Kansas City earns an overall grade of A+ with a composite score of 70.4th percentile, ranking it among the top US metros. The city's economic character is defined by its exceptionally high wage growth rate of 8.26% year-over-year and its low unemployment rate of 3.50%, which together signal a highly competitive labor market. These metrics suggest that Kansas City is an attractive location for businesses looking to tap into a skilled and productive workforce.

Labor Demand

Kansas City's employment growth rate is 0.25% year-over-year, combined with a weekly hours deviation of 0.049% above its own trend, resulting in a labor demand composite score of 4.70, which is near the median. This combination signals a genuine demand expansion, albeit at a moderate pace. The city's labor market is characterized by a steady increase in jobs and hours worked, indicating a stable and growing economy.

Unemployment

The unemployment rate in Kansas City is 3.50%, which corresponds to an above-average percentile rank of 80th. This low unemployment rate indicates a tight labor market with limited slack, making it challenging for businesses to hire new employees. As a result, companies may face upward pressure on wages to attract and retain top talent in this competitive job market.

Wage Growth

With a year-over-year wage growth rate of 8.26%, Kansas City experiences exceptionally fast wage growth, ranking it in the top tier at the 98th percentile. This rapid wage growth implies rising labor costs for employers, but it also translates to increased purchasing power for workers, making the city an attractive location for businesses that value a skilled and motivated workforce.

Cost of Living

Kansas City has a cost of living score that corresponds to a top-tier percentile rank of 83rd, with a price-to-salary ratio of $197/sqft to $35.77/hr, resulting in a ratio of 5.51. This indicates that the city is relatively affordable compared to its peers, making it an attractive location for talent without requiring significant wage premiums. The stable and relatively low cost of living in Kansas City can be a major draw for businesses looking to attract and retain employees.

Labor Force Growth

The civilian labor force in Kansas City is shrinking at a rate of -0.70% year-over-year, which is near the median. This contraction in the labor force supply implies a structural headwind for hiring, as the pool of available workers is decreasing. Businesses may need to adapt their recruitment strategies to compensate for the limited labor force growth in the city.

Building Permits

Kansas City has experienced a significant increase in residential building permits, with a year-over-year change of +51.78%, ranking it in the top tier at the 92nd percentile. This surge in building permits signals an expansion in housing supply, which should improve affordability and accommodate a growing workforce. The increase in permits is a positive indicator for businesses considering relocation, as it suggests a more stable and accessible housing market for their employees.

Days on Market

The current median days on market in Kansas City is 45 days, with a year-over-year change of +0.0%, corresponding to a below-average percentile rank of 29th. This relatively fast pace of home sales indicates a competitive housing market, which may pose challenges for relocating workers. However, the stable days on market suggests a balanced market that is neither overly hot nor cold, providing a degree of predictability for businesses and their employees.

Office Economy

Kansas City's professional and office worker share is below average, ranking at the 30th percentile. This suggests that the city's talent pool is not as deep in professional and office sectors, making it less suited for businesses that require a high concentration of tech, finance, or consulting talent. However, the city may be more attractive to businesses in other sectors, such as logistics or manufacturing, that can tap into its diverse workforce.

In conclusion, Kansas City offers businesses a unique combination of high wage growth, low unemployment, and relatively affordable cost of living, making it an attractive location for companies looking to tap into a skilled and productive workforce. However, the city's shrinking labor force and competitive housing market pose significant risks that decision-makers should carefully consider when evaluating Kansas City as a potential business location.