By Walter Bialas, August 16, 2018
Balancing opportunity with cost of living
We’ve all been enjoying a robust economy over the last several years – especially in some of the larger markets around the US. In almost all areas, unemployment is extremely low. The last time we saw national unemployment at its current level of 4.2% was in 2000. Job growth is high and working millennials (those aged 25 to 34 years old), who are now shaping our workforce, are in high demand. According to the Bureau of Labor Statistics, unemployment for them is even lower at 3.9%.
It is not a surprise that wages have begun to move up at this point in the cycle for many jobs. Based on our review, the average household income in the US is now $83,700 – and millennials, many who are beginning or in the early stage of their careers are not far behind at $75,400.
We reviewed the top-45 largest US metro areas to see how these incomes were trending. Overall, incomes are up from when we last investigated this topic a couple of years ago with some astounding differences between markets. For example, in California’s Bay Area, the average millennial household earns close to $115,000 annually. Likewise, Boston and Washington, DC both have broken the $100,000 mark.
Cost of living, however, is an important factor in these high growth areas. In fact, the exorbitant living costs in these areas makes those incomes much less impressive. Using the Council for Community and Economic Research, living costs in these areas are 150% to almost 200% higher than the US average.
While most other markets are less extreme, understanding a local area’s cost of living is critical in assessing the livability of an area. Overall, job opportunity and income is a delicate balance, especially for millennials who are beginning careers, thinking of starting families – and paying off sizable student loan debt.
So, where exactly is the “value of a dollar” for these millennial households the highest? We looked at roughly the top 45 markets that JLL tracks and identified select markets on the map below that have been showing strong vitality in job gains, as well as more modest growth engines. This effort allowed us to compare local millennial incomes to the US millennial average and provide a clearer, more comprehensive view of the numbers when comparing one metro to another. To be fair, many other medium to smaller markets have good incomes and lower costs of living, but the scale of growth in these markets can limit job opportunities for millennials entering the workforce and progressively advancing their careers. You can click on the map and see our interactive review of the major US markets.
As we look more broadly at our findings, the Texas markets come out on top. This is due to the above average incomes, combined with a much lower cost of living – driven mostly by more affordable housing prices and apartment rents and no personal state income tax. The Texas metros are also fast growing from a jobs perspective. As such, opportunities abound across industries and across different labor classes. In terms of the base numbers – the average income of a millennial will feel $1,100 to $7,300 higher in Texas than the US average – which means the value of their dollar goes further – and they can enjoy a higher quality of life.
The table details the average household income for working millennials in several markets across the US and walks through our cost of living adjustment based on information from the Council for Community and Economic Research.
From a talent pipeline perspective – both talent acquisition and retention – these differences are critical in recruiting across all industries. Interestingly, DFW and the other major Texas markets, can be viewed as prospective catalysts or “money magnets” for the working millennial – where diverse job opportunities are growing, career advancement is high, and above average spending power puts you ahead of your peers in other markets.