The Boston-Cambridge-Newton metro area has an overall grade of C, ranking 33.6th percentile out of 50 US metros, with a labor demand composite score of 3.18. This city's economic character is most defined by its low labor demand, with employment growth of -0.80% YoY and weekly hours deviation of -0.598% from its own trend, as well as its extremely high cost of living, with a PSF to wages ratio of 10.94. The cost of living is a major concern, with a percentile rank of 10th, indicating a very expensive city.
Labor Demand
The employment growth rate of -0.80% YoY and weekly hours deviation of -0.598% signal a contraction in labor demand, indicating that the city is experiencing a decline in job creation and a decrease in working hours. This combination suggests that businesses may be reducing their workforce or cutting back on hours, rather than expanding. The labor demand composite score of 3.18, ranking 26th percentile, further reinforces this notion.
Unemployment
The unemployment rate of 3.90% is relatively low, ranking 26th percentile, indicating a tight labor market with some slack. For a business trying to hire in this city, this means that it may be moderately challenging to find qualified candidates, and wage pressure may be present. However, the market is not extremely tight, and businesses may still be able to find suitable candidates.
Wage Growth
The year-over-year wage growth rate of +3.59% is near the median, ranking 46th percentile, indicating moderate wage growth. This means that employer labor costs are rising, but not extremely rapidly, and worker purchasing power is increasing. While this is a positive sign for workers, it may also lead to increased labor costs for businesses.
Cost of Living
The city's cost of living is extremely high, with a PSF to wages ratio of 10.94, ranking 10th percentile, indicating a very expensive city. This means that the city is at a significant disadvantage in terms of talent attraction, as workers may require wage premiums to afford the high cost of living. The fact that PSF is rising 0.4% YoY relative to wages further exacerbates this issue.
Labor Force Growth
The civilian labor force is growing at a rate of +2.87% YoY, ranking 98th percentile, indicating a rapidly expanding labor force supply. This means that the city has a strong hiring capacity, with a large and growing pool of potential candidates. Businesses may find it easier to hire in this city due to the expanding labor force.
Building Permits
The year-over-year change in building permits is -22.81%, ranking 16th percentile, indicating a sharp decline in housing supply. This signals that the city's housing market may be tightening, leading to decreased affordability and increased competition for housing. This could make it more challenging for workers to relocate to the city and for businesses to attract talent.
Days on Market
The current median days on market is 25 days, with a YoY direction of +0.0%, ranking 4th percentile, indicating a very fast-paced market. This means that homes are selling quickly, making it challenging for relocating workers to find housing. The market is highly competitive, and businesses may need to provide relocation assistance to help workers navigate the housing market.
Office Economy
The city has a deep professional talent pool, ranking 74th percentile, indicating a strong presence of office and professional workers. This makes the city well-suited for businesses in the tech, finance, consulting, and HQ sectors, but less suited for industrial or logistics-dominant businesses.
The Boston-Cambridge-Newton metro area offers businesses a highly educated and growing labor force, but its extremely high cost of living and tight housing market pose significant challenges. The single biggest risk or constraint for a decision-maker is the city's high cost of living, which may require businesses to offer wage premiums to attract and retain talent.