Kansas City boasts an overall grade of A+ with a composite score of 69.7th percentile, ranking it among the top US metros. The city's economic character is largely defined by its strong labor demand, with a composite score of 5.99, and its top-tier wage growth of 7.35% year-over-year. These metrics signal a city with a thriving job market and increasing labor costs.
Labor Demand
Kansas City's employment growth rate of 0.73% year-over-year, combined with a weekly hours deviation of 0.665% above its own trend, indicates genuine demand expansion. This combination suggests that the city is experiencing a period of job growth, with hours worked increasing above the trend line. As a result, businesses can expect to find a strong and growing labor market.
Unemployment
The city's unemployment rate of 3.80% is relatively low, ranking in the 78th percentile, indicating a tight labor market. This tight market implies that businesses may face challenges in hiring, as well as upward pressure on wages. As a result, companies may need to offer competitive salaries to attract top talent.
Wage Growth
With a year-over-year wage growth rate of 7.35%, Kansas City is experiencing rapid labor cost increases, ranking in the 92nd percentile. This fast wage growth is a double-edged sword, as it increases labor costs for employers but also boosts worker purchasing power. As a result, businesses should factor in rising labor costs, while also considering the benefits of a workforce with increasing disposable income.
Cost of Living
Kansas City's cost of living, with a PSF of $196/sqft and an earnings ratio of 5.39, ranks in the 80th percentile, indicating a relatively affordable city. This affordability advantage can be a significant talent attraction factor, as workers can maintain a high standard of living without requiring excessive wage premiums. As a result, businesses can leverage the city's affordability to attract and retain top talent.
Labor Force Growth
The city's labor force is growing at a rate of 0.34% year-over-year, indicating a slowly expanding workforce supply. While this growth is modest, it suggests that the labor pool is not contracting, providing a stable foundation for hiring. As a result, businesses can expect to find a steady supply of workers, although growth may be limited.
Building Permits
Kansas City's building permits have decreased by 5.58% year-over-year, ranking in the 44th percentile, indicating a tightening housing supply. This decline in permits may signal future affordability challenges and constraints on workforce accommodation. As a result, businesses should consider the potential long-term implications of a tightening housing market on their ability to attract and retain talent.
Days on Market
The current median days on market is 50 days, with no year-over-year change, ranking in the 28th percentile. This relatively fast market means that homes are selling quickly, which can make it challenging for relocating workers to find housing. As a result, businesses may need to provide relocation assistance or consider the potential impact on employee retention.
Office Economy
Kansas City's office economy, with a professional worker share ranking in the 28th percentile, indicates a relatively shallow talent pool in professional and office sectors. While the city may not be the best fit for businesses requiring a deep knowledge-economy talent pool, it may be more suitable for industries with different workforce requirements. As a result, businesses should carefully consider their specific talent needs when evaluating Kansas City as a potential location.
In conclusion, Kansas City offers businesses a strong labor market, rapid wage growth, and a relatively affordable cost of living. However, the city's tightening housing supply, as indicated by the decline in building permits, poses a significant risk to long-term workforce accommodation and affordability. As a result, decision-makers should carefully weigh the benefits of Kansas City's thriving job market against the potential challenges of a constrained housing market.