Companies Follow Talent into New Markets

Signs are growing that the employment market is improving. The economy added 379,000 jobs to nonfarm payrolls in February—the most recent month data is available—and the unemployment rate declined to 6.2%. Perhaps more telling, last week weekly jobless claims totaled 684,000—the first time claims had been below 700,000 during the pandemic.

But certain areas are improving faster. In a new report, Cushman & Wakefield found that the labor shifts that began before the pandemic intensified during the health crisis. Before COVID hit, markets such as Austin and Nashville exhibited higher job posting growth rates than coastal and Midwest markets.

In 2020, Nashville and Fort Lauderdale saw posting activity increase more than 20% for almost all corporate occupier profiles from April to December. Corporate, technology and call center job postings jumped by more than 50% in Phoenix. C&W says these markets are positioned to capture talent migrating to markets with lower costs, better climates and more favorable policy environments.

“The increase in job posting activity is likely an indication these markets will recover quickly and lead to more net-new migration, both in population and corporate relocation,” writes D&W’s Erica Ruder.

But not all of the Sunbelt cities are seeing accelerating job postings. For instance, Austin and Atlanta have experienced a decline in corporate and technology job posting activity since April 2020. Dallas has seen a decrease in corporate job postings during that time. Ruder points out that these areas saw a run-up in the cost of living before the pandemic. Those increases may have pushed those working from home to seek less expensive cities.

The work from home trend will benefit many companies that seek to tap these new talent pools but may not want to establish a physical presence in these markets. 

Indeed, the WFH experiment of the past year has given rise to a so-called “untethered class” of workers who hold remote positions and are unencumbered by homeownership or family obligations, a report from ApartmentList suggests.

These workers are highly-educated, high-earning, and on the precipice of settling down at a median age of 32.  ApartmentList suggests this new untethered class consists of 8.7 million workers, or 5.6% of the total American workforce.

“Given that so many untethered workers are living in the nation’s most expensive housing markets, many may choose to relocate to markets where they can afford to purchase homes and raise families more comfortably,” housing economist Chris Salviati writes in the report. “While such a trend would be unlikely to lead to the demise of superstar cities, it has significant potential to reshape the markets that the untethered class moves to.”

Bolstering this trend, it appears that the allure of moving to new cities is still gripping many Americans. One in three Americans plans to move in the next 12 to 18 months or is undecided about staying in their current residence, according to a recent Pitney Bowes’s BOXpoll.