The Sacramento-Roseville-Folsom metro area has an overall grade of C+ with a composite score ranking it 38.8th percentile out of 50 US metros. This city's economic character is most defined by its labor demand, with a composite score of 5.87 ranking it in the 62nd percentile, and its cost of living, which is in the 26th percentile due to a PSF to wages ratio of 8.82. The labor demand and cost of living metrics signal a mixed economic environment, with some positive trends in job growth but also challenges in affordability.

Labor Demand

The employment growth rate in Sacramento-Roseville-Folsom is +0.76% year-over-year, combined with a +0.508% deviation in weekly hours from its own trend, indicating genuine demand expansion. This combination signals that the city is experiencing a moderate increase in jobs and hours worked, suggesting a growing economy. The labor demand composite score of 5.87, ranking in the 62nd percentile, further supports this interpretation.

Unemployment

The unemployment rate in Sacramento-Roseville-Folsom is 5.00%, ranking in the 36th percentile, which indicates a moderate level of slack in the labor market. This rate suggests that while the market is not extremely tight, it is also not overly loose, making it a relatively neutral environment for businesses trying to hire. However, the moderate unemployment rate may still pose some challenges for finding the right talent.

Wage Growth

The year-over-year wage growth in Sacramento-Roseville-Folsom is +2.02%, ranking in the 24th percentile, which is below average. This slow wage growth suggests that labor costs for employers are not rising rapidly, but it also implies that worker purchasing power is not increasing significantly. As a result, businesses may face a relatively stable labor cost environment, but workers may not have strong bargaining power.

Cost of Living

Sacramento-Roseville-Folsom has a cost of living score in the 26th percentile, with a PSF to wages ratio of 8.82, indicating that the city is relatively expensive. The PSF is $339/sqft, which has decreased by 0.9% year-over-year, slightly mitigating the affordability concerns. However, the overall affordability score suggests that the city may struggle to attract talent without offering wage premiums to compensate for the high cost of living.

Labor Force Growth

The civilian labor force in Sacramento-Roseville-Folsom has contracted by -1.92% year-over-year, ranking in the 10th percentile, which indicates a shrinking labor pool. This decline in labor force growth poses a significant structural headwind for hiring, as businesses may face challenges in finding qualified workers to fill open positions.

Building Permits

The number of residential building permits in Sacramento-Roseville-Folsom has increased by +21.94% year-over-year, ranking in the 74th percentile, which suggests that housing supply is expanding. This growth in building permits is a positive sign for future affordability and workforce accommodation, as it may help to alleviate some of the pressure on the housing market.

Days on Market

The median days on market for homes in Sacramento-Roseville-Folsom is 50 days, with a year-over-year decrease of -2.0%, ranking in the 14th percentile. This relatively fast pace of home sales suggests that the market is competitive, and relocating workers may face challenges in finding and securing housing.

Office Economy

The share of professional and office workers in Sacramento-Roseville-Folsom is 0.78, ranking in the 8th percentile, which indicates a relatively shallow talent pool in these sectors. This city is best suited for businesses that do not require a deep knowledge-economy talent pool, such as industrial or logistics-dominant companies, but may not be ideal for tech, finance, or consulting firms that rely on specialized office workers.

The Sacramento-Roseville-Folsom metro area offers a mixed economic environment, with some positive trends in labor demand and building permits, but also challenges in affordability and labor force growth. The single biggest risk or constraint for businesses considering this location is the shrinking labor pool, which may pose significant challenges for hiring and talent acquisition.