Supply and Demand. This basic business principle affects your ability to hire management talent in two critical ways.  Some types of experienced candidates (e.g. chief engineer with tunnel experience) are in short supply -  the demand has resulted in on going open positions and / or increasing salary levels.

The second supply and demand affecting your ability to hire external candidates or promote / transfer internal candidates is the decreasing supply of house inventories in the $ 200,000 to $ 350,000 range.   This is particularly seen in Metropolitan Statistical Areas (MSA), including the urban land of a city and its suburbs as well as the rural land that surrounds them.

Often the lack of a local supply of experienced laundry plant manager, chief engineer, sales manager, service manager or GM candidates necessitates the consideration of candidates who will need to move to your MSA to accept your job offer.   Chances are these candidates are in the middle stages of their career, so they need four bedrooms, a two car garage, and good schools.  Ideally they will move from a comparable MSA and transfer their current home equity into a comparable house in your MSA.  Typically what happens is a chunk of their equity gets eaten up by the broker’s commission and a second mortgage payoff.   As a result, the equity often diminishes to a smaller available down payment for house hunting.

Do the math.  Chances are the candidates will need at least 2500 sq feet. At $125 sq foot the homes will be in the $300,000 range.  If the employee’s salary is in the $ 60,000 range then the monthly take home (after taxes, medical, etc) will be about $3800.  Even if they have $ 100,000 in transferable equity, a 30 year fixed rate mortgage loan for    $200,000 plus taxes will grab at least $ 1800, leaving $2200.  If the spouse isn’t bringing home a second paycheck then this family is in trouble.  

Ten, twenty thirty years ago this dilemma was limited to a handful of MSAs around the US.  Metro New York, Los Angeles, San Francisco traditionally headed the list, with Chicago and Washington DC not too far behind.   In the past two years the sticker shock of 4 bedroom houses has rattled many a candidate taking a plant tour for a prospective job offer or promotion.  With just enough internet research they have enough ammunition to ask for a deal breaking salary or to the dismay of the employer, turn the offer down.

Our industry gets cornered with this issue because in most demographics the urban center of the MSA often has the greater supply of available low wage non exempt workforce, public transportation, existing laundry plant facilities, and proximity to the customers.   Meanwhile, 42 of the top 50 US cities experienced population increases within their city (urban) limits between 1990 and 2000.  These population increases have continued throughout the suburban segment of the MSA.