Memphis has an overall grade of B- with a composite score ranking it 49.9th percentile 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 highly affordable cost of living, ranked in the top tier at 98th percentile. Specifically, the labor demand composite score of 2.94 and the cost of living ratio of $155/sqft to $32.13/hr, with a PSF decline of 6.1% YoY, set the tone for this market.

Labor Demand

Memphis has an employment growth rate of -0.03% YoY and weekly hours 1.318% above its own trend, signaling a contraction in labor demand rather than genuine expansion. This combination suggests a survivor squeeze, where remaining workers are absorbing the load of eliminated roles. The labor demand composite score of 2.94, ranked in the bottom tier at 18th percentile, reinforces this interpretation.

Unemployment

The unemployment rate in Memphis is 4.20%, ranking near the median at 58th percentile. This indicates a moderate level of slack in the labor market, making it relatively easier for businesses to hire compared to tighter markets. However, this also implies weaker local consumer demand.

Wage Growth

Memphis has a year-over-year wage growth rate of 4.99%, ranked above average at 64th percentile. This represents moderately fast wage growth, which will lead to rising labor costs for employers but also increase worker purchasing power. As a result, businesses may face higher costs, but workers will have more disposable income.

Cost of Living

With a cost of living ratio of $155/sqft to $32.13/hr and a PSF decline of 6.1% YoY, Memphis is highly affordable, ranked in the top tier at 98th percentile. This affordability advantage will attract talent without requiring significant wage premiums, making it an attractive location for businesses looking to hire.

Labor Force Growth

The civilian labor force in Memphis is shrinking at a rate of -0.76% YoY, ranked below average at 24th percentile. This contraction in labor supply will create a structural headwind for hiring, making it more challenging for businesses to find the workers they need.

Building Permits

Memphis has seen a 39.08% year-over-year increase in residential building permits, ranked in the top tier at 88th percentile. This expansion in housing supply will improve affordability and accommodate a growing workforce, signaling a positive outlook for future workforce attraction and retention.

Days on Market

Homes in Memphis currently sit on the market for 54 days, with a year-over-year decline of 3.6%. This relatively fast market, ranked below average at 24th percentile, may make it challenging for relocating workers to find housing, potentially impacting a business's ability to attract talent.

Office Economy

Memphis has a relatively shallow professional talent pool, ranked in the bottom tier at 2nd percentile. This makes it less suited for businesses requiring deep knowledge-economy talent, such as tech, finance, or consulting firms, but more suitable for industries with fewer specialized roles, like logistics or manufacturing.

In conclusion, Memphis offers businesses an affordable cost of living and a moderate unemployment rate, but its low labor demand and shrinking labor force pose significant challenges. The single biggest risk for a decision-maker is the potential difficulty in finding and hiring the necessary workers due to the contracting labor supply, which could constrain business growth and expansion plans.