The Los Angeles-Long Beach-Anaheim metro area has an overall grade of B, ranking at the 55.3th percentile among 50 US metros, with a composite score driven largely by its strong labor demand and building permits growth. The city's labor demand composite score of 7.11, combining a 1.83% employment growth rate and a 0.253% weekly hours deviation above trend, signals genuine demand expansion. This, along with a 27.28% year-over-year increase in building permits, defines the city's current economic character.
Labor Demand
The employment growth rate of 1.83% and weekly hours deviation of 0.253% above trend indicate a strong labor market with genuine demand expansion. This combination signals that the city is adding jobs at a rate above the national average and that workers are putting in more hours, suggesting a healthy and growing economy. The labor demand composite score of 7.11, ranking in the 86th percentile, further reinforces this assessment.
Unemployment
The unemployment rate of 4.40% places the city in the 64th percentile, indicating a relatively tight labor market with some slack. For businesses trying to hire, this means they may face moderate competition for talent, but it's still possible to find qualified candidates without excessive wage pressure. The unemployment rate suggests a balance between labor supply and demand.
Wage Growth
The year-over-year wage growth rate of 3.57% is near the median, ranking in the 46th percentile. This moderate wage growth suggests that labor costs for employers are increasing, but not at an alarming rate, while workers see a modest improvement in their purchasing power. The wage growth rate is neither exceptionally high nor stagnant, indicating a stable labor cost environment.
Cost of Living
With a cost of living ratio of $642/sqft to $41.84/hr, resulting in a ratio of 15.34, and a percentile rank of 4, the city is relatively expensive compared to its peers. The fact that PSF is falling by 3.0% year-over-year slightly mitigates this, but the city remains one of the more expensive options. This high cost of living could make it challenging to attract talent without offering wage premiums.
Labor Force Growth
The civilian labor force is contracting at a rate of -1.27% year-over-year, ranking in the 24th percentile. This decline in labor force supply indicates a structural headwind for hiring, as the pool of potential workers is shrinking. Businesses may need to adapt their recruitment strategies or consider relocation to areas with growing labor forces.
Building Permits
The 27.28% year-over-year increase in building permits, ranking in the 88th percentile, signals a significant expansion in housing supply. This growth in residential construction suggests that the city is poised to improve its affordability and accommodate a growing workforce, which could attract more businesses and talent in the future.
Days on Market
The current median days on market is 57 days, with a year-over-year change of 0.0%, ranking in the 30th percentile. This indicates a relatively fast-paced market where homes sell quickly, which could make it challenging for relocating workers to find housing. The stable days on market suggests that the housing market is not experiencing significant fluctuations.
Office Economy
With an office/professional worker share composite score of 2.08, ranking in the 30th percentile, the city has a relatively shallow professional talent pool. This makes it less suited for businesses in tech, finance, consulting, or HQ decisions that require deep knowledge-economy talent, but it might be more appropriate for industries with different workforce needs.
The Los Angeles-Long Beach-Anaheim metro area offers a strong labor demand and an expanding housing supply, making it an attractive location for businesses looking to grow. However, the single biggest risk or constraint for decision-makers is the high cost of living, which could necessitate wage premiums to attract and retain talent, potentially offsetting some of the benefits of the city's strong labor market and growing economy.