Memphis, with an overall grade of B- and a composite score ranking at the 54.9th percentile among 50 US metros, is characterized by its above-average labor demand and highly affordable cost of living. The city's labor demand composite score of 5.71, driven by a +0.17% employment growth rate and +1.176% weekly hours deviation from its own trend, signals genuine demand expansion. Additionally, its cost of living, with a PSF of $152/sqft and a ratio of 4.59 to hourly earnings of $33.13, ranks in the 94th percentile for affordability.
Labor Demand
Memphis exhibits a +0.17% employment growth rate and a +1.176% deviation in weekly hours from its own trend, indicating genuine demand expansion. This combination suggests that the city is adding jobs and workers are putting in more hours, a sign of a strong labor market. The labor demand composite score of 5.71 further supports this assessment, ranking in the 62nd percentile.
Unemployment
The unemployment rate in Memphis stands at 4.10%, placing it near the median in terms of labor market tightness. This rate suggests that while the market is not overly tight, it does have some slack, making it somewhat easier for businesses to hire compared to tighter markets. However, this also means that local consumer demand might not be as strong as in areas with lower unemployment rates.
Wage Growth
Memphis experiences a year-over-year wage growth rate of +3.62%, which is near the median. This moderate wage growth indicates that labor costs for employers are increasing, but not at an alarming rate, and worker purchasing power is also growing, albeit not rapidly. This balance suggests a relatively stable labor cost environment.
Cost of Living
With a cost of living ranking in the 94th percentile, Memphis is highly affordable compared to its peers, especially considering its PSF is $152/sqft and has been falling by -1.9% YoY relative to wages of $33.13/hr. This affordability is a significant talent attraction advantage, as businesses can offer competitive wages without needing large premiums to offset high living costs.
Labor Force Growth
The civilian labor force in Memphis is contracting at a rate of -1.73% year-over-year, indicating a shrinking labor pool. This contraction poses a structural headwind for hiring, as the supply of potential workers is decreasing, which could lead to increased competition for available talent.
Building Permits
Memphis has seen a significant increase of +112.99% in residential building permits year-over-year, signaling an expansion in future housing supply. This growth in permits suggests that developer confidence is high, and the city is likely to see improvements in affordability and an easier time accommodating a growing workforce in the future.
Days on Market
The median days on market for homes in Memphis is 73 days, with a year-over-year increase of +7.3%. This indicates a slower market, where homes are sitting longer before being sold. For workers relocating to Memphis, this could be beneficial, as it suggests a more accessible and less competitive housing market.
Office Economy
Memphis has a relatively shallow professional talent pool, ranking in the 4th percentile for the share of jobs in professional and office sectors. This makes the city less suited for businesses requiring deep knowledge-economy talent, such as tech, finance, or consulting firms, but potentially more suitable for industries with different workforce needs.
In conclusion, Memphis offers businesses an affordable cost of living and a labor market with genuine demand expansion, making it an attractive location for certain types of industries. However, the single biggest risk or constraint for decision-makers is the city's contracting labor force, which could lead to challenges in finding and hiring the necessary talent, potentially offsetting some of the location's other advantages.