Memphis, with an overall grade of B- and a composite score ranking it 48.3th percentile out of 50 US metros, is characterized by its unique combination of strong wage growth and an affordable cost of living, with a cost of living percentile rank of 98th. The city's wage growth rate of 7.68% YoY and cost of living ratio of $155/sqft to $33.25/hr, with PSF falling 6.1% YoY, are the two metrics that most define its current economic character. These numbers suggest a city with rising labor costs but also attractive affordability for workers.

Labor Demand

Memphis has an employment growth rate of -0.11% YoY and weekly hours 1.092% above its own trend, resulting in a labor demand composite score of 3.05, which ranks in the bottom tier at 12th percentile. This combination signals a survivor squeeze, where remaining workers are absorbing the load of eliminated roles, rather than genuine demand expansion. The negative employment growth rate indicates a contracting job market.

Unemployment

The unemployment rate in Memphis is 4.10%, ranking near the median at 43rd percentile, indicating a moderate level of slack in the labor market. This means that while it's not extremely difficult to hire, there is some wiggle room for businesses to find talent without excessive wage pressure. However, the market is not so loose that it would lead to weak consumer demand.

Wage Growth

With a YoY wage growth rate of 7.68%, Memphis experiences fast wage growth, ranking in the top tier at 94th percentile. This implies rising labor costs for employers but also strong purchasing power for workers, which can be beneficial for businesses relying on local consumer spending. The rapid wage growth may pressure businesses to adjust their compensation packages to remain competitive.

Cost of Living

Memphis is very affordable, with a cost of living percentile rank of 98th, due to its PSF of $155/sqft falling 6.1% YoY relative to wages of $33.25/hr, resulting in a ratio of 4.66. This high affordability ranking means the city has a significant talent attraction advantage without needing wage premiums, making it an attractive location for businesses looking to relocate or expand without breaking the bank on salaries.

Labor Force Growth

The civilian labor force in Memphis is shrinking at a rate of -1.15% YoY, ranking below average at 26th percentile. This contraction in labor supply poses a structural headwind for hiring, as the pool of potential workers is decreasing. Businesses may face challenges in finding the right talent due to this declining labor force.

Building Permits

Memphis has seen a YoY increase in building permits of 14.68%, ranking above average at 74th percentile. This rise in permits indicates that housing supply is expanding, which should improve affordability and accommodate workforce growth in the future. The increase in building permits is a positive sign for businesses concerned about the housing needs of their employees.

Days on Market

The current median days on market in Memphis is 64 days, with a YoY increase of 10.3%, ranking in the bottom tier at 16th percentile. This means homes are sitting longer on the market, indicating a slower, more buyer-friendly market. For workers relocating to Memphis, this could make it easier to find and purchase a home, as the market is less competitive.

Office Economy

Memphis has a relatively shallow professional talent pool, ranking in the bottom tier at 4th percentile. This makes the city less suited for businesses in tech, finance, consulting, or HQ decisions that require a deep knowledge-economy talent pool. However, it may be more appropriate for industries with fewer specialized roles, such as industrial or logistics-dominant economies.

In conclusion, Memphis offers businesses an attractive combination of strong wage growth and affordability, which can be beneficial for talent attraction and retention. However, the single biggest risk or constraint for decision-makers is the city's shrinking labor force, which poses a significant challenge for hiring and workforce expansion, making it crucial for businesses to plan strategically for their labor needs.