Jacksonville, Fla., is close to pre-pandemic employment levels while Las Vegas is still 14% behind.
By Manuel Gutierrez, Consulting Economist to NKBA
The 390 metropolitan areas in the U.S. account for 89% of all employment, but these metros range widely in terms of size. The largest is New York, with 8.8 million individuals employed, while the smallest, Hinesville Ga., has fewer than 21,000 workers.
The concentration is readily apparent in Figure 1. It displays a line graph of all metro areas by their contribution to the total, ranked in terms of size. On the horizontal axis, the 390 metros are ranked left to right from largest to smallest. Plotted on the vertical axis is the percent contribution to the total of each additional metro area.
The 44% number next to the vertical dashed line reflects the percent of total U.S. employment accounted for by those largest 25 metro areas. Although it is not indicated in the chart, half of all those employed live in the top 33 metros. Additionally, two-thirds of employment is generated by the top 133 metros.
In other words, the top third of metros account for two-thirds of employment. The concentration of employment in a few large metro areas is further illustrated in Figure 2, which specifies the top 25 residential construction markets based on the number of housing permits issued. The metro areas are ranked according to their total employment as of February.
Topping the list of employment by market is the New York Metro, which ranks #3 nationally by number of housing units built last year. The second largest metro by number of employed, Los Angeles, placed seventh for new residential construction, with 27,000 homes built last year.
Near the bottom of Figure 2 is Austin, ranked 20th in employment, but 5th in terms of residential construction.
Two major factors that have impacted the recovery from the pandemic are the response and actions by state governments, and the concentration of employment in industries most affected by the pandemic.
Figure 3 displays the gap between today’s employment level and that of February 2020 — listed by largest new construction markets — before many of the COVID-19 restrictions were implemented.
The dashed vertical line represents the average U.S. employment gap, which was 6.2% in February 2021 compared with a year earlier.
The gap for two metro areas is highlighted in red to show the extremes. Jacksonville has the best recovery among these 25 metros, with its current employment just 2.5% lower than a year ago.
In contrast, Las Vegas still has a long way to go, with its current employment level 14.1% lower than it was in February 2020.
One thing that is apparent from the chart is that the best-performing metro areas are in states that followed more open and flexible pandemic policies. Four of the top five are either in Florida or Texas, two states that had less restrictive pandemic mandates.
The two worst performing metros, Las Vegas, as stated earlier, and Orlando, are among the top convention and entertainment markets, so it’s not surprising that employment would be negatively impacted based on restrictions against large gatherings.
New York and Los Angeles, two areas also far behind last year’s employment levels, are both in states that had stricter pandemic laws and are also heavy tourist markets, which obviously were affected because of a sharp drop in air travel and hotel usage.
Charts:
