Conversation Starter: Local Unemployment Rates Show Star Metros Falling to Earth

The share of metros where the local unemployment rate has increased by 0.5 percentage point or more over the past year is up sharply now covering nearly half of metro areas, home to just over half of all U.S. workers. (A 0.5 percentage point or greater increase in the smoothed, seasonally adjusted national unemployment rate over its lagging 12-month low is historically associated with economy-wide recessions according to research by economist Claudia Sahm.)

Paradoxically, however, the national unemployment rate has not increased – effectively holding flat over the past year.

How are these seemingly contradictory claims both true? A closer look at metro unemployment rates suggests that unemployment has increased more in local markets with low unemployment rates, narrowing the gap between the nation’s tightest job markets and the rest of the country.

The chart below shows the 10th percentile, the median, and the 90th percentile of metro unemployment rates through November 2023 (the most recent data available at this publication). While the 10th percentile of metro unemployment rates has increased by 0.4 percentage points from its April 2023 low, the 90th percentile has increased by only 0.2 percentage points from its June 2023 low. Moreover, the 10th percentile is 0.1 percentage points above where it stood on the eve of the Covid-19 pandemic, while the 90th percentile is 0.3 percentage points below where it was in January 2020.

Another way to visualize the same data is to look at the percentage point gap between the tightest and softest jobs markets. The chart below shows the gap between the 25th and 75th percentiles (known as the “interquartile range”), the gap between the 20th and the 80th percentiles, and the gap between the 10th and the 90th percentiles. All three metrics show that cross-metro disparities in unemployment rates are narrowing to historical lows going back to at least 1990.

Together, these data suggest that: (1) unemployment has increased faster and is now above pre-pandemic norms in the nation’s historically tight jobs markets, but is increasing more slowly and is still tighter than historical norms in the nation’s historically weak jobs markets, and (2) there has been some convergence in unemployment rates across metro markets.

Conversation Starters are a periodic series of charts and data points from Glassdoor’s Economic Research team aimed at sparking conversations on timely trends in employee satisfaction, workplace community, the future of work, and the labor market more broadly.