The city with the highest employment in the USA

In this article, we’ll take a look at the city with the highest employment rates in the U.S. To see the full list, read The 25 Cities with the Highest Employment Rates in the U.S.

As 2024 settles in, investors’ attention has once again turned to the economy. As has been the case for more than a year, key indicators like unemployment, inflation, and interest rates are on Wall Street’s radar. These indicators are important for gauging the long- and medium-term direction of the U.S. economy.

On the employment front, the U.S. labor market has managed to hold its ground despite 23 years of high interest rates. The labor market has been a primary target of the Federal Reserve’s interest rate hikes. The Fed’s mandate is to regulate prices and maintain a strong labor market. To achieve labor market stability, officials have carefully balanced monetary policy between tightness and leniency to avoid causing economic damage.

In late May 2024, economic indicators were revised and new data emerged confirming that the US economy is struggling under pressure from high interest rates. The new set of data comes from the Department of Commerce, showing that US GDP grew by 1.4% in the first quarter and 2.8% in the second quarter. This shows an acceleration in the pace of GDP growth amid expectations of a rate cut. Another key indicator that saw a downward revision was consumer spending. Closely linked to the labor market, consumer spending is key to economic growth. Initially revised down to 2% by economists, consumer spending recorded an annualized growth rate of 2.3% in the second quarter.

Despite these positive numbers, the labor market is facing a heatwave. Just as the broader stock market’s performance is tied to economic indicators, the labor market also influences wages and other stocks related to human resources management. These stocks tend to do well when hiring is strong, and the recent slowdown, which has caused companies to remain cautious about hiring, has also affected stocks.

One such stock is Workday, Inc. (NASDAQ:WDAY), a workforce management software provider based in Pleasanton, California. Workday shares fell more than 20% in the last week of May after the company, which enables enterprises to manage financial operations, including payroll, released its first-quarter earnings report. The report was important for the future of the workforce, as Workday lowered its annual subscription revenue to a level that barely met analyst estimates. For the current fiscal year, Workday expects subscription revenue to be between $7.70 billion and $7.73 billion. The previous estimate was between $7.73 billion and $7.8 billion, and the high end of the current estimate is also the analyst average.

The story continues

Workday stock has seen a 10% gain since then, and currently has a price-to-earnings ratio of 34. This means the stock is trading at a higher multiple compared to the S&P 500, which has a price-to-earnings ratio of 21. The company has grown its revenue by about 67% over the past five years, while the stock is up about 25% over the same period. This shows that Workday stock is quite sensitive to any changes in investor outlook. Software stocks are not doing very well in 2024 as investors believe that emerging AI technologies will make it easier and cheaper to create alternative software products at a fraction of the current cost. We agree with market sentiment and believe that AI stocks will outperform software stocks. If you are looking for an AI stock that is more promising than WDAY but is trading at less than 5 times earnings, check out our report on cheapest AI action.

Another employment stock that closely tracks the labor market is Automatic Data Processing, Inc. (NASDAQ:ADP). Its stock has seen about a 50% increase in price over the past five years, while revenue has grown by about 24%. Automatic Data Processing, Inc. (NASDAQ:ADP) has a P/E ratio of 25, which is more in line with the S&P 500. Of course, this also means that ADP needs to grow faster than the market to justify its current price.

As for Workday, Polen Capital shared some important insights into the company in its Q1 2024 investor letter. The fund commented:

As investors remain cautious about the economy and job market in 2024, we decided to take a look at the U.S. cities with the highest employment rates.

A group of smiling job seekers shake hands with employers at a job fair.

Our methodology

To compile a list of the U.S. cities with the lowest employment rates, we used the April 2024 Department of Labor data on unemployment rates by metropolitan area and selected areas with the lowest seasonally adjusted unemployment rates.

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1. Ames, IA Metropolitan Statistical Area

Unemployment rate in April 2024: 1.6%

At the top of our list of US cities with the most employment is the metropolitan area of ​​Ames, IA. Also known as Story County, Iowa, it had a population of 98,566 in 2023. The county seat is Nevada, Iowa. Nevada is a small city with a population of less than ten thousand.

The largest city in Story County is Ames, Iowa. In 2020, the population was 66,427, making it the ninth most populous city in the state. The largest employer in Ames City is Iowa State University. The city also has important departments of agriculture and energy.

Story County is currently preparing for a historic bill to be approved by the Iowa Legislature. The new laws could make it harder for foreigners to own land in the area and ultimately benefit residents through economic growth. The bill comes as tensions between the U.S. and China continue to rise, with U.S. lawmakers criticizing Chinese ownership of farmland in the U.S.

You can see other cities with high employment rates on the 25 Cities with the Highest Employment Rates in the USA page.

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Disclosure: None.