It is harder to discern which industries are responsible for the slowdown over the last quarter as industry data is not seasonally adjusted and seasonal changes often mask underlying trends. Without seasonal adjustment, the only valid comparison is to look at the same period one year ago. Nonetheless, by looking at how 12-month job growth changed between June and September we can begin to draw some conclusions.
Since June, two industries appear to have slowed significantly. Education and Health Services was estimated to have added 8,800 jobs between June 2023 and June 2024 but by September, this annual gain was down to 4,500. Similarly, the annual growth for Accommodation and Food slipped from a gain of 1,900 jobs between June 2023 and June 2024 to a loss of 2,200 jobs during the September-to-September period.
On the plus side, the Professional and Business Services sector appears to be rebounding. In June, it was estimated to have lost 3,600 jobs over the prior year. By September, this loss had been cut to 400. Similarly, the Trade, Transportation and Utilities sector had been growing at a rate of 2,500 jobs annually according to the June data. This increased to 4,000 annually in the September data.
Despite an economy that lost jobs over the last quarter, the region’s unemployment rate has remained remarkably resilient, increasing only marginally since June, from 3.4% to 3.5%. Because there are always people in the midst of transitioning from one job to another, an unemployment rate at or below 4% is considered full employment. Metro Kansas City’s unemployment rate is also substantially below the U.S. unemployment rate of 4.1% and ranks fourth among the 11 benchmark metros.
A relatively tight labor market would be expected to boost average wages, all else equal, and this is what has occurred. Average hourly wages increased 47 cents in the last quarter and $1.33 over the past year to $32.78. Though the region’s employers continue to pay wages that rank near the bottom among the benchmark metros – ninth out of 11 – area workers’ recent pay increases are more solidly in the middle of the pack, ranking sixth. Continued long enough, this would gradually lift average wage levels toward the middle as well.
In sum, while employers seem to have begun shrinking their workforce, the impact on workers themselves appears marginal so far. The situation may become more mixed in the near future, though. Layoffs are expected to begin in November at GM’s Fairfax plant as it is shut down for more than a year to retool in preparation for building the Chevy Bolt in 2026. On the other hand, Panasonic has begun hiring and this will accelerate in 2025 for a plant opening later that year. In addition, the workforce continues to see declining participation rates as Baby Boomers continue to retire. Combined, it seems likely that the labor market will remain tight for the foreseeable future. In fact, it may become the case that declining employment levels reflect labor scarcity more than reduced employer demand. If so, then workers can expect to continue to see pay increases with low unemployment even in the face of lower overall job totals.
