in cash.
  • Rochester, New York is offering up to $10,000 in relocation incentives, and the same in homebuyer incentives.
  • Topeka, Kansas is offering up to $15,000 for remote workers and up to $10,000 for local employees.
  • Vermont is offering a 'New Relocating Worker Grant' of up to $7,500.

HR teams and businesses may be well advised to keep abreast of developments in state incentives, as these could combine with their own attempts to attract talent, and may even dictate strategy when scouting locations for new offices. 

Texas Growing as America’s New Business Hub

As of July 2022, Texas has become home to 53 Fortune 500 companies. Big corporations to make such recent moves include Tesla and HP (Hewlett-Packard Enterprise). The recent influx is owed to the state’s business-friendly policies. The economic environment in Texas makes a convincing case to move a company across the country. Of course, more businesses mean more jobs and opportunities attracting top talent to the lone star state. 

Primary Drivers for Texas Relocation:

  • Texas’ combined corporate tax rate is 21%, among the lowest in the US. 
  • Texas has a lower than average cost of living, even with inflation running at an 8% rate nationwide. 
  • Corporate rent is relatively low compared to other states.
  • Electricity costs are about half of what they are in New York and California. 
  • Average gas prices are significantly cheaper.

Employee Benefits Trends

Companies expanding abortion benefits after Roe v. Wade was overturned.

Numerous companies are expanding their abortion benefits package off the back of the US Supreme Court’s overruling of the Roe v. Wade decision, which federally legalized abortion in 1973. 

Abortion benefits include monetary packages to help with abortion-related expenses such as travel and healthcare. In some cases, benefits cover the spouse as well as the employee.

A few companies that have expanded coverage include Amazon, Bank of America, Bumble, Buzzfeed, Citigroup, and CNN. Canadian companies have also adopted these benefits for their US employees.

"The overwhelming majority of CEOs want to remove barriers to people who choose to have an abortion to access the procedure, without taking a position on whether abortion is good or bad," said Johnny C. Taylor Jr., President and CEO of the Society for Human Resource Management..

HR managers should note that adding abortion benefits may prove to be really important in employment packages to retain talents in a company.

Housing & Cost of Living

Exponential price hikes threaten livelihoods across the US.

The inflation rate in the US economy is at 9.1%, the highest since 1974. This is drastically increasing the cost of living for Americans, and the Federal Reserve has increased interest rates by 0.75 percentage points to try and combat it.

Rental prices continue to increase sharply.

Home and rental prices are rising for middle-class citizens in the US. Steep increases, especially in populated areas, unfortunately see no signs of slowing anytime soon.

Nationwide, the median rent for a one-bedroom apartment is up 11.3%. Rent for a one-bedroom unit in Greensboro, North Carolina, has increased 6% over the past month and 30.9% from July of last year. Similarly, the average cost of renting a one-bedroom unit in New York City has reached an all-time high of $3,780.

The table below shows the average rent in cities across the US.

How to help your employees:

  1. Be aware of rental costs and hardships your employees might face.
  2. Offer work/life flexibility to enable employees to move fast and secure a home in these extremely competitive housing markets.
  3. Employers should consider moving businesses to friendly cities that offer relocation relief packages.

Business & Economy: Recession Fears Resurface

Fears of a recession in the US are prevalent, especially after reports have shown two consecutive quarters of GDP decline (the economy contracted 1.6% and 0.9% in Q1 and Q2 respectively). 

The chart below shows how GDP has declined so far in 2022.

Economists do not all agree that the US is actually in recession due to positive elements in the economy that include an increase in wages and personal spending. However, business growth is being slowed by the rise of interest rates, up to 2.50% by the Federal Reserve in an effort to tame inflation caused by the war in Ukraine, the pandemic, and China’s Zero-Covid policy all causing supply-chain constraints in the economy.

Conclusion

These are challenging times for employers and employees alike. Whilst the government and Federal Reserve are doing all to curtail inflation, HR teams and employers should do everything possible to help their employees. Constructing an engaging, rewarding, and exciting workplace (and where possible, providing financial support to help combat inflating costs of living) will be essential in maintaining workers' morale in this tough period. 

Consider ways to help employees maintain a good work-life balance; perhaps implementing abortion packages and state-led accommodation relief to help ease the high cost of living.

Thanks for reading! See you next month!

Questions About Moving Employees or What We Do At PerchPeek?

No matter where your business is located, or how many employees you have to move, the relocation experts at PerchPeek are standing by at all times to answer any and all questions that you may have about moving and taking care of your most important business asset, your team! Feel free to click here to reach out for a call with us or book a demo to see exactly how PerchPeek can work for you and your teams!

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