Birmingham, with an overall grade of C- and a composite score ranking it 34.3th percentile out of 50 US metros, is characterized by its below-average unemployment rate of 3.50% and stagnant wage growth of -0.40% year-over-year. These two metrics most define the city's current economic character, indicating a tight labor market with limited upward pressure on wages. The labor demand composite score of 5.99, ranking in the 68th percentile, suggests a moderate level of job growth.
Labor Demand
The employment growth rate of +1.24% year-over-year, combined with a weekly hours deviation of -0.047% from the city's own trend, signals a genuine demand expansion, albeit with some moderation in hours worked. This combination indicates that the city is adding jobs, but the pace of hours growth is slightly below trend. The labor demand composite score of 5.99, ranking in the 68th percentile, confirms this assessment.
Unemployment
The unemployment rate of 3.50% is below the national average, indicating a tight labor market with limited slack. This means that businesses trying to hire in Birmingham may face challenges in finding available workers, leading to potential wage pressure. With a percentile rank of 36, the city's unemployment rate is lower than 64% of the metros in the comparison set.
Wage Growth
The year-over-year wage growth rate of -0.40% is stagnant, indicating that labor costs for employers are not rising significantly. However, this also means that worker purchasing power is not increasing, which could have implications for local consumer demand. As the 2nd percentile rank suggests, Birmingham's wage growth is among the weakest in the country.
Cost of Living
With a cost of living ratio of $157/sqft to $32.33/hr, and a year-over-year decline of -0.6% in PSF, Birmingham is relatively expensive, ranking in the 29th percentile. This means that the city may struggle to attract talent without offering wage premiums, as the cost of living is higher than in many peer cities.
Labor Force Growth
The civilian labor force is contracting at a rate of -0.74% year-over-year, indicating that the supply of workers is shrinking. This contraction will likely create a structural headwind for hiring, making it more challenging for businesses to find the talent they need. The 34th percentile rank confirms that Birmingham's labor force growth is weaker than most metros.
Building Permits
The year-over-year change in building permits is -23.78%, indicating that housing supply is tightening. This decline in permits suggests that future affordability and workforce accommodation may be at risk, as the supply of new housing is not keeping pace with demand. The 10th percentile rank is a concern, as it indicates that Birmingham's permit activity is among the weakest in the country.
Days on Market
The current median days on market is 66 days, with a year-over-year increase of 10.0%. This means that homes are sitting on the market for longer periods, indicating a slower and more buyer-friendly market. However, for workers relocating to Birmingham, this may make it easier to find a home, as the market is less competitive.
Office Economy
With an office/professional worker share of 2.58, ranking in the 52nd percentile, Birmingham has a near-median depth of professional talent pool. This makes the city suitable for businesses that require a moderate level of specialized knowledge workers, but it may not be the best fit for companies that require a deep pool of tech, finance, or consulting talent.
In conclusion, Birmingham offers a tight labor market with limited wage pressure, but also a shrinking labor force and stagnant wage growth. The single biggest risk or constraint for businesses considering locating in Birmingham is the potential difficulty in attracting and retaining talent due to the city's relatively high cost of living and limited housing supply.