Kansas City employment surges in December

This month’s strong performance allowed the region’s job count to finally exceed June’s total by 1,100, reaching a new high of 1,152,600. Area employment now stands at 18,300 higher than in December 2023.  This 1.6% increase ranks fifth among 11 benchmark metros, behind Charlotte, Indianapolis, Raleigh and Austin but ahead of Denver, Nashville, Cincinnati, Portland, Minneapolis, and Columbus.

Health Services; Leisure and Hospitality; Professional and Technical Services; Retail Trade; and Administrative Support led the region in job gains, each adding at least 2,000 jobs over the past 12 months. Meanwhile, Manufacturing, Information and Wholesale Trade lost jobs during the period.

The December bump in payroll employment did not improve the region’s unemployment rate, as it stayed stable at 3.6%, the same rate it has been the past three months. However, compared to a year ago, the region’s unemployment rate increased by 0.7%, which is the fifth largest among the area’s comparison metros and indicative of a loosening labor market. Only Denver, Minneapolis, Cincinnati and Columbus saw larger increases since December 2023.

Despite this 12-month increase in the Kansas City metro’s unemployment rate, it is still below the 4% level considered to be full employment. Additionally, the Kansas City region's unemployment rate remains lower than all but four of the benchmark metros — Nashville, Raleigh, Minneapolis and Austin.

Given its historically low cost of living, it is unsurprising that December’s $32.61 average wage of Kansas City metro workers is the second lowest of the benchmark metros, behind Columbus. However, the period of economic stagnation throughout most of the last half of 2024 likely also contributed to this low ranking.  The average wage in the Kansas City region only increased $1 compared to a year ago, or 3.2%.  Both the dollar value and the percentage increase ranked last among the comparison regions.

Overall, December’s employment rebound simply puts the regional economy back on its recent longer-term trajectory, rather than performing below it as it had for much of the second half of 2024.  That trajectory is one of gradually slowing employment growth, due in large part to slowing growth of the labor force as increasing numbers of baby boomers retire.

Low labor force growth is making it more difficult for many employers to find the workers they need to expand.  With the flow of immigrants likely to be restricted for the foreseeable future, businesses have several options to respond. They can raise wages to attract labor, shift production offshore to where labor is more plentiful, invest in automation to save labor, or some combination of the three. Communities, too, can respond by ramping up the scope, effectiveness and responsiveness of their workforce training systems to better supply the workforce needs of area businesses.  

It is still too early to tell how these various competing options will play out and what their collective impact on the Kansas City economy will be. But all signs point to even slower labor force growth in the future than we have so far experienced.