Denver has the hottest job market in the nation, report finds

Businesses in the Denver area are hiring more often and paying better wages compared to their out-of-state peers, making the region the country's hottest market for job seekers. according to a new report.

Payroll giant ADP recently identified the nation's hottest hiring markets based on pay growth, starting wages and hiring rate for 15 million workers.

The Denver metro area, defined as the Denver-Aurora-Lakewood metropolitan statistical area, earned the top place out of 55 metro areas analyzed by ADP.

ADP rated Denver particularly high in wage growth. Yearly pay growth hit 5.8%, ranking Denver in the 98th percentile.

ADP's research also placed Denver in the 87th percentile for new-hire wages, at $19 per hour, and in the 67th percentile for its monthly hiring rate, at 4.5%. Hiring rate represents the?number of new hires as a share of monthly total employment between July 2023 and June 2024.

Those factors combined to make Denver's top ranking.

Construction and professional services were the largest overall drivers of the high ranking, with new hires in construction making an average of $25 per hour.

The rankings were also buoyed by strong hiring rates in the leisure and hospitality sector, at 5.6%. Another factor was the 7.6% annual wage growth recorded by businesses in natural resources and mining, the report said.

Colorado growth

Despite sluggish job growth in 2023 that dragged into this year, Colorado's larger economy often outpaces the nation in several key metrics, local economists say.

High GDP, strong labor force participation rates and a large number of job openings have helped Colorado consistently fare well in national rankings, said Brian Lewandowski, an economist with the University of Colorado's Leeds School of Business, during a press call in August that discussed the state's economic situation.

As of June, Colorado wages grew 11.2% year-over-year — a number that Lewandowski called "anomalous," although not so far-fetched when stacked up to prior months.

Beginning in February with 6.1% growth, Lewandowski said the state has consistently logged high rates of wage growth.

Richard Wobbekind, another senior economist at CU's Leeds, added that lower-wage positions have recently been making significant gains. Those changes could be contributing to the percentage increases seen in wage growth, he said.

At $19 per hour, ADP's starting wage in the Denver area ranked 50 cents higher than any of the other metro areas analyzed. This year, Denver's local minimum wage ordinance brought its minimum wage to $18.29 per hour.

Hottest hiring markets

Some of the hottest job markets in the country aren’t where you might think they'd be, underscoring how pockets of stiff competition are developing despite a broadly slowing labor market.

Following closely behind Denver were Oklahoma City, Las Vegas, Seattle and Portland. Each of those cities posted annual pay growth above 5.4%.

At the other end of the ranking was Providence, Rhode Island, which saw lower pay raises and a lower hiring rate, along with Tampa, Florida; Baltimore; and Salt Lake City.

Liv Wang,?lead data scientist at ADP Research Institute, said while some labor markets are hotter than others, those at the bottom of the list are not “bad” so much as they haven’t seen recent growth. Also, cost of living and internal migration can shift a labor market by providing a steadier supply of new workers.

“Affordability and price level definitely matters — and also some migration of workers might help the labor shortage in certain areas,” Wang said. “That can also ease wage increases.”

According to the ADP research, new hires could expect the biggest starting salaries in areas with high costs of living, with San Jose, California, topping the list at $25 per hour, followed by San Francisco at $21 per hour, and Seattle and Boston at $20 per hour. Starting wages for new workers bottomed out among the markets tracked at $15 per hour in New Orleans, San Antonio, Pittsburgh and Virginia Beach, Virginia.

Some industries have seen stronger pay growth than others. For example, annual pay growth for manufacturing jobs in Austin, Texas, stood at 11%, followed by 10.6% for natural-resources and mining jobs in Richmond, Virginia. On the flip side, natural-resources jobs in Tulsa, Oklahoma, saw a 1.7% decline in pay over the last year.

The highest average wage for any new hire in any industry was $65.90 per hour in San Jose for the information industry — not a surprise given the tech-heavy presence in Silicon Valley.

The research comes in the context of the Labor Department's recent announcement that it has revised its new-jobs reports over much of the last year downward by about 818,000.

Alex Cook, small-business expert at H&R Block’s Block Advisors, said workers will continue to seek out traditional employment as opposed to taking on side hustles for secondary income.

“This data nods to potential difficulty that [small- and medium-sized business] owners may face hiring employees while competing with larger, more established companies for talent," Cook said in an email. "With a steadying, slowing job market, the wages and benefits that larger companies can offer will make it hard for resource-strapped, smaller/younger SMBs to compete.”

Small-business owners are feeling the stress of the current market conditions, according to the latest National Federation of Independent Business Small Business Optimism Index.

“The road ahead remains tough for the nation’s small-business owners,” said NFIB Chief Economist Bill Dunkelberg in a statement. “Cost pressures, especially labor costs, continue to plague small-business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.”