The Chicago-Naperville-Elgin metro area has an overall grade of D, ranking in the 22.5th percentile out of 50 US metros, with a labor demand composite score of 3.52, placing it in the bottom tier. The city's economic character is most defined by its negative employment growth rate of -0.08% and its weekly hours deviation of +0.673%, indicating a weak labor market. The unemployment rate of 4.40% and labor force growth rate of -2.01% also contribute to the city's economic challenges.
Labor Demand
The employment growth rate of -0.08% and weekly hours deviation of +0.673% suggest a scenario where hours are above trend during job losses, indicating a survivor squeeze where remaining workers are absorbing the load of eliminated roles. This combination signals a contraction in labor demand, rather than genuine demand expansion. The labor demand composite score of 3.52, ranking in the 14th percentile, further supports this conclusion.
Unemployment
The unemployment rate of 4.40% is relatively high, ranking in the 20th percentile, indicating a labor market with some slack. This means that businesses may find it relatively easier to hire workers, but may also face weaker local consumer demand. The practical implication for a business trying to hire in this market is that they may have a larger pool of potential candidates to choose from.
Wage Growth
The year-over-year wage growth rate of +3.23% is moderate, ranking in the 34th percentile. This rate suggests that labor costs for employers are rising, but not extremely quickly, and worker purchasing power is increasing. However, the wage growth rate is not high enough to significantly drive up labor costs or boost consumer demand.
Cost of Living
The city's cost of living, with a PSF of $219/sqft and an earnings ratio of 5.86, ranks in the 20th percentile, indicating that it is relatively expensive. The 3.8% year-over-year increase in PSF further contributes to the city's low affordability score. This means that the city may struggle to attract talent without offering wage premiums to offset the high cost of living.
Labor Force Growth
The civilian labor force is contracting at a rate of -2.01% year-over-year, ranking in the 12th percentile. This decline in labor force supply implies that hiring capacity may be constrained, making it more difficult for businesses to find and recruit workers. The shrinking labor pool is a structural headwind for hiring in this city.
Building Permits
The year-over-year change in residential building permits is -4.95%, ranking in the 44th percentile, indicating a moderate decline in housing supply. This suggests that the city's housing market may be tightening, which could lead to decreased affordability and make it more challenging for workers to relocate to the area.
Days on Market
The current median days on market is 37 days, with a year-over-year decrease of -2.6%, ranking in the 12th percentile. This indicates a relatively fast-paced market, making it competitive for workers relocating to the city. However, the decreasing days on market suggests that the market may be heating up, which could further constrain affordability.
Office Economy
The city's professional and office worker share is 2.46, ranking in the 42nd percentile, indicating a moderate depth of professional talent pool. This suggests that the city is relatively well-suited for businesses in the tech, finance, and consulting sectors, but may not be as attractive for industries with more specialized or industrial roles.
The Chicago-Naperville-Elgin metro area offers a business a relatively large pool of potential candidates due to its higher unemployment rate, but its weak labor demand, declining labor force, and tightening housing market pose significant risks to hiring capacity and affordability. The single biggest risk or constraint a decision-maker should factor in is the city's low labor force growth rate, which may limit the availability of skilled workers and constrain business expansion.