Talent in your company is both the most important and, yet, the most costly line item to control. How do you balance getting the best people for diverse workforces while ensuring that your talent is affordable?
The general assumption is that higher cost areas – think Bay Area or the Pacific Northwest – are where the best talent pool lies. However, companies leaving Silicon Valley are recognizing that top tech talent and the future of work is not limited to the large, dense and expensive cities. If you are part of a fully distributed company, in particular, you are at an advantage to hire talent that meets your needs and is in a place with lower costs of living and higher quality of life.
Find Talent that Meets Your Needs
The needs of your company highly influence what you look for in the talent that makes your team thrive. If you are looking for talent that will grow within your organization, consider the following factors in the cities from which you hire.
Strong Graduate Pipeline
Following the 2008 financial crisis, many cities recognized that improving their talent pool and investing in their human capital is essential for the economic development of their region. The Capital Region, in particular, has risen as a “talent trader”, investing in university education for skills aligned with the job market of today and tomorrow. The region, comprising cities surrounding Washington, D.C. like Baltimore and Richmond, has quietly attracted and retained some of the country’s most diverse and high-performing tech talent pool.
Cities like Columbus, Nashville, and Raleigh also top the list when it comes to a highly educated and employable population with low costs of living.
Tech Skill Growth
Effective company expansion comes not simply from bringing on those that will be good for your organization today, but considering how their skills will develop for tomorrow. Smart cities tend to have high rates of change in their tech talent pool. This is not to say that they have high turnover rates. Rather, it implies that the pool of tech talent is continuously growing and evolving. The growth of technology use in every economy highlights a need for diverse technical skills that is likely to continue to grow into the foreseeable future.
Some of the fastest growing cities in the US are at the forefront of job creation because of this. With young and diverse workforces, places like Salt Lake City and Denver have become competitive markets for large companies like Amazon, Facebook and Google, as well as medium sized companies like Palantir and Podium that offer innovative and dynamic skills development for their talent.
The competition for top talent is fierce, which means hiring from places that have low turnover rates can, ultimately, lower costs for your organization.
“Your employees are your business. Local business owners know that hiring great individuals and retaining them is critical to their business’s success,” says John Waldmann, co-founder and CEO of Homebase. “Finding and interviewing candidates can take a lot of time but is an investment in the future. When you get hiring right, you can spend your time doing what you love and watch your business thrive.”
Finding talent that is loyal to your organization’s mission and vision can make even your second office or satellite office thrive and encourage your company’s expansion.
The tech sector faces some of the highest employee turnover. Even at some of the largest tech firms, the median tenure of an employee can be as short as one year. Because highly skilled individuals recognize that their skills are transferable, they seek companies that are best for their professional and personal growth and enable them to be in places with a high quality of living.
The cities with the highest average amount of days of employee retention include generally overlooked tech cities like Columbus, Phoenix, Atlanta and Chicago.
Balancing Labor Costs
According to CBRE’s sixth annual Scoring Tech Talent report, the combined costs for talent and occupancy for tech firms are up by as much as 12.5 percent year over year as the job market has tightened and competition for talent has increased.
Labor markets are increasingly improving throughout the US, which means wage inflation is a key challenge for every company as they continue to grow. In certain metro areas, like San Francisco, San Jose and Portland, wage inflation has been the result of the growth of the tech sector as well as rising costs of living. San Jose, in particular, experienced a 5.75% increase in average annual wages due to the high demand of talent in the tech sector.
Lower cost metro areas in states like North Carolina, Ohio and Pennsylvania offer a surprising plethora of tech talent along with low office rental rates and relatively lower wage inflation.
Using One America Works’ City Selector Tool, we looked at talent availability (see STEM index) and affordability (see Operation Cost of a Company) to generate the following list of cities with high quality talent at a reasonable cost:
- Pittsburgh, Pennsylvania
- Sacramento, California
- Madison, Wisconsin
- Orlando, Florida
- Salt Lake City, Utah
One America Works’ new City Selector Tool ranks cities and regions based on customizable data. With 45 data points and over 450 cities, you can have all the information you need to find your company’s next ideal destination within minutes.