The Washington-Arlington-Alexandria metro area has an overall grade of C+ with a composite score ranking at the 49.0th percentile out of 50 US metros. This city's economic character is most defined by its strong wage growth, with a year-over-year increase of 6.02%, and its low labor demand, signaled by a -1.82% employment growth rate and -0.510% weekly hours deviation from trend. These metrics suggest a complex labor market with both positive and negative trends.

Labor Demand

The employment growth rate in Washington-Arlington-Alexandria is -1.82%, and weekly hours are deviating -0.510% from the city's own 12-month baseline, resulting in a labor demand composite score of 1.75, which ranks at the 0th percentile. This combination signals a contraction in labor demand, indicating that the city is experiencing a decline in job creation and hours worked. This suggests a survivor squeeze, where remaining workers are absorbing the load of eliminated roles.

Unemployment

The unemployment rate in Washington-Arlington-Alexandria is 3.70%, which ranks at the 70th percentile, indicating a relatively tight labor market. This means that there is less slack in the market, making it harder for businesses to hire new employees. As a result, businesses may face upward pressure on wages to attract and retain talent.

Wage Growth

The year-over-year wage growth in Washington-Arlington-Alexandria is 6.02%, which is a relatively fast pace, ranking at the 88th percentile. This rapid wage growth implies rising labor costs for employers, but also increasing purchasing power for workers. As a result, businesses may need to adjust their compensation packages to remain competitive in the market.

Cost of Living

Washington-Arlington-Alexandria has a cost of living score that ranks at the 69th percentile, with a PSF of $299/sqft, which is decreasing by 2.9% year-over-year, and an average hourly earnings of $45.44/hr, resulting in a ratio of 6.58. This suggests that the city is relatively affordable compared to its peers, which can be a talent attraction advantage, as businesses may not need to offer significant wage premiums to compensate for high living costs.

Labor Force Growth

The civilian labor force in Washington-Arlington-Alexandria is contracting at a rate of -2.24% year-over-year, which ranks at the 8th percentile. This decline in labor force supply implies that the city's hiring capacity may be constrained, making it challenging for businesses to find and recruit new talent.

Building Permits

The number of residential building permits in Washington-Arlington-Alexandria is increasing by 13.92% year-over-year, which ranks at the 70th percentile. This expansion in housing supply suggests that the city's affordability and workforce accommodation may improve in the future, as more housing options become available.

Days on Market

The median days on market for homes in Washington-Arlington-Alexandria is currently 43 days, with a year-over-year increase of 13.2%, ranking at the 94th percentile. This indicates a slower market, where homes are taking longer to sell, making it more accessible for workers relocating to the city to find housing.

Office Economy

The share of professional and office workers in Washington-Arlington-Alexandria ranks at the 34th percentile, with a composite score of 2.28. This suggests that the city has a relatively shallow talent pool in these sectors, making it less suited for businesses that require a deep knowledge-economy talent pool, such as tech, finance, or consulting firms.

The Washington-Arlington-Alexandria metro area offers a complex mix of strong wage growth and declining labor demand, making it a challenging location for businesses to navigate. The single biggest risk or constraint for decision-makers is the city's contracting labor force supply, which may limit hiring capacity and require businesses to offer competitive compensation packages to attract and retain talent. Overall, businesses that can adapt to these conditions may find opportunities in this market, but will need to carefully consider the implications of the city's unique economic character.