For St. Louis, this was the year economic momentum pushed up against the limits of a slow-growing population.
Job growth, which had surged for three years as the metro area completed a belated recovery from the Great Recession, slowed markedly in 2017. As of October, St. Louis has added 12,500 jobs in the latest 12 months, down more than 25 percent from 2016’s 17,100-job gain.
The 2018 total won’t be any bigger and may even be smaller, predicts Karl Kuykendall, a regional economist with IHS Markit. St. Louis simply doesn’t have enough people ready and willing to enter the job market.
The metro area’s unemployment rate, at 3.3 percent in October, is almost as low as it was in early 2000, at the end of the strongest economic boom most workers can remember.
Moreover, we seem to be out of homemakers, retirees and others who are inclined to go looking for jobs. The area’s labor force — the number of people who are working or actively job hunting — has shrunk by 2.2 percent in the past year.
“Labor force scarcity is becoming an issue,” says Howard Wall, an economist at Lindenwood University. “We had a good couple of years, but this year seems to be more typical of the long-term trend for St. Louis.”
Kuykendall calls the outlook for next year “lukewarm.” “We’re at the point in St. Louis where the unemployment rate has gotten so low it can have a dampening effect on job growth,” he explains.
Metro areas with better growth prospects next year are the ones, mostly in the South and West, that attract workers from other parts of the country. St. Louis, in most years, has more people moving out than moving in.
We can pat ourselves on the back all we want about our strong health care and financial-services industries, but demographics are a big determinant of the region’s future. Among the 25 biggest U.S. metro areas, only Detroit had a slower rate of population growth between 2010 and 2016.
And, like much of the Midwest, St. Louis is aging. The shrinking workforce number means we aren’t producing or attracting enough young workers to replace the older ones who retire.
We were able to sustain strong job growth for a couple of years, while people who had lost jobs during the recession remained on the sidelines. That source of potential labor supply is running out.
“We’re past the recovery stage,” Wall says. “This is the long-run trend that we’re in, and what is happening now is what we have for the next few years.”
A worker shortage makes St. Louis look unattractive to national companies, such as Amazon, that are deciding where to expand. Over the longer term, our hope has to be that the region’s startup companies will thrive, becoming magnets that attract young workers to the area.
This year did bring a couple of hopeful developments on that front. Tech giant Cisco Systems bought Observable Networks, a cybersecurity startup, and said good things about the region’s talent pool. Aclaris Therapeutics bought Confluence Life Sciences, a drug-development firm, and plans an expanded presence in the Cortex area.
It will take a long time for deals like those to move the needle for St. Louis, though. Meanwhile, if job growth is going to be slow for the next couple of years, we can at least hope that it remains steady.