Fresno, with an overall grade of C and a composite score ranking it 32.5th percentile among 50 US metros, is characterized by its below-average labor demand and high unemployment rate, with 7.70% of the labor force unemployed. The labor demand composite score of 4.90 and unemployment rate are the two metrics that most define this city's current economic character, with the latter being a significant concern for businesses looking to hire. Specifically, the combination of a low labor demand score and high unemployment rate suggests a challenging environment for businesses.

Labor Demand

Fresno's employment growth rate is +0.79% year-over-year, while weekly hours are -0.503% below the city's own trend, indicating a labor market that is not experiencing genuine demand expansion. This combination signals a contraction in labor demand, rather than a survivor squeeze, as hours are below trend despite some job growth. The labor demand composite score of 4.90 is below average, ranking 38th percentile.

Unemployment

The unemployment rate in Fresno is 7.70%, which is the lowest percentile rank, indicating a significant amount of slack in the labor market. This means that the market is not tight, and businesses may find it easier to hire workers, but may also face weaker local consumer demand. The high unemployment rate has a practical implication for businesses trying to hire, as they may have a larger pool of potential candidates to choose from.

Wage Growth

Wage growth in Fresno is +4.51% year-over-year, which is above average, ranking 66th percentile. This rate of wage growth is relatively fast, which implies rising labor costs for employers, but also good news for worker purchasing power. As wages rise, businesses may need to adjust their compensation packages to remain competitive, while workers may see an increase in their disposable income.

Cost of Living

Fresno has a cost of living score that ranks 43rd percentile, with a PSF of $263/sqft and average hourly earnings of $34.06/hr, resulting in a ratio of 7.72. This means that the city is near the median in terms of affordability, neither particularly expensive nor cheap compared to its peers. The fact that PSF is rising +0.4% year-over-year relative to wages suggests that affordability may be decreasing over time. This has implications for talent attraction, as businesses may not need to offer significant wage premiums to compensate for the cost of living.

Labor Force Growth

The civilian labor force in Fresno is shrinking at a rate of -1.42% year-over-year, indicating a contracting labor pool. This means that the supply of workers is decreasing, which may pose a structural headwind for hiring and business expansion. As the labor force contracts, businesses may need to compete more aggressively for a smaller pool of potential candidates.

Building Permits

The number of building permits in Fresno is decreasing at a rate of -6.89% year-over-year, which signals a tightening of the housing supply. This decrease in permits may lead to a supply squeeze in the future, making it more difficult for workers to find affordable housing and potentially eroding the city's attractiveness to relocating workers. The near-median percentile rank of 40th suggests that this trend is not drastically different from other cities.

Days on Market

The median days on market in Fresno is 57 days, with a year-over-year change of +0.0%, indicating a relatively stable market. However, the below-average percentile rank of 28th suggests that homes are selling relatively quickly, which may make it challenging for relocating workers to find housing. This could be a concern for businesses looking to attract talent from outside the area.

Office Economy

Fresno's professional and office worker share is relatively low, ranking 18th percentile, indicating a shallow talent pool in these sectors. This suggests that the city is not well-suited for businesses that require a deep knowledge-economy talent pool, such as tech, finance, or consulting firms. Instead, the city may be more suitable for businesses with industrial or logistics-dominated economies.

In conclusion, Fresno offers a unique combination of below-average labor demand and high unemployment, which may make it an attractive location for businesses looking for a large pool of potential candidates. However, the single biggest risk or constraint for businesses is the city's shrinking labor force, which may pose significant challenges for hiring and expansion. Decision-makers should carefully consider this factor when evaluating Fresno as a potential location for their business.