Sterling Lexicon offers an insight into what to expect from the US domestic relocation market in 2020.
The first year of the new decade will be very busy - our nation will see a presidential election, a new generation of workers and new technologies are just over the horizon, and the economy is seeing the longest period of uninterrupted growth in its history. These are the relocation trends you should be watching in 2020.
Generation Z enters the job market
Generation Z (Gen Z) are entering adulthood and the workforce in increasing numbers. 2020 will be influenced by how the relocation industry moves these workers into their roles.
While Millennials (Gen Y) will form the largest cohort of workers in 2020, Gen Z will begin entering the workforce at an accelerated rate. These adults, born in the mid-90’s and later, are often considered to be even more Millennial-ish than Millennials themselves. However, early studies may be revealing that Gen Z has significant differences from their Millennial counterparts.
Notice that the qualities of Gen Z are not inherently negative - qualities in this combination can be leveraged to cultivate a worker that is exceptionally engaged in their career. The key word being ‘cultivated’. These qualities likely mean that a Gen Z worker will be more willing to accept relocation than prior generations, but due to higher digitalization and higher likelihood of early workforce entry, may also be less ready-made for any particular position. Despite the differences between Millennials and Gen Z, these disparities might not be so great as to require major restructuring in onboarding and relocation.
For instance, short-term assignments (STAs) may be repurposed for the young workers. STAs are temporary transfers, sometimes across national borders, that last between three months to a year. STAs are especially useful for knowledge transfers, project-based work, and providing international experience. While these transfers might stereotypically be associated with upper-management, STAs may serve multiple purposes for young workers to prove themselves ready for future, larger-commitment relocations, but also be used to fill skill-gaps.
For 2020, the relocation industry should consider whether it can help move these workers into their new careers by integrating mentorship connections into their programmes - thus ensuring that a skills gap doesn’t prevent the right person from getting into the right place. Be sure to remember that like Millennials before them, Gen Z is going to be a diverse cohort of workers - do not limit your relocation candidates to any particular demographics. Also, like Millennials, Gen Z may tend to prefer do-it-yourself and cash programmes, or programmes that allow significant flexibility such as a Core/Flex approach.
Artificial intelligence still too new
Artificial Intelligence (AI) is being presented as the new panacea to all business challenges. However, while one can acknowledge that AI will eventually extend into all areas of work, 2020 is perhaps still too early to re-organise your HR and relocation programmes around AI. Twitter bots going rogue (TayTweets), and facial recognition only being accurate for a single demographic, should serve as warnings against poor applications of this burgeoning technology.
Another caution against AI: while the digitally native Generation Z is likely to easily understand and use new technologies, their discerning eyes will more readily criticise poorly implemented technologies.
An alternative to AI is to consider robotic process automation (RPA). Where AI is very new, RPA is established, reliable, and proven. RPA can be used to alleviate the burden on relocation professionals of tedious data-entry and filling out forms, and instead allow them to focus on more client-oriented tasks. Implementing RPA processes can still be complicated, however, so be sure to commit extra time to understand exactly where and how RPA can support your relocation and talent programmes.
For 2020, be skeptical of accepting AI solutions at face value. This technology requires an educated eye to implement, and an expert to upkeep. It may be more worthwhile to prefer new hires with computer science skills to provide the necessary filter and insight into incoming AI technologies. Fresh talent may give you the edge needed to adapt in the face of disruption.
Strong economic growth, but real estate sales stagnant
The United States is currently experiencing the longest period of uninterrupted real estate growth in its history. The previous record for longest growth lasted from the post-war slowdown in March 1991, to the burst of the dot-com bubble in March 2001 - a period of 120 months. The last recession ended June of 2009 - over 126 months ago. Despite a few doomsayer headlines portending an oncoming recession in 2020, the evidence of such is inconclusive, and the relocation industry should expect continued growth.
The real estate market is filled with signs of unmet demand. Mortgage rates are expected to remain below 3.9% and may drop as low as 3.5%. Housing prices are expected to continue to rise. And the length of time one owns a home between moves is as high as 23 years in some metropolitan areas. These trends are causing younger homebuyers to look for homes in the suburbs.
The increasing trend of home tenure is another way of saying a decreasing trend in domestic migration. While during the 50’s and 60’s, as much as 20% of American families per year migrated to new homes, that number has dropped to 9.8% . This phenomenon is likely being driven by three general factors. First: as said before, increasing home tenure, especially by older generations, will tend to shut younger generations out of the housing market. Second: incomes, adjusted for inflation, have remained mostly flat for the last 35 years, which has a double-effect - not only are Americans having to work harder to improve their standard of living, but flat incomes have led to a swift increase in the number of dual-income households. Anybody familiar with the relocation industry will know that relocating a dual-income household comes with a great deal more involvement than relocating a household with only one income earner. Finally, third: with the increase in telecommunication and telepresence technologies, the requirement for on-site presence is relaxed, which further reduces the need to relocate.
While the yearly domestic migration rate isn’t expected to rise above 12%, the relocation industry may be able to alleviate some of the complications preventing Americans from migrating by offering more sophisticated relocation packages aligned to the trends and market forces described here.
The economic environment within the relocation industry appears to be on an ongoing trend of consolidation with the $400-million acquisition of Cartus Relocation by Sirva Worldwide, Inc in 2019. In the past, consolidation in the relocation industry has occurred sporadically, but in recent years, consolidation has greatly accelerated. We see this trend continuing in 2020 and will likely require the relocation industry to be prepared for further disruption and change.
For 2020, relocation professionals will want to keep their eye on the 2020 housing market and economics news. A recession usually causes business shrinkage and increasing unemployment - a double-edged sword for relocation. While business restructuring may increase relocations, business shrinkage may reduce them. Similarly, unmet demand in the housing market tends to anchor homeowners in place and make real estate difficult to acquire - even in spite of low mortgage rates.
2020 is shaping up to be a year full of exciting challenges. New talent, new policy approaches and new technologies are disrupting an already-tumultuous industry, and the US economy is primed for further rapid changes.