Health Care Industry Leads Kansas City Job Growth
The Kansas City labor market is stable with 1.4 percent job growth in September. Wage growth has also been routinely above 3.0 percent in 2019. While wage growth is the shining star in this city, housing prices are starting to react. Home prices grew 8.5 percent in Q3 and remain substantially higher than nearby cities.
ThinkWhy It Matters
The Kansas City employment landscape:
- Job growth is increasing.
- More people are entering the labor force.
- Unemployment rate is holding steady.
- Wage growth has been strong for the past six months.
- Housing remains affordable for residents but is less affordable compared to neighboring cities.
The overall labor market is strong but certain sectors are flourishing with employment growth while others are withering. Health Care and Social Assistance are among the flourishing sectors with 7.0 percent job growth in September 2019. Conversely, Telecommunications job growth has receded by 6.4 percent in September 2019 and has a five-year average annual job growth of -9.6 percent. Businesses in the area should pay close attention to the dramatic swings in industry trends.
Kansas City businesses can:
- Create a strategy to diversify the mix of industries served, if currently serving a receding sector (see table below).
- Consider full or partial remote job options for workers from the Lawrence or Topeka areas. This laborforce may have lower wage requirements due to considerably lower housing costs.
- Offer competitive wages in industries seeing aggressive job growth and consider recruiting from receding industries, especially employees with crossover skills.
Average Hourly Earnings Growth (all private employees, September 2019)
Wage growth is continuing to improve for Kansas City. In 2018, January to September monthly wage growth averaged 1.8 percent. This is compared to 3.8 percent during the same period in 2019. In September 2019, average hourly earnings lifted by 2.3 percent, increasing the hourly rate to $28.39.
Unemployment Rate (August 2019)
The unemployment rate decreased from 4.0 percent in July to 3.3 percent in August.
Over the past two years, the area’s unemployment rate has held steady. The unemployment rate in Kansas City averaged 3.6 percent from January to August 2018. This is compared to an average unemployment rate of 3.5 percent from January to August 2019.
Job Growth by Industry (September 2019)
Kansas City job growth is slightly accelerating with more people entering the workforce. The rate of overall job growth in the Kansas City metro is increasing, as compared to 2018. Annual job growth is 1.4 percent* with a job gain of 15,400. While this is an increase compared to last year, these rates are below the five-year average of 1.9 percent for Kansas City.
Companies serving industries seeing slower job growth, may experience revenue declines as customers spend less. This may be particularly true in the Telecommunications sector, which is seeing receding job growth.
Kansas City's job-growth performance in the Health Care industry is strong. Companies providing products or services to the Health Care industry may experience positive revenue growth, as Health Care companies increase hiring in anticipation of greater production.
The industries below experienced job growth ABOVE the Kansas City metro annual average (1.4 percent in September 2019). The industries highlighted in green are experiencing faster growth trajectories this month, as compared to the five-year annual average.
For investors looking to expand their portfolio, companies within these industries should be considered for sale and acquisition opportunities.
Industries with job growth BELOW the Kansas City metro annual average may experience decreased revenue. In response, a construction company only providing services to Merchandise and Retail stores may reevaluate their target sectors in order to diversify revenue streams. Although Construction in this metro area is strong, those companies that provide products or services to a receding industry, could see impact to their bottom line.
Cost of Housing
The cost of housing in Kansas City has continued to increase but remains below the September national median home price of $272,200. According to the National Association of Realtors, Kansas City’s home prices grew by 8.5 percent to a median price of $222,400 in Q3 2019. However, relative to nearby cities like Topeka and Wichita, Kansas City is significantly more expensive.