By Nadine Jeserich, VP Analytics
A promising signal for good recruitment zones for business attraction can be trends in salaries.
With labor costs representing up to 60-80% of production costs, high-wage regions lose a significant competitive advantage. Rising wages in already high-cost locations can signal regions with tight labor markets or a significant cost of living – where businesses are about to get ready to re-think their cost structure and where they might outsource, relocate or expand their highest labor cost segments to other markets.
The semiconductor industry is one of the highest paying non-finance industries – this includes companies manufacturing circuits, memory chips, microprocessors, and similar components.
However, high salaries can also reflect a high productivity workforce and might make it worth the expense.
Think of Switzerland, one of the highest wage countries in the world. They still attract many international companies due to its high skill and high productivity workforce. The table below shows the highest paying counties in the U.S. in that industry, how their salaries stack up against the national average, and the average sales per worker – a measure of labor productivity.
In the U.S., the very top wage counties also show substantially higher productivity as measured by sales per employee. But when we move down the list of areas that are just above average cost but also show high wage growth, we discover some potential targets in Oregon, as highlighted below. Places where wages have increased substantially over the past two years, even though productivity is pretty close to average (at 104% and 108% of national average).
Of course the skill of workers, turnover and other organizational factors play a role in determining whether it’s worth paying higher wage rates.
But it is one of the signals to look for – coupled with other signals on company growth – to narrow down your search for recruitment zones.