Regional Monthly Workforce Indicators

Kansas City employers added 1,800 jobs in March, recovering most of the job decline from February (2,000 jobs)

Employment numbers from the Bureau of Labor Statistics show a rebound in March from the losses experienced in February. Employment growth appears to be slowing, however. Employment grew by 3,700 between the last quarter of 2022 and the first quarter of 2023 compared to an average of 7,400 over each of the prior three quarters.

The Kansas City metro now stands about 27,000 above the peak of employment that was achieved before the COVID-19 recession.

Employment — Seasonally adjusted

This graph shows the current number of jobs in the Kansas City metro as determined by the monthly Current Employment Statistics survey. Seasonal adjustment is a statistical technique that attempts to measure and remove the influences of predictable seasonal patterns to reveal the underlying trend in how employment and unemployment change from month to month.

Kansas City is ranked eighth overall in annual employment growth, down from seventh overall last month.

Employment increased 2.7% during the past 12 months for the Kansas City metro. This growth rate ranks Kansas City’s economy 8th among the 11 benchmark metros, though it is not far behind Portland (3.0%) and Cincinnati (2.9%). Austin (4.7%) and Nashville (4.3%) grew at a significantly faster rate than the other benchmark metros. Meanwhile, Denver (0.6%), Columbus (0.7%) and Minneapolis (1.7%) grew significantly slower than the Kansas City region.

The seasonally adjusted unemployment rate remained at 2.7% in March, which is below historical averages and continues to suggest a very tight labor market.

The unemployment rate remained tight at 2.7%, flat since last October. This is the lowest rate of any of the benchmark metros, though it is shared by five of them, including Kansas City. In addition, Denver, Indianapolis, Minneapolis and Nashville also report only 2.7% of their labor force is unemployed.

Unemployment rate — Seasonally adjusted

Though the monthly data suggests job growth is beginning to slow, progress over the past year has been robust across nearly all industries, with only two sectors losing jobs in the past 12 months. Services continued to lead the region’s employment gains. Leisure & Hospitality added 8,400 workers, followed by Health Services and Private Education which added 6,800 workers. Management of Companies added another 2,400 workers and Professional/Technical Services added 1,900 jobs. Among goods-producing industries, Mining, Logging, & Construction added 5,000 workers and Manufacturing added 2,600 workers.

The two sectors to lose jobs in the last 12 months were Federal Government, down 200 jobs, and Retail Trade down 600 jobs.

Like job growth, the most recent monthly data suggests wage growth has also begun to stall. Average private hourly earnings reached its peak of $30.87 in January but has since declined slightly. Compared to a year ago, wages overall grew 5.27%, which is high by historical standards and puts Kansas City in the top three benchmark metros in the growth of average wages.

While good news, the region’s workers still have a long way to go to achieve the kinds of wage increases their counterparts in other benchmark metros have experienced since the COVID-19 recession. Average wages for Kansas City area workers are only 7.5% higher now than in January 2020. The typical worker in Portland (up 20.4%), Columbus (up 18.6%) or Nashville (up 15.2%) have received more than double the wage increases of the typical worker in Kansas City. As a result, the region’s wage increases rank 10th out of the 11 benchmark metros, only beating out Indianapolis.

Each month, we provide data on jobs that have been most in demand in a key regional occupational sector based on employer job postings.

We may be seeing the beginnings of the slowdown in economic activity engineered by the Open Market Committee of the Federal Reserve Board to combat inflation by raising interest rates 10 times since March 2022. Though national job growth has yet to slow substantially, locally both job and wage growth appear to have stalled recently. Nonetheless, the labor market remains tight, given a historically low unemployment rate of 2.7%. For comparison, a rule of thumb for determining full employment is when the unemployment rate near 4%. Historically, this has roughly been the lowest level of unemployment consistent with inflation remaining low. 

Recent instability in the banking sector is creating a more restrictive lending environment. Combined with a Federal Funds rate that is now between 5% and 5.25%, the Fed is now likely to take a more wait-and-see approach to monetary policy, even if they do not officially call it a “pause” in interest rate hikes. Given that monetary policy acts with long lags, the impact of these hikes is still in the process of unfolding. As a result, most economists believe the labor market will further soften and the unemployment rate will begin to tip upward. Current projections for both the United States and Kansas City economies are for a very mild recession later this year and into 2024. 

Given the retirements from the labor force by baby boomers, however, it will remain difficult for businesses to find all the workers they need. It could well be that even during a recession, the unemployment rate remains below 4%. If inflation approaches the Fed’s target of 2% at the same time, as is also forecast, this may force a revision in the above rule of thumb.

Last updated May 16, 2023.

The Monthly Workforce Indicators offer a look at the regional workforce including both seasonally adjusted employment and unemployment, employment by industry and the region’s employment growth ranking against 10 peer metros.