The Nashville-Davidson--Murfreesboro--Franklin metro area has an overall grade of B, ranking at the 52.0th percentile among 50 US metros, with a composite score driven largely by its low unemployment rate of 3.10% and a near-median labor demand composite score of 5.26. The city's economic character is defined by these two metrics, indicating a tight labor market with moderate job growth. Specifically, the unemployment rate and labor demand score suggest a city with genuine demand expansion, albeit at a moderate pace.

Labor Demand

The employment growth rate in Nashville is +0.65% year-over-year, combined with a weekly hours deviation of +0.047% from its own 12-month baseline, signaling genuine demand expansion. This combination indicates that the city is experiencing job growth with hours running above trend, suggesting that businesses are hiring and workers are absorbing additional workloads. The labor demand composite score of 5.26, ranking at the 46th percentile, further supports this interpretation.

Unemployment

The unemployment rate in Nashville is 3.10%, ranking at the 92nd percentile, indicating a very tight labor market. This low unemployment rate means that the market has little slack, making it challenging for businesses to hire new employees. As a result, businesses may face upward pressure on wages to attract and retain talent in this competitive market.

Wage Growth

The year-over-year wage growth in Nashville is +3.92%, ranking at the 52nd percentile, indicating moderate wage growth. This rate suggests that labor costs for employers are rising, but not excessively so, while workers are experiencing some improvement in their purchasing power. The moderate wage growth rate may help balance the tight labor market, but it still poses a cost consideration for businesses.

Cost of Living

Nashville has a cost of living score ranking at the 51st percentile, with a PSF of $259/sqft and average hourly earnings of $35.74/hr, resulting in a ratio of 7.25. The city's cost of living is near the median, making it neither particularly affordable nor expensive relative to its peers. The fact that PSF is falling by -1.1% year-over-year slightly improves the affordability. This near-median affordability means that businesses may not need to offer significant wage premiums to attract talent, but it does not provide a strong talent attraction advantage either.

Labor Force Growth

The civilian labor force in Nashville is growing at a rate of -0.95% year-over-year, ranking below average at the 30th percentile. This negative growth rate indicates that the labor force supply is contracting, posing a structural headwind for hiring and business expansion. The shrinking labor pool may exacerbate the already tight labor market conditions.

Building Permits

The year-over-year change in residential building permits in Nashville is -21.89%, ranking at the 14th percentile, indicating a sharp decline in housing supply expansion. This significant decrease in building permits signals a potential future supply squeeze, which could worsen affordability and make it more challenging for the workforce to find accommodation, ultimately affecting the city's attractiveness to businesses and workers.

Days on Market

The median days on market for homes in Nashville is 60 days, with a year-over-year increase of +1.7%. This indicates a slightly slower market, ranking below average at the 28th percentile. For workers relocating to Nashville, this means that the housing market is somewhat more accessible than in faster-moving markets, but the rising days on market could signal a normalization of the market rather than a significant easing of competition.

Office Economy

Nashville has an office economy score ranking at the 78th percentile, with a share of professional and office workers indicating a deep talent pool. This makes the city well-suited for businesses in the tech, finance, consulting, and HQ sectors that rely on specialized knowledge workers. However, it may be less ideal for industries with more industrial or logistics-oriented workforces.

The Nashville-Davidson--Murfreesboro--Franklin metro area offers businesses a tight labor market with moderate job growth and a deep professional talent pool, making it attractive for certain sectors. However, the single biggest risk or constraint for decision-makers is the city's shrinking labor force and sharp decline in housing supply expansion, which could lead to future affordability issues and challenges in attracting and accommodating workers.