Memphis has an overall grade of C+ with a composite score ranking it 40.5th out of 50 US metros. The city's economic character is most defined by its low labor demand, with a composite score in the bottom tier, and its high cost of living affordability, ranking in the top tier with a score of 98th percentile. Specifically, the labor demand composite score of 2.11 and the cost of living ratio of $153/sqft vs $33.22/hr, with a PSF falling 4.4% YoY, are key metrics shaping the city's economic landscape.

Labor Demand

Memphis has an employment growth rate of -0.49% YoY and weekly hours 1.586% above its own trend, indicating a contraction in job growth but with hours running above trend, suggesting a survivor squeeze where remaining workers are absorbing the load of eliminated roles. This combination signals that the city is not experiencing genuine demand expansion. The labor demand composite score of 2.11 is in the bottom tier, ranking 4th percentile, further emphasizing the lack of job growth.

Unemployment

The unemployment rate in Memphis is 4.70%, ranking near the median at the 40th percentile, indicating a moderate level of slack in the labor market. This rate suggests that while it may not be extremely difficult to hire, there is not a significant surplus of workers either. For a business trying to hire in Memphis, this means they may face some competition for talent but not to the extent seen in tighter labor markets.

Wage Growth

Memphis experiences a year-over-year wage growth of +4.52%, ranking above average at the 68th percentile. This indicates that wages are rising faster than in most other cities, leading to increasing labor costs for employers. However, it also means that workers have stronger purchasing power, which can be beneficial for local consumer demand.

Cost of Living

With a cost of living score ranking in the top tier at the 98th percentile, Memphis is more affordable relative to its peers. The PSF of $153/sqft compared to average hourly earnings of $33.22/hr, with a PSF falling 4.4% YoY, makes it an attractive location for talent without necessitating significant wage premiums. This affordability can be a major advantage in attracting and retaining workers.

Labor Force Growth

The civilian labor force in Memphis is shrinking at a rate of -0.92% YoY, ranking below average at the 34th percentile. This contraction in labor force supply poses a structural headwind for hiring, as the pool of potential workers is decreasing. Businesses looking to expand or establish operations in Memphis may face challenges in finding sufficient labor.

Building Permits

Memphis sees a year-over-year increase in residential building permits of +5.95%, ranking near the median at the 56th percentile. This growth indicates that housing supply is expanding, which should improve affordability and accommodate workforce needs in the future. However, the moderate pace of growth may not entirely keep up with demand, potentially limiting the improvement in affordability.

Days on Market

Homes in Memphis currently sit on the market for a median of 68 days, with a year-over-year increase of +6.2%. This ranks in the bottom tier at the 8th percentile, indicating a slower market where homes take longer to sell. For workers relocating to Memphis, this could mean a more accessible and less competitive housing market, potentially easing the transition.

Office Economy

Memphis has a professional and office worker share ranking in the bottom tier at the 4th percentile, indicating a less deep talent pool in these sectors. This suggests that Memphis is less suited for businesses requiring a high concentration of tech, finance, consulting, or HQ operations, but may be more appropriate for industries with different labor requirements, such as logistics or manufacturing.

In conclusion, Memphis offers businesses an affordable cost of living and a moderate unemployment rate, but it is constrained by low labor demand and a shrinking labor force. The single biggest risk for a decision-maker considering Memphis as a location is the challenge of finding and hiring sufficient labor due to the contracting labor force, which could hinder business growth and expansion plans.