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While assessing a prospective location’s workforce may begin with a review of the data, a qualitative evaluation can provide new information not easily apparent from any desktop research.
There are few subjects about which more ink has been spilled in the last three years than the state of the U.S. workforce. From the impact of business shutdowns and enhanced unemployment benefits on labor participation, to pent-up challenges bringing critical supply chain workers to the verge of major strikes, and the more recent “quiet quitting” trend impacting even the most progressive office environments — HR and executive teams tasked with selecting new company locations are faced with more complexity than ever before. Even in the face of such fast-changing dynamics, growing companies must still plan for a stable workforce, separating the short-term impacts from the long-term realities, and compare potential communities accordingly.
While none of us has a crystal ball, there are proven methods to evaluate and measure a community’s workforce “fit” for a specific project. In this evaluation, it is important to look not only at the data, but also at the qualitative factors that are specific to each market to ensure you can recruit competitively and retain the workforce needed to be successful.
My team and I are spending more time evaluating labor than ever before, and it continues to be a major concern for our clients in making a final location decision. Our reports are comprised of both robust data analytics and thorough contextual examination of our client’s potential locations.
Quantitative
Our labor evaluations begin with a detailed look at a community’s workforce data: population size, population growth, average age, wages, labor participation, unemployment rates, etc. In addition to the community’s overall workforce, we use standard occupation classification (SOC) codes to analyze particular segments of the labor pool relevant to our client’s employment profile.
An important consideration when performing such an analysis is how to set the geographic region to evaluate. Employment data, especially for key metrics like wages, can be highly localized. Unfortunately, too often the data is reported at levels — such as by MSA or county — that skews its usefulness for evaluating a particular site or building. Some economic development organizations (EDOs) and research platforms report population and labor data using a mileage radius, which — particularly in any large metro — may vastly overstate the actual commutable area. Our team uses granular zip-code-level data based on driving distances to ensure accuracy in our methodology and reporting.
We also pay close attention to data trends. While not perfect (and COVID certainly added an interesting wrinkle to most data sets!), past performance is still the best predictor of future outcomes. Our team examines growth rates in population, industry metrics, wages, and other customized topics to understand a community’s dynamics and how our client’s needs fit into the long-term outlook.
Qualitative
In addition to the data review, as part of our labor analytics for site selection projects, we conduct dozens of interviews each year with existing employers across the U.S. to help our clients understand what’s working — and what isn’t — in local labor markets. This information can not only illuminate and contextualize the data trends but can also provide new information that won’t be easily apparent from any desktop research. Information about major competitors, shift schedules, wage pressures, community dynamics, and other variables are factors all decision-makers should be investigating as they select a new location for any type of operation.
Key Issues
- Time — COVID left us with many lessons, but for the U.S. workforce, the most significant realization may be that life is short and precious — leading many employees to reassess their work-life balance. Understanding how your competitors are approaching this issue in your finalist locations can ensure you can meet prospective employee expectations and be competitive in hiring.
In some communities, this trend has impacted how employers are scheduling shifts. In particular, workers are pushing back against mandatory overtime or shift schedules extending five, six, or seven days. Many manufacturers and distributors who can shift to a schedule of four 10-hour shifts with a three-day weekend, or even three 12-hour shifts, and still meet production requirements, are doing so. It is important to understand how your preferred shift schedule fits with what’s offered in your target community (or provides an alternative not currently in the market).
In communities that have seen a slower rebound to pre-COVID labor participation rates, this is sometimes due to factors such as childcare availability or schooling impacting working parents. To account for this, some companies are supplementing with part-time opportunities to replace full-time roles or backfill absent employees where needed. I’ve heard from companies hosting job fairs for part-time-only roles for which they’ve received hundreds of applicants — among them, parents needing a second income, college students, or even baby-boomers who have retired but may want to reenter the workforce less than full-time. This move to include part-time roles can take some time to accomplish but can help companies tap into an additional pool of candidates not currently participating in the workforce or underemployed in part-time service roles.
- Training — Just as every community is “a great place to do business,” you’d be hard pressed to find a community without an extensive workforce development ecosystem. Nearly every city and county has resources in place — regionally, if not locally — to support workforce development for groups ranging from K–12, technical, and community college students to exiting service members and formerly incarcerated persons. Without clear quality indicators to provide benchmarks, it can be confusing and difficult to assess a community’s workforce resources and their ability to provide customized training and qualified candidates for your project.
A great place to start is identifying existing programming for alignment with your skill and credential needs. Visit the training centers to view equipment and speak to instructors about coursework. Request the school’s data on enrollments, graduations and credentials earned, and placement. Ask about partnerships serving middle- and high-school students. Are the existing industries engaged and providing hands-on opportunities to explore students’ career pathways? If your company’s needed training isn’t available, or existing programming needs to be tailored to meet your needs, ask for case studies based on similar efforts for other projects. Get feedback from the HR teams of existing companies using the training to understand its ease of use, flexibility, and ability to meet relevant industry standards.
Finally, don’t discount the importance of training and leadership development for non-production roles. Turnover data reveals what most of us already know anecdotally: workers don’t leave bad companies; they leave bad bosses. Due in part to the wave of early retirements — which is still ongoing — there is a tremendous gap in leadership development for the first-time managers who fill many supervisor positions. It is important for decision-makers to understand what a community’s resources are for training not only technical skills but interpersonal, communication, and management skills for these roles as part of their training plans, as well as supporting existing internal company training programs.
- Diversity, Equity, and Inclusion — As the national conversation about company stewardship in environmental, social, and governance (ESG) areas has progressed, it is important to consider how your company’s priorities for diversity, equity, and inclusion (DEI) can be met in the community you select. This begins with learning about the diverse populations and their history in each community you are evaluating, as well as how an equity and inclusion framework is part of the existing workforce and education programs. The history, population composition, and culture of your final location can support (or hinder) your company’s ability to successfully build an equitable and inclusive team, so it should not be ignored in the evaluation process.
- Regulatory Environment — Another factor employers want to evaluate in their location decision is the region’s legalization of marijuana for medical or recreational purposes. In states that have any form of legalized use, as well as states with stricter controls, employers and staffing agencies are seeing higher incidences of THC on pre-employment drug-testing panels. Many manufacturers and transportation industry employers maintain a zero-tolerance policy for safety and insurance reasons, but many others have chosen to relax their standards. If your company is considering a new location in a state that’s legalized cannabis for any purpose, it is important to evaluate how that will impact your potential labor pool based on your company’s policies and insurance requirements.
- Housing — Another factor often missed or neglected in a location decision is the community’s available housing at all price points. We’ve seen many communities interested in recruiting manufacturing and distribution operations that aren’t willing to support multifamily housing or affordable single-family developments. Evaluate a community’s number of new units built and pipeline of new developments to ensure that your workforce can sustainably commute a reasonable distance to the facility and that the community’s housing can support a growing workforce.
- Quality of Life — Quality of life is one factor that is hard to pin down but remains as important as ever for every type of workforce. The important thing to remember when comparing multiple locations is that quality of life often means different things to different types of workers and different generations. Quality of life for recent graduates often means walkable urban communities, outdoor recreation assets, and entertainment amenities, while quality of life for mid-career professionals may place more emphasis on excellent schools, lower commuting times, and family-oriented amenities. If you can’t have all of these in one place (which is often the case), understand the workforce you’re targeting (or relocating) and how to choose a location that can meet those needs.
In Sum
The question of how long this new normal dynamic will last is an open one. As the economy moves into a potential recession, employees may lose some of the leverage they’ve been accustomed to through the pandemic. As labor costs continue to increase, our clients are also investing heavily in automation to reduce their labor profile. While this is nothing new, it indicates that more changes are in store for the talent market of tomorrow. This is why it is essential to conduct a multi-faceted evaluation of your potential locations to ensure long-term success in your location of choice, as well as periodic evaluations of your market once you are operational to ensure you are adapting to stay competitive as an employer of choice in your new home.
About The Author
As a leader in Maxis Advisors’ Location Advisory and Incentives group, Lauren Berry works to create a win for both client and community through the site selection and incentives negotiation process. In this role she leverages her robust economic development experience to advise both domestic and international clients on meaningful talent, location analysis, and credits and incentives solutions for projects of all sizes. Prior to joining Maxis, Lauren began her career in economic development at the Youngstown/Warren Regional Chamber in Ohio. She earned the Ohio Certified Economic Developer (Ohio CED) credential and served on the board of directors for the Ohio Economic Development Association. She is a graduate of Patrick Henry College and active member of the PHC Alumni Association. She and her husband reside in Charlotte.