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San Francisco again outpaces the field

San Francisco was the top performing large county economy for the second quarter in a row in 2019Q3, according to new data from the Bureau of Labor Statistics published today.

Year-over-year employment growth in San Francisco in September was 3.5%, up slightly from 3.4% in June. Davidson County (Nashville) was second again, at 3.4%. Rounding out the top five were Wake (Raleigh) at 3.3%, Maricopa (Phoenix) at 3.2%, and King (Seattle) and Travis (Austin) tied at 3.1%. Overall performance among large counties of 500,000 or more jobs was unchanged from 2019Q2, but there were fewer counties with net year-over-year losses in 2019Q3. We should not make too much of quarterly movements given the likelihood of BLS revisions to the data when the full year is available. That said, it appears job growth accelerated in Raleigh and Dallas in 2019Q3 and slowed in Las Vegas and Atlanta.

San Francisco retained its pole position in wage growth among large counties, as well, but it didn’t quite reach the milestone I discussed in November with the 2019Q2 release. The average weekly wage in San Francisco in 2019Q3 was $2,273, up 7.6% on a year-over-year basis, not adjusted for inflation. The average weekly wage in San Francisco was 93% of the average weekly wage in Santa Clara County, which is the narrowest gap for Q3 dating back to at least 2001 (it was 78% as recently as 2011). So we’re not there yet, but the day is coming soon.

Rounding out the top five for wage growth were Hamilton County (Cincinnati) at 6.4%, Wake (5.3%), Denver (5.1%), and Dallas and Tarrant (Fort Worth) tied at 4.9%. Travis (Austin) was next at 4.8%. Davidson (Nashville) was down the list a bit at a very healthy 4.1%.

Interesting side note for the Silicon Valley watchers to keep an eye on: The only large county with a net decline in the average weekly wage in 2019Q3 on a year-over-year basis was Santa Clara (-0.3%). That is the second quarter in a row finishing in the bottom two of the ranking.

Again, not to make too much of it until the revision is out, but notable that the average weekly wage was growing faster in areas of the country like Cleveland and Detroit than it was in Silicon Valley last year.

Next update with 2019Q4 will be on May 20.

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Data Releases

Raleigh economy continues hot streak

For the second month in a row Raleigh, NC, is the fastest growing job market among large metropolitan areas, according to new data released today by the Bureau of Labor Statistics.

Year-over-year job growth in Raleigh was 3.7% in December, ranking first among metropolitan areas with employment of 500,000 or more. Raleigh finished the year with a net gain of about 23,000 jobs, pending a revision to the estimates expected next month by BLS. Rounding out the top five large metros were: Austin (3.5%), Dallas (3.4%), Orlando (3.3%), and San Antonio (3.2%). Nashville was at 1.7%, up by about 18,000 jobs on the year, pending the revision.

There were three large metros posting declines in December: Grand Rapids, Hartford, and Memphis.

At the state level Utah led the way in December at 3.3%, followed by Arizona (2.9%), Idaho (2.9%), Texas (2.7%), and Washington (2.5%). Wyoming, West Virginia, Vermont, and Oklahoma were in negative territory in December for the second month in a row.

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Data Releases

IRS: Davidson County among national leaders in attracting residents from out of state

Davidson County was among the leaders nationally in attracting residents from out of state in 2017-2018, according to new data from the Internal Revenue Service (IRS).

Nearly 17,000 households representing an estimated 25,000 people (see methodology below) moved to Davidson County from other states in 2017-2018, accounting for the majority of all US-based moves to the county (61%). Davidson County’s net gain, or inflow-outflow, of an estimated 3,358 households from out of state ranked 16th among the 100 largest counties in the country. Maricopa County, AZ (Phoenix) had the largest net gain in households at 21,267, followed by Clark County, NV (Las Vegas) at 15,628, and King County, WA (Seattle) at 10,718. Denver and Wake County (Raleigh) rounded out the top five.

Since nominal change tends to favor large counties—i.e. more people, more moves—it can be helpful to normalize the data to account for differences in total population. Looking at net migration of households from out of state relative to total population, Davidson County jumps up to #7 (Denver is first). In other words, people moving to Davidson County from out of state are having a more significant impact on the size of the overall population here compared to the impact of out-of-state migration in most other large, growing counties.

Where are people coming from?

In terms of migration the top “donor” states to Davidson County ranked by inflow of households (with a minimum of 500) in 2017-2018 were:

  1. Florida 1,206
  2. California 1,152
  3. Texas 847
  4. Illinois 761
  5. Georgia 611
  6. New York 598
  7. Alabama 547
  8. Kentucky 508

In net terms (inflow-outflow) Davidson County gained the most households from Illinois (446), California (367), and Florida (337).

The top ten donor counties to Davidson County were:

  1. Rutherford County 2,183
  2. Williamson County 2,045
  3. Sumner County 1,239
  4. Wilson County 1,022
  5. Shelby County 606
  6. Montgomery County 481
  7. Cook County (IL) 465
  8. Los Angeles County (CA) 437
  9. Robertson County 364
  10. Cheatham County 344

The top ten donor counties from out of state were:

  1. Cook County (IL) 465
  2. Los Angeles County (CA) 437
  3. Fulton County (GA) 239
  4. Harris County (TX) 201
  5. Dallas County (TX) 197
  6. Jefferson County (AL) 181
  7. New York County (NY) 166
  8. San Diego County (CA) 160
  9. Maricopa County (AZ) 158
  10. Kings County (NY) 158

Nearly one out of every five households moving to Tennessee from other states went to Davidson County, followed by Shelby County (13%) and Montgomery County (8%).

Methodology

The IRS publishes annual data showing the number of tax returns, exemptions, and total adjusted gross income reported in each state and county and then matches addresses in consecutive years of filings to identify migrants. Analysts use these returns to estimate households and exemptions to estimate people, but they are not matched 1:1.

For example, multiple returns can be filed from the same address, and not all exemptions are people. Generally, returns are a more accurate proxy for households than exemptions are for people, which is why most analysts focus on returns when reporting the data. Time periods are expressed in hyphenated years (e.g., 2017-2018) due to tax filing deadlines. The 2017-2018 data set includes reported income earned in Tax Year 2017 only but could reflect a move in 2018 during the filing period for most returns, January-April 15, 2018. Since a move could occur at any time between when the Tax Year 2016 return was filed and when the Tax Year 2017 return was filed it must be expressed as two hyphenated calendar years.

Finally, not everybody is required to file a tax return, meaning the IRS data does not reflect the total population. Please see the user guide posted on the IRS website for a more detailed explanation of data limitations and appropriate interpretation.

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Data Releases

Health care added nearly $11 billion to Nashville economy in 2018

The health care industry added nearly $11 billion to Nashville’s economy in 2018, according to newly available county-level statistics from the Bureau of Economic Analysis (BEA).

Nashville’s health care industry accounted for $10.996 billion in value-added to Davidson County’s gross domestic product (GDP) in 2018, according to my analysis of BEA’s data, or about $1.50 out of every $10 in total economic value. Health care is 15.3% of total GDP in Davidson County, which ranks first among the largest 100 county economies in the U.S., followed by Bronx (15.1%), Nassau (14.8%), and Kings (13.0%) in New York.

Health care’s inflation-adjusted growth rate of 2.8% in 2018 trailed the Nashville economy overall (4.6%), but the industry’s real value has more than doubled since 2001. Of counties with a health care industry valued at $10 billion or more, only Maricopa, AZ (Phoenix), and Santa Clara, CA, surpassed Davidson’s real growth rate (105%) during 2001-2018.

County-level GDP data is an important milestone for federal statistics programs, especially for counties, like Davidson, belonging to very large metropolitan statistical areas (MSAs), where parsing county-level trends is difficult. Jobs data has been available at the county level for a long time but provides only one indicator of local economic activity. Analysts have been lobbying for publicly available, county-level GDP data for quite some time.

So, on behalf of local analysts and economic developers everywhere, thanks to BEA for this important contribution to our understanding of local economies.

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Data Releases

Brace yourself, San Francisco

San Francisco is approaching a milestone, and not everybody is going to be happy about it: Average wages in San Francisco are approaching parity with Silicon Valley.

Average weekly wages in San Francisco grew by double-digits for the third quarter in a row on a year-over-year (YoY) basis in 2019Q2, according to data released yesterday by the U.S. Bureau of Labor Statistics. The average weekly wage in San Francisco was $2,430 in Q2, up 15.5% (nominal) from a year earlier, which led all large counties by a mile (Seattle was next among counties with at least 500,000 jobs at 6.6%). In fact, San Francisco has now achieved that feat for two quarters in a row. It was the only large county to reach double-digit average weekly wage growth on a YoY basis in Q1 (10.2%); Hamilton/Cincinnati was next at 5.9%.

Wage growth in the Bay Area and Silicon Valley is hardly breaking news. We got the latest reminder just last week with the release of 2018 per capita income data. But yesterday was noteworthy because we could look back when we have more data available and realize that the first half of 2019 was the start of a new chapter in the story about economic geography in the Bay Area and Silicon Valley, one in which the center of gravity for higher earnings shifts from Santa Clara to San Francisco. Citylab followers and their favorite economists have speculated about that for some time. The evidence might be tilting in their favor.

The gap between the average weekly wage in Silicon Valley and San Francisco narrowed to about 7% in 2019Q2, a difference of less than $200. That’s the first time the wage gap in Q2 has been in the single-digits since at least 2001. Why is Q2 significant? It’s not surprising to see the average weekly wage in San Francisco approach or even slightly exceed the average weekly wage in Silicon Valley in Q1, or occasionally Q4, due to the timing of bonuses paid in finance. There are larger numbers of finance jobs in southern California given the size of those counties, but San Francisco has the most significant finance cluster on the West Coast (a jobs LQ of 1.44 and wages LQ of 1.59, for the economists). But the numbers quickly flip back in favor of Silicon Valley in Q2, Q3, and usually Q4. The last notable narrowing of the wage gap in spring or summer was in 2009, and before that in 2002–but not to single-digits.

To understand how quickly things have shifted in the Bay Area labor market, consider how San Francisco compares to New York, historically where you would find the nation’s most highly compensated workers, on average. San Francisco’s recent track record of ludicrous speed wage growth resulted in wage parity, at the average, with New York for the first time in 2016Q3. Less than three years later the gap was 15% in favor of San Francisco.

Will 2019Q3 be the turning point in the story when San Francisco surpasses Silicon Valley? We will find out on February 20.