Smaller, more-affordable cities in Sunbelt & Mountain West spearhead boom times in America

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◆ WSJ NEWS EXCLUSIVE
Utah’s Tech Hub Powers America’s Hottest Job Market, WSJ Ranking Finds

More-affordable cities that serve as tech and finance outposts top the latest annual rankings

◆ See WSJ/Moody’s Analytics ranking of the 18 hottest job markets in 2023: https://flic.kr/p/2pJc8NY

Salt Lake City was the country’s hottest job market in 2023, followed by three cities in Florida: Jacksonville, Orlando and Tampa. Miami also made the top 10, making Florida the top state last year.

The Mountain West and Sunbelt cities bucked the trend in a year marked by layoffs in the technology, manufacturing and financial sectors. Workers flocked to these areas for their plentiful job opportunities, wage growth, affordability and recreational offerings.

The Wall Street Journal, working with Moody’s Analytics, assessed about 380 metro areas. The rankings determined the strongest labor markets based on five factors: the unemployment rate, the labor-force participation rate, changes to employment levels, the size of the labor force and wages. Larger areas, with more than one million residents, were ranked separately from smaller ones.

HOTTEST JOB MARKETS

Data continue to show a strong U.S. economy, tempering expectations for interest-rate cuts by the Federal Reserve. Employment in March rose by 303,000 jobs, according to the Labor Department, which was much higher than economists’ expectations, while the unemployment rate ticked down to 3.8%.

Cities with strong job markets were those well-positioned as affordable alternatives to the traditional tech and financial hubs.

‘Silicon Slopes’

For over a decade, Salt Lake City has attracted white-collar workers from the San Francisco Bay Area and Los Angeles. Many of the workers have taken jobs in Salt Lake City’s tech hub, aptly referred to as “Silicon Slopes.” They have also been able to buy homes after being priced out of California cities.

This migration increased after the pandemic, drawing in young workers with a deepened desire for easy access to the great outdoors.

“There’s a virtuous cycle where young, highly educated workers are moving into Salt Lake City and bringing in more money to that area,” said Adam Kamins, an economist at Moody’s Analytics.

Salt Lake City performed well across all five metrics, with the second-highest rate of labor-force participation and fifth-strongest growth in wages.

Austin, Texas, which fell five spots from the previous year but was still the seventh-highest-ranked labor market, had the strongest labor-force participation among large metro areas. Like Salt Lake City, Austin has become a cheaper alternative to the traditional tech hubs.

While high interest rates and layoffs also affected Salt Lake City last year, it was easy for those workers to find employment given the area’s diverse economy, said Ron Zarbock, owner of Spherion Staffing Services, which specializes in professional, information technology and logistics industries.

“Some of the IT startups got diminished, but other organizations from the financial markets or manufacturing would pick them right up,” said Zarbock.

Friendly business laws and tax incentives have also made Salt Lake City a good place to build and expand businesses in other industries, said Jill Perelson, founder and chief executive of recruiting agency PrincePerelson & Associates. High-growth industries in Salt Lake City include life sciences, manufacturing and supply-chain logistics.

“There is so much land here that manufacturing and logistics companies can expand into the desert and beyond,” said Perelson.

In January, food company Mars Inc. announced a new 399,000 square-foot baking facility to make Nature’s Bakery snacks. Subzero Engineering, maker of data-center equipment, announced a 155,000-square-foot manufacturing facility in December.

Florida’s strong showing

Florida dominated the top 10 rankings of the hottest job markets in 2023 with four spots, after holding three of the top 10 spots in 2022. Jacksonville has continued moving up the ranks, becoming the second-hottest job market after placing third in 2022.

It is due to a continuation of companies ranging from corporate offices to warehouses relocating from the Northeastern corridor to Jacksonville, said Mike Brady, owner of two Express Employment Professionals staffing offices. His firm specializes in recruiting warehouse employees in the area. The abundance of jobs related to the gig economy has also forced employers to offer more competitive wages, he said.

Florida as a whole continues to be a magnet for remote workers who like the affordability and the lack of a state income tax, said Kamins at Moody’s. Banks, mortgage lenders and real-estate businesses hired aggressively last year in Florida.

While those industries didn’t have a banner year in 2023, Florida outperformed the rest of the country, Kamins said.

Hedge-fund giant Citadel announced two years ago that it was moving its headquarters from Chicago to Miami. Although the waterfront site for the planned headquarters remains empty, the project is finally starting to take shape. Financial firms including Fifth Third and PGIM announced in recent months they would open offices in Tampa.

Tampa and Miami came in first and second, respectively, in wage growth—indicating that employers are paying up to attract and retain workers. Meanwhile, New York and San Jose, Calif., metro areas, which are major financial and tech hubs, ranked toward the bottom of the list for wage growth.

Methodology

Rankings are based on five attributes: average unemployment rate throughout the year; yearly labor-force participation rate; change in the average monthly employment and labor-force levels from a year earlier; and the change in average weekly wages, not adjusted for inflation, in the first half of the year from a year earlier, reflecting the latest available wage data.

Each attribute was ranked, and those rankings were added together to create an overall score. Large metropolitan areas are those with a 2022 population above one million.