Kansas City earns an overall grade of B+ with a composite score ranking at the 62.8th percentile among 50 US metros. The city's economic character is most defined by its top-tier wage growth of 7.56% year-over-year and its strong building permits growth of 96.01% year-over-year, indicating a dynamic labor market and expanding housing supply. These metrics suggest a city with a growing economy and increasing demand for labor.
Labor Demand
Kansas City's labor demand composite score is 5.19, ranking near the median at the 46th percentile, driven by employment growth of 0.51% year-over-year and weekly hours 0.172% above trend. This combination signals genuine demand expansion, as hours are running above trend during a period of job growth. However, the modest employment growth rate suggests that this demand expansion is not overly aggressive.
Unemployment
The unemployment rate in Kansas City is 3.40%, ranking above average at the 70th percentile, indicating a relatively tight labor market. This tightness implies that businesses may face challenges in hiring, with upward pressure on wages. As a result, companies may need to offer competitive compensation packages to attract top talent.
Wage Growth
With a year-over-year wage growth rate of 7.56%, Kansas City ranks in the top tier at the 92nd percentile, signaling fast-rising labor costs for employers. This strong wage growth is beneficial for worker purchasing power, as employees can afford more goods and services. However, it may pose challenges for businesses looking to maintain profit margins.
Cost of Living
Kansas City's cost of living is relatively affordable, with a percentile rank of 82, driven by a PSF-to-earnings ratio of $194/sqft to $36.10/hr, or 5.37. Although PSF is rising 1.6% year-over-year, the city's affordability relative to peers remains high. This affordability advantage can attract talent without requiring significant wage premiums, making it an attractive location for businesses.
Labor Force Growth
The civilian labor force in Kansas City is contracting at a rate of -2.12% year-over-year, ranking in the bottom tier at the 10th percentile. This decline in labor force supply poses a structural headwind for hiring, as businesses may struggle to find qualified candidates. Companies may need to invest in training and development programs to address this shortage.
Building Permits
Kansas City has seen a significant increase in building permits, with a year-over-year growth rate of 96.01%, ranking in the top tier at the 92nd percentile. This surge in permits suggests that housing supply is expanding, which should improve affordability and accommodate a growing workforce. As a result, businesses can expect a more stable and affordable housing market for their employees.
Days on Market
The median days on market in Kansas City is 52 days, with a year-over-year increase of 2.0%, ranking near the median at the 50th percentile. This relatively stable market indicates that homes are selling at a moderate pace, making it accessible for relocating workers to find housing. However, the rising trend may signal a slight normalization of the market.
Office Economy
Kansas City's professional and office worker share is below average, ranking at the 32nd percentile, with a composite score of 2.20. This suggests a relatively shallow talent pool for tech, finance, and consulting businesses. While the city may not be ideal for headquarters or high-end professional services, it could be suitable for industries with more diverse labor needs, such as logistics or manufacturing.
In conclusion, Kansas City offers a dynamic labor market with strong wage growth and an expanding housing supply, making it an attractive location for businesses. However, the city's contracting labor force supply poses a significant risk, and decision-makers should carefully consider strategies to address this challenge, such as investing in workforce development programs or exploring alternative talent pipelines.