LaborIQ® Market Index: November 2021 Metro Rankings
These labor market rankings help talent acquisition professionals find and retain talent, regardless of geography or industry. High-growth areas can increase their talent pool by sourcing from other metros, while lagging metros must focus on retaining limited supply.
Job gains picked up in October after the COVID-19 Delta variant caused jobs gains to slow substantially in late summer and early fall. With this slower-but-steady recovery, the U.S. labor market is approaching 97% of pre-pandemic employment. Twenty-one of the 150 metros ranked in the LaborIQ® Market Index have already exceeded their pre-pandemic employment levels — which is up from 10 and 16 metros, respectively, during August and September — and another 15 are within 1.0%.
The recovery has varied substantially depending on location. Some metro areas in the Northeast, Midwest and Gulf Coast continue to struggle recouping lost jobs and retaining talent. Others — including Dallas, Phoenix and Austin — are consist top-performers at or near full recovery. While progress to recovery is one important variable in the LaborIQ Market Index calculation, net migration and wage growth tend to be a sign of a strong job market and can further fuel the economy and other indicators.
Key Takeaways: Road to Growth & Recovery
The LaborIQ Market Index top-10 rankings illustrate the strong labor markets and recoveries across the southern U.S., Southwest, Mountain West and Pacific Northwest regions. Many metros ranked in the top 10 have had strong economic performance throughout 2021, driven largely by job gains and net migration.
The Top 5 — Seattle and Jacksonville jump to Nos. 4 and 5, respectively, joining mainstays Dallas, Austin and Phoenix, which have held the top three spots since June.
Dallas Tops the List — The city’s held the No. 1 spot since April 2021 and been in the top 5 since October 2020.
Who’s In, Who’s Out — Jacksonville reentered the top 10 at No. 5 due to strong job gains and growth and is one of only five large metros to reach full recovery, while Houston fell from 10 to No. 14.
The proprietary LaborIQ Market Index enables businesses and talent acquisition professionals to closely evaluate which U.S. metros are primed for recruiting and attracting talent. The index measures 10 key performance indicators — representing the greatest drivers of a market’s economic growth or decline — and tracks each metro’s progress toward pre-pandemic employment levels and recovery.
Despite Big Job Gains, Some Large Metros’ Rankings Unlikely to Improve Soon
Several high-profile markets in the Northeast, California, and Midwest continue to trail not only the national recovery expectations, but also the recovery seen in major metros in other regions of the country, such as Dallas, Seattle, Denver and Atlanta. Currently, Boston (No. 29), Los Angeles (No. 32), San Francisco (No. 61), New York (No. 67) and Chicago (No. 69) have consistently been notably lower in the rankings.
Looking forward to 2022 — and even 2023 — these markets aren’t likely poised for significantly higher rankings. Despite projections these five metros will combine to add nearly 1 million jobs in 2022 — and over half a million jobs in 2023 — they’re dragged down by population growth and net-migration that place them near the bottom of the 150 largest metros.
These projected job gains, while impressive, reflect the sheer magnitude of job losses at the outset of the pandemic. As office workers went remote — and some even relocated permanently from the city center — the businesses supporting them — like coffee shops, restaurants and bars in the leisure and hospitality industry — weren’t in high demand. As office workers return — even if only a few days per week — additional businesses will look to hire more talent and things will continue to return to normal. But with low net-migration and population growth will keep these markets lagging their peers in terms of recovery and growth.
Migration and population growth are key drivers of economic success because they are indicative of a strong labor market. Talent may relocate for a job opportunity, but people don’t often move alone — they move with partners/spouses and children. And these people increase the demand for goods and services — bars and restaurants, hair salons and clothing stores, education and healthcare all thrive when population is increasing.
It’s not all gloom and doom for these markets. Talent acquisition professionals will be in demand to fill nearly 1.5 million jobs projected to be added over the next two years. Businesses will need to focus on retaining talent to prevent workers from being poached to other locales. But given that these are some of the highest-wage markets in the country, remote work is a potential way to find new talent.
Top & Bottom 10s Remain Largely Unchanged
The LaborIQ Market Index captures the factors that impact labor market strength, providing insight into regional differences across the country. The top 10 metros are primarily in the Southeast, Texas, Mountain West and Pacific Northwest areas of the U.S., while the bottom 10 mostly comprises metros across the Northeast, Midwest and the Gulf Coast.
Metros in the top 10 perform well in key Labor Market Index indicators, including population growth, net migration, job gains and job growth. Strong economic fundamentals and job growth often fuel net migration, which increases labor supply as well as the demand for goods and services. Out of 150 metros in the LaborIQ Market Index rankings, the average population growth and net migration rankings for the top metros are 18 and 12, respectively; these metros also average in the top-25 for job gains and growth.
Top metros are leading the recovery and making progress to recouping jobs lost during the pandemic. However, even with favorable economic conditions, talent supply will struggle to keep up with the demands for hiring. Talent acquisition professionals in top metros will continue to be busy through 2022 and may need to look toward lower-ranked metros to fill open positions.
For those in the bottom 10 of the largest 150 metros, the average population growth and net migration rankings are 99 and 107, respectively, and the average ranking for job gains is 131 and job growth is 128. Most of these metros are forecasted to recover all jobs lost to the pandemic in 2024 or later, after the national jobs recovery expected in 2023.
Although they face a challenging environment, talent acquisition professionals in these bottom metros will be hard at work filling the many jobs lost. Businesses will need to be proactive to retain top talent with a tight national talent supply and increasing compensation demands for many occupations.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.