Has the music stopped in Nashville's job market?

The Nashville metropolitan area currently has one of the lowest unemployment rates in the country. Job growth is strong at both ends of the value chain, in raw materials and professional industries. Logistics and related trades have also been expanding. But the sector that Nashville has relied on for decades to make its name – leisure and hospitality – may be starting to fade from the limelight.

Key takeaways

• The Nashville area has been gaining workers in logistics and related industries faster than the rest of Tennessee
• Employment in leisure and hospitality is well below the pre-pandemic trend and may be stalled
• A surge in the area's labor force may have ended and even be reversing

In August, the Nashville metropolitan area had an unemployment rate of just 2.8 percent, well below the national average. Nashville recovered from the pandemic more quickly than the nation as a whole, but now the difference is roughly the same as it was before the pandemic. There are compositional changes in the Nashville workforce that merit more analysis.

The primary source of jobs in the Nashville area is now the trade, transportation, and utilities sector. Job growth in transportation and warehousing has been particularly strong. Amazon announced plans for a 5,000-strong workforce in the area and is adding 1 million square feet of office space in addition to its distribution centers.

Memphis, with its FedEx hub, has traditionally been the center of logistics in Tennessee. But the Nashville area has been gaining ground steadily in the past couple of years. Here is how growth in the sector in Nashville has compared to the state overall:

We've been providing support for this boom with our staffing in logistics and other light industrial roles; shifts for warehouse associates and general labor have been among the most popular on our platform in the Nashville area this year.

We've also been staffing a variety of roles at events and venues, which are a huge part of Nashville's reputation as the Music City. But these days, leisure and hospitality account for just over 10% of employment in the greater Nashville area. And it looks like the sector may not be able to return to the steady growth that preceded the pandemic:

Right now, the sector is short about 12,000 filled positions versus the pre-pandemic trend, and the rebound from the pandemic has flattened out. There is also a gap at the national level, but it continues to close. The leveling off of the trend in the Nashville area is particularly surprising given the massive shift in consumer spending from goods to services over the spring and summer of this year. And now, consumers worried about an economic downturn may be starting to cut back on these same kinds of spending.

Looking ahead, there's another warning sign for the Nashville labor market. In the government's raw employment figures, the number of employed people in the area seems to have topped out and may actually be falling:

Part of the drop over the summer could be seasonal, but it's happened earlier than usual and is still significant. With such a low unemployment rate, these data could signify people leaving the labor force altogether, a return of the trend we saw earlier in the pandemic. Either way, the labor market in Nashville is shifting – will we someday call it the E-Commerce City?

These links offer more information:

Bureau of Labor Statistics: Economic Summary

State of Tennessee Economic Data

Nashville Chamber of Commerce Workforce Study

Realtime metrics

These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 10/13/2022 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:

• $0.15 drop in hourly pay
• 0.7% point rise in share of short-notice shifts
• 1.1 hours rise in hours per existing worker

To receive future briefings and data insights from our Economic Research team, please subscribe below. Follow Daniel Altman on Twitter at @AltmanEcon or on LinkedIn.