Here's where Phoenix ranks among hottest US job hiring markets

The job marketing is softening nationally, but the Phoenix area compares favorably to other major metros.

That's according to new data from the research arm of payroll giant ADP, which identified the nation's hottest hiring markets based on pay growth, starting wages and hiring rate for 15 million workers.

The Phoenix metro ranked No. 11 among 55 markets with populations of one million or more. Phoenix saw annual pay growth of 5.2% from July 2023 to June 2024, during which time it had an average new hire wage of $17 per hour and a 4.2% hiring rate —?a metric which compares the number of new hires to the state's monthly total employment. The metro was found to be in the 81st percentile among the 55 hiring markets studied by ADP.

Some of the top industries in the Phoenix metro include financial activities, leisure and hospitality and construction. The hiring rate for financial activities jobs in the metro was 4%, according to ADP, placing that industry in the 91st percentile in the study. Phoenix's pay growth was highest in the construction industry, jumping 6.4% to $22 per hour to land in the 80th percentile. That tracks with a recent report from Construction Coverage, which found that Arizona saw the No. 7 highest construction wage growth of any state from 2018 to 2023.

The jobs picture in the Phoenix metro has been a mixed bag in other sectors. Manufacturing has been a particular bright spot, with Arizona in 2024 ranking as the No. 1 market growth market for manufacturing job gains , according to one report from Newmark Group Inc. The state figures to feature prominently into U.S. efforts to close an expected manufacturing workforce gap in the coming years, as tech giants such as TSMC, Intel, LG and Amkor plan large campuses in the metro.

On the other hand, the Valley slipped slightly in a recent ranking by CBRE Group Inc. of the top 20 tech talent markets in North America , dropping to No. 18. That report found that Phoenix's average annual tech salary increased by $13,663 in 2023 to $97,977 — still short of stalwart tech markets such the Bay Area and Seattle, which registered average tech salaries of $192,969 and $176,189, respectively, according to the study.

Denver tops other US 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 .

The top metro area based on ADP's criteria was Denver, with 5.8% annual pay growth, $19 an hour for new hires and a monthly hiring rate of 4.5%. Hiring rate represents the?number of new hires as a share of monthly total employment between July 2023 and June 2024.

Following closely behind 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 data also found that 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.”