The Top U.S. Cities for Job Seekers in 2021
The global pandemic and the actions taken in response to the crisis have upended the U.S. economy and jobs market, with the national unemployment rate sitting at 6.1% as of May 2021. If you're one of the nearly 10 million people unemployed, it could make sense to look in cities where jobs are on the rise. MoneyGeek compared over 50 cities with labor forces of at least 500,000 and analyzed five key economic factors for each one, including wage and job growth, unemployment rate, the size of the labor force and housing affordability, to rank the top cities in the United States for job seekers.
- Salt Lake City in Utah and the Birmingham-Hoover area in Alabama top the list of overall best cities for job seekers.
- The worst city for job seekers in 2021 is Hartford, Connecticut, with the New York City and Los Angeles metro areas close behind.
- The best city for wage growth is Richmond, Virginia, which experienced a 13% increase over the last year, while the worst is Kansas City, Missouri, which saw a 5.1% decline in wages.
- The highest unemployment rates were concentrated in major entertainment hubs: Los Angeles, New York City and Las Vegas.
- The best city for wage vs. job growth is St. Louis, Missouri, where a resident's average monthly income is typically 3.7 times the average monthly rent.
Job Growth Ranking for Major Cities
When you look at how the top cities rank, it's also essential to see how the lower cities rank and why.
In 2020 and 2021, we saw several major metropolitan areas, such as New York City, Los Angeles, Las Vegas and Chicago, fall to the bottom. These are all major entertainment hubs, and the lockdowns and shuttering of hotels, restaurants, theaters and other related businesses likely play a role in their lower ranking. As a result, this may indicate a temporary shift as we recover from pandemic-related economic losses.
However, with the exception of Las Vegas, many of the lower-ranked cities are in high-rent, high-tax areas, including the city that MoneyGeek identified as the worst city for job seekers in 2021: Hartford, Connecticut. In contrast, the top cities — Salt Lake City, Birmingham, Indianapolis and Nashville — are in areas with a lower tax burden and lower living costs. So our 2021 ranking could also be evidence of a longer-term trend.
Detailed Findings on Best and Worst Cities for Jobs
It's hard to imagine that places like Los Angeles and New York City would be toward the bottom of the rankings for top U.S. cities for job growth in 2021, but they landed in those spots because they rank lower on employment growth, competition and housing affordability. There is a large workforce in California, and many companies are headquartered there. Still, the wage-to-rent ratios in some of California's most booming cities, such as Los Angeles, Riverside and San Diego, have made these cities unaffordable to live in for the majority of Americans.
Individual Job Growth Indicator Rankings
"City growth is essentially driven by exports that bring 'new' money into the city's economy," says John Downen, senior research analyst at the University of Utah's David Eccles School of Business in Salt Lake City, our top city for 2021 job seekers.
"So cities with companies that produce goods and services that people elsewhere want — think Amazon in Seattle — are more likely to experience economic growth."
But you need more than big-beyond-belief companies like Amazon, Downen adds.
"To support this growth, it's important to have a workforce with the skills those exporting industries need and a regulatory environment that does not greatly increase the cost of doing business, whether through high taxes or restrictive regulations."
More Jobs and Top Employers May Strengthen a City’s Appeal
The best cities for job growth are concentrated in smaller metropolitan areas. We found Birmingham, Alabama, to be the best for job growth, and three of the top five are found in the Midwest — Kansas City, Missouri; Oklahoma City, Oklahoma; and Salt Lake City, Utah.
It's true that every one of these cities experienced negative job growth over the last 12 months — most likely due to the pandemic. But MoneyGeek also found that all five of these top cities, when comparing the employment rate in February 2020 against the current employment rate, are within 1–2% of their previous employment levels. In contrast, the worst cities have about a 10–15% gap between previous and current employment rates.
There are many reasons that cities grow, however, and one of the biggest actions that spur job growth is when a city attracts a large employer. "Research has shown that most of the growth we've seen in income inequality in the last 40 years in America has occurred between, not within, firms," says Jon Thompson, an assistant professor of economics at Willamette University in Oregon.
"Working for Microsoft, Boeing, Alphabet or other large, nearly monopolistic enterprises is typically great for workers compared to working for enterprises in more competitive industries," Thompson says. So even if you don't have designs on landing a job with a multi-billion or trillion-dollar company, Thompson suggests moving to the cities that house them. A city that works well for an international powerhouse will generally mean more work for everyone.
Thompson's recommendation may mean that while Richmond, Virginia, is ranked as one of the worst cities for job growth this year, it may stage a reversal in the coming years. Amazon recently announced its plans to build a second headquarters in Arlington and a new fulfillment center in Richmond. Nevertheless, it's notable that San Francisco and New York City, where many major companies are headquartered, are two of the worst places for job growth in 2021. And with many businesses embracing the remote work trend over the last year, it will be interesting to see what happens to these cities.
Rising Wages Lift Cities Up
Richmond, VA, saw its wages climb 13%, and San Diego-Carlsbad in CA was the closest behind (9.8%). At the bottom was Kansas City, MO, where wages went down -5.1%. Nobody can know the future, and maybe Kansas City will be offering pay raises and company cars to everybody in the next year, but for now, it isn't a good sign when a city's wages are dropping.
Low Unemployment Boosts a City's Outlook
It seems to bode well for current and future job seekers when a city has a lower unemployment rate than others. Birmingham-Hoover, AL, currently has a 3.5% unemployment rate, followed by Jacksonville, FL, at 3.7%, and Los Angeles-Long Beach-Anaheim, CA, is at the very bottom with 9.9% and New York-Newark-Jersey City, NY, is close behind with 9.8%.
Affordable Housing Helps Workers Live Well
This ratio translates to housing affordability. The more money you spend on rent and housing, the less money you have for everything else. On our list, St. Louis and Milwaukee-Waukesha-West Allis, WI fare very well (3.7 and 3.5 respectively). Louisville/Jefferson County, KY, gets a 3.4, Birmingham-Hoover, AL, 3.0 and Hartford, Connecticut, 3.3.
That means if you live in St. Louis, your monthly income is typically going to be 3.7 times your monthly rent. Riverside-San Bernardino-Ontario, CA, is at the bottom with 1.8. San Diego-Carlsbad, CA is barely better at 2.0.
To rank the best cities for jobs, MoneyGeek calculated three factors from the Bureau of Labor Statistics and Zillow representing how good a city is for someone seeking jobs. The first factor is job growth and incorporates the trend in jobs created and the trend in wages. The next consideration is job competition and includes the unemployment rate as well as the overall size of the employment numbers reflecting greater absolute availability of jobs. The final factor is housing affordability, and it captures the ratio of wages over rents to indicate an area's cost of living.
- Growth in Employment, Last 12 Months: 20% weight
- Growth in Employment, Last 3 years: 10% weight
- Growth in Hourly Wages, Last 12 months: 15% Weight
- Unemployment Rate, Current: 35% Weight
- Size of Labor Force: 10% weight
- Monthly Wages Over Monthly Rents Ratio: 10% weight
Overall Growth: Growth in employment last 12 months (44%), growth in employment last 36 months (22%), hourly wage growth 33%. In the overall ranking, this is 45% of the overall weight.
Job Competition: Unemployment rate 78% weight, size of labor force 22% weight. In the overall ranking, this is 45% of the overall ranking.
Housing Affordability: Wages over rents ratio, 100%. This is 10% of the overall ranking composition.
For purposes of this analysis, only metropolitan statistical areas with labor forces larger than 500,000 were considered in building the ranking.