Employment Base Analysis

Total nonfarm employment provides the broadest measure of economic activity. Track 3-year and 5-year compound annual growth rates (CAGR) to identify acceleration or deceleration. Compare metro job growth to the national average (approximately 1.5% annually during expansions) to identify outperformers. The employment-to-population ratio reveals labor market tightness—ratios above 60% indicate tight labor markets that attract in-migration. The unemployment rate at the metro level (available monthly from BLS) provides a cyclical indicator. Average weekly wages by industry (from QCEW data) reveal the income quality of employment—a metro adding 10,000 jobs in technology ($120K average salary) has very different housing demand implications than one adding 10,000 jobs in hospitality ($35K average).

Industry concentration is one of the most underappreciated risks in market selection. A metro where a single sector represents more than 15% of total employment is vulnerable to sector-specific downturns. Houston experienced a 20% apartment vacancy spike in energy-dependent submarkets when oil prices collapsed in 2015-2016. Detroit's housing market collapsed alongside the auto industry in 2008-2009. Calculate a Herfindahl-Hirschman Index (HHI) of employment concentration by summing the squared employment shares of each major sector. An HHI below 0.10 indicates a well-diversified economy; 0.10-0.18 indicates moderate concentration; above 0.18 indicates high concentration risk. The strongest markets combine rapid job growth with diversification across technology, healthcare, education, professional services, and government—ensuring that no single sector downturn can derail the local economy.

The shift to remote and hybrid work since 2020 has partially decoupled housing demand from employment geography. Workers earning San Francisco salaries while living in Boise, Raleigh, or Nashville increase housing demand (and purchasing power) in destination metros without those metros needing to add the corresponding jobs locally. The Stanford Working from Home survey estimates that 28% of paid workdays occur at home as of 2024, down from a peak of 47% in 2020 but far above the pre-pandemic 5%. This structural shift has two implications for demographic analysis: (1) metros with strong quality-of-life amenities can attract demand beyond their local employment base, and (2) traditional employment-to-housing-demand ratios may understate demand in attractive mid-cost metros that receive remote workers. The effect is most pronounced for knowledge workers—approximately 35% of employment in metros like Austin, Denver, and Raleigh is remote-eligible.