The Chicago-Naperville-Elgin metro area has an overall grade of C- with a composite score ranking at the 27.5th percentile out of 50 US metros. This city's economic character is most defined by its low labor force growth rate of -2.46% YoY and its bottom-tier cost of living score, with a PSF to wages ratio of 5.87, indicating a relatively expensive market. The labor demand composite score of 5.43, near the median, also plays a significant role in shaping the city's economic landscape.

Labor Demand

The employment growth rate in Chicago-Naperville-Elgin is +0.22% YoY, combined with a weekly hours deviation of +0.823% from its own trend, signaling a genuine demand expansion. This combination indicates that jobs are being added, and hours are running above trend, suggesting a moderate level of labor demand. The near-median percentile rank of 50th percentile for labor demand composite score further supports this assessment.

Unemployment

The unemployment rate in Chicago-Naperville-Elgin is 4.90%, ranking at the 22nd percentile, indicating a below-average labor market with some slack. This means that while it may not be extremely difficult to hire, there is still some competition for talent, and businesses may face moderate wage pressure. The relatively high unemployment rate compared to other metros suggests that the market is not overly tight.

Wage Growth

The year-over-year wage growth in Chicago-Naperville-Elgin is +3.28%, ranking at the 40th percentile, indicating a moderate pace of wage growth. This rate suggests that labor costs for employers are rising, but not extremely rapidly, and worker purchasing power is increasing at a steady pace. The moderate wage growth rate may attract businesses looking for a balance between labor cost management and worker satisfaction.

Cost of Living

Chicago-Naperville-Elgin has a cost of living score ranking at the 18th percentile, with a PSF to wages ratio of 5.87, indicating a relatively expensive market. The PSF is $221/sqft, increasing by 3.8% YoY, which may deter talent attraction without wage premiums. The low affordability score suggests that businesses may need to offer higher salaries to compensate for the high cost of living.

Labor Force Growth

The labor force in Chicago-Naperville-Elgin is contracting at a rate of -2.46% YoY, ranking at the 4th percentile, indicating a significant decline in the workforce supply. This contraction implies that hiring capacity may be limited, and businesses may face challenges in finding qualified talent. The low labor force growth rate is a concern for businesses looking to expand or establish operations in the area.

Building Permits

The number of building permits in Chicago-Naperville-Elgin has decreased by 42.35% YoY, ranking at the 0th percentile, indicating a severe tightening of housing supply. This sharp decline signals that future affordability and workforce accommodation may be at risk, potentially limiting the city's ability to attract and retain talent. The lack of new housing developments may exacerbate the existing affordability issues.

Days on Market

The median days on market in Chicago-Naperville-Elgin is 36 days, with a YoY decrease of 2.7%, ranking at the 10th percentile. This indicates a relatively fast-paced market, which may be challenging for relocating workers to find housing. The low percentile rank suggests that the market is competitive, and workers may need to act quickly to secure housing.

Office Economy

Chicago-Naperville-Elgin has an office economy score ranking at the 50th percentile, indicating a moderate depth of professional talent pool. This city is suited for businesses that require a balance of office and non-office sectors, but may not be the best fit for companies that rely heavily on specialized professional or office roles. The moderate ranking suggests that the city has a diverse economy, but may not be a hub for tech, finance, or consulting industries.

The Chicago-Naperville-Elgin metro area offers a moderate labor demand and wage growth, but its low labor force growth rate and expensive cost of living are significant concerns. The single biggest risk or constraint for businesses considering this location is the limited workforce supply and potential affordability issues, which may impact their ability to attract and retain talent.