Job Growth Doesn’t Always Equate to Income Growth: Nashville Experiences Both
Nashville’s job growth has been well documented over the last several years. The Nashville metro area has consistently ranked in the upper echelons of economically strong metros. The unemployment rate for the region ranks one of the lowest in the country at 2.9% as of July. 2021 saw a swift and healthy recovery from the pandemic as the latter half of the year saw unemployment rates go down back to pre-pandemic levels and employment. It’s no secret that Nashville has experienced rapid economic growth and Nashville is not unique in that regard; several metros have experienced economic surges over the past few years. While employment growth is vital to the success of an economy, wage growth is critical to the prosperity of a city’s population, especially now as inflationary trends in the last two years have lowered people’s buying power. Wage growth & job growth are not always correlated.
A recent analysis by the US department of Commerce Office of the Under Secretary for Economic Affairs (OUSEA) shows that strong job growth does not always bring corresponding income growth.
Over the last 40 years, Nashville has been one of few metros that have both high job growth and high-income growth.
Using a similar methodology but looking at the last 10 years and including only metros with at least 2M in population, the correlation is stronger and the Nashville metro area still shows both significant job growth as well as wage growth. In fact, it is one of only 4 metro areas, Austin, Riverside, and Orlando, being the other 3 in the last 10 years with job growth of over 30% & wage growth above 40%.
While employment growth is important for the success of a local economy, income growth is critical to the prosperity of individuals who make up the local economy, especially at a time when inflation and high interest rates are taking away purchasing power from individuals.