The Washington-Arlington-Alexandria metro area has an overall grade of C, ranking 33.8th percentile out of 50 US metros, with a composite score heavily influenced by its poor labor demand and labor force growth metrics, which are both at the 0th and 4th percentiles, respectively. The labor demand composite score of 1.50, driven by a -3.19% employment growth rate and -1.154% weekly hours deviation, signals a contraction in the job market. This combination of negative employment growth and below-trend hours worked indicates a lack of genuine demand expansion.

Labor Demand

The employment growth rate in Washington-Arlington-Alexandria is -3.19% year-over-year, and weekly hours are deviating -1.154% from the city's own 12-month baseline, resulting in a labor demand composite score of 1.50. This combination signals a contraction in the job market, rather than genuine demand expansion or survivor squeeze. The negative employment growth and below-trend hours worked indicate a lack of labor demand.

Unemployment

The unemployment rate in Washington-Arlington-Alexandria is 4.10%, ranking at the 28th percentile, indicating a below-average but not extremely tight labor market. This level of unemployment suggests that there is some slack in the market, making it slightly easier for businesses to hire, but still with some wage pressure. However, the relatively high unemployment rate compared to other metros may limit local consumer demand.

Wage Growth

The year-over-year wage growth in Washington-Arlington-Alexandria is +3.48%, ranking near the median at the 44th percentile. This moderate wage growth rate suggests that labor costs for employers are rising, but not extremely rapidly, and worker purchasing power is increasing. The wage growth is not stagnant, but it is also not fast enough to significantly drive up labor costs.

Cost of Living

Washington-Arlington-Alexandria has a cost of living score of 76th percentile, with a PSF of $310/sqft and average hourly earnings of $45.36/hr, resulting in a ratio of 6.83. The city's cost of living is more affordable than many of its peers, with a PSF that is falling -3.7% year-over-year. This affordability advantage can attract talent without requiring significant wage premiums.

Labor Force Growth

The civilian labor force in Washington-Arlington-Alexandria is contracting at a rate of -2.11% year-over-year, ranking at the 4th percentile. This negative growth rate indicates that the labor force supply is shrinking, creating a structural headwind for hiring and potentially limiting the city's ability to support business expansion.

Building Permits

The number of residential building permits in Washington-Arlington-Alexandria is increasing by +36.76% year-over-year, ranking at the 84th percentile. This significant increase in building permits suggests that housing supply is expanding, which may improve affordability and accommodate a growing workforce in the future.

Days on Market

The median days on market for homes in Washington-Arlington-Alexandria is 29 days, with a year-over-year increase of +16.0%, ranking at the 56th percentile. This relatively fast pace of home sales indicates a competitive market, which may make it challenging for relocating workers to find housing.

Office Economy

The share of professional and office workers in Washington-Arlington-Alexandria is below average, ranking at the 30th percentile. This suggests that the city's talent pool is not as deep in professional and office sectors, making it less suited for businesses that require a high concentration of tech, finance, or consulting talent.

The Washington-Arlington-Alexandria metro area offers a relatively affordable cost of living and a moderate wage growth environment, but its poor labor demand and labor force growth metrics pose significant risks for businesses looking to expand or relocate. The single biggest constraint for decision-makers is the shrinking labor force supply, which may limit the city's ability to support business growth and expansion.