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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

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.