The Sacramento-Roseville-Folsom metro area has an overall grade of C, ranking 34.8th percentile out of 50 US metros, with a labor demand composite score of 4.64 and an unemployment rate of 4.20%. The city's current economic character is most defined by its stagnant wage growth, at +1.25% year-over-year, and its declining labor force growth, at -1.52% year-over-year. These metrics signal a challenging environment for businesses looking to hire and retain top talent.

Labor Demand

The employment growth rate in Sacramento-Roseville-Folsom is +0.57% year-over-year, while weekly hours are deviating -0.456% from the city's own 12-month baseline. This combination signals a moderate expansion of labor demand, but with some signs of strain, as hours are not increasing as quickly as employment. This suggests that while there is some genuine demand expansion, it may not be as robust as in other cities.

Unemployment

The unemployment rate in Sacramento-Roseville-Folsom is 4.20%, which is near the median for US metros. This indicates a relatively balanced labor market, neither extremely tight nor extremely slack. For a business trying to hire in this city, this means that while it may not be extremely difficult to find qualified candidates, it also won't be unusually easy, and wages may not be under significant upward or downward pressure.

Wage Growth

The year-over-year wage growth in Sacramento-Roseville-Folsom is +1.25%, which is in the bottom tier of US metros, ranking 14th percentile. This slow wage growth signals a relatively flat cost environment for employers, but also weak bargaining power for workers. As a result, businesses may not face significant labor cost pressures, but workers may not have strong purchasing power, which could impact local consumer demand.

Cost of Living

Sacramento-Roseville-Folsom has a cost of living score that ranks in the bottom tier, 15th percentile, with a PSF-to-earnings ratio of $343/sqft to $38.27/hr, or 8.96. This means that the city is relatively expensive compared to its peers, which could make it harder to attract talent without offering wage premiums. The fact that PSF is not falling year-over-year, but rather stable, suggests that affordability is not improving, and businesses may need to factor in higher costs of living for their employees.

Labor Force Growth

The civilian labor force in Sacramento-Roseville-Folsom is shrinking at a rate of -1.52% year-over-year, which is in the bottom tier of US metros, ranking 14th percentile. This contraction in labor force supply signals a structural headwind for hiring, as the pool of available workers is declining. This could make it more challenging for businesses to find qualified candidates, and may require them to offer more competitive wages or benefits to attract talent.

Building Permits

The number of residential building permits in Sacramento-Roseville-Folsom is declining at a rate of -1.37% year-over-year, which is near the median for US metros. This suggests that housing supply is not expanding as quickly as in other cities, which could lead to tighter housing markets and reduced affordability in the future. This may impact the ability of businesses to attract and retain workers, particularly if they are relocating from other areas.

Days on Market

The median days on market for homes in Sacramento-Roseville-Folsom is currently 43 days, with a year-over-year decline of -2.3%. This relatively fast pace of home sales suggests a competitive market, which may make it challenging for relocating workers to find housing. However, the fact that days on market are declining suggests that the market is still relatively hot, and businesses may need to factor in the potential for rapid price appreciation and reduced affordability.

Office Economy

The share of professional and office workers in Sacramento-Roseville-Folsom is relatively low, ranking in the bottom tier, 14th percentile. This suggests that the city's talent pool is not as deep in these sectors, and may be more suited to businesses in industries such as logistics or manufacturing. However, businesses in tech, finance, or consulting may find it more challenging to attract and retain top talent in this city.

The Sacramento-Roseville-Folsom metro area offers businesses a relatively balanced labor market and a flat cost environment, but also poses significant challenges in terms of stagnant wage growth, declining labor force supply, and relatively high costs of living. The single biggest risk or constraint for decision-makers is the potential for reduced affordability and competitiveness in attracting and retaining top talent, particularly in professional and office sectors.