How Shifting Labor Markets Are Redrawing the US Talent Map

Over the past five years, the labor market has undergone monumental changes. The COVID-19 pandemic was a massive disruption that brought about one of the most competitive labor markets in history, leading to record demands for talent, historically high quit rates and elevated inflation and wages. The pandemic reshaped how people work by normalizing remote roles and, amid acute talent shortages, pushed organizations to hire beyond their traditional geographic boundaries.

Wages across the United States vary significantly from one metropolitan area to another, reflecting differences in labor supply, cost of living and local economic conditions. As a result, understanding geographic variation is essential when evaluating labor costs. To simplify these differences, U.S. metros are often grouped into broad market tiers, ranging from lower-cost midsized and smaller regions to the highest-cost labor markets, such as New York and San Jose, California.

To keep this framework aligned with ongoing shifts in the labor market, our market analytics team periodically reviews economic indicators across all U.S. metropolitan areas and update tier assignments as appropriate. Recent trends, including strong job creation and rising wages in parts of the Southeast, have resulted in several metro areas moving into a higher market tier — examples include Atlanta; Austin, Texas; Charlotte, North Carolina; Durham, North Carolina; and Raleigh, North Carolina.

The Five-Year Shift: Understanding a Changing Workforce

Following the pandemic, record demand for talent and severe talent shortages gave more leverage to employees. Monthly job openings exceeded one million throughout the latter half of 2021 through all of 2022, reaching a historical 1.21 million job openings in March 2022. With the unemployment rate hovering between 3.5% and 4.0% during this time, the supply of available talent couldn’t meet demand, resulting in a labor market where employees had significantly more bargaining power compared to recent history. The worker-friendly labor market led to a trend known as the Great Resignation, in which workers quit their current roles in record numbers in search of higher compensation, better non-wage benefits and more flexible work arrangements.

The Great Resignation coincided with historic inflation and rapidly rising wages, driven by employers increasing pay to compete for talent in a very competitive labor market. While workers across the board saw higher earnings, job switchers experienced the largest gains. Lower wage workers, such as those in retail, hospitality, transportation and warehousing, experienced notable gains during this period. According to the Economic Policy Institute, workers at the 10th percentile saw wages rise 13.2% from 2019 to 2023, far outpacing increases for middle-wage workers (3.0%), upper middle-wage workers (2.0%), and even those at the 90th percentile (4.45%).

Although the Great Resignation initially reshaped the labor market, a combination of economic and geopolitical pressure has since slowed this momentum. Job openings have declined from record highs, and quit rates have fallen back to pre-pandemic levels. As a result, workers now have few incentives to change jobs, leading to the so-called “Great Stay.” By February 2025, job switchers were seeing wage growth of 4.2%, slightly below the 4.4% wage growth of job stayers, marking a reversal of earlier patterns. With rising uncertainty, many workers are opting for stability and 75% report plans to remain in their current role through 2027.

A Workforce on the Move

As government mandated shutdowns pushed many organizations into remote operations, jobs that could be performed off site quickly shifted in that direction. This gave employees greater flexibility and expanded employers’ access to talent, well beyond their traditional geographic limitations.

While many companies have enacted return-to-office initiatives, about 1 in 10 US workers continues to be fully remote. During the pandemic, many remote workers relocated from high-cost coastal cities to more affordable regions, particularly across the Sun Belt. In the decade prior to the pandemic, coastal hubs like San Jose, New York, Seattle and Boston accounted for two-thirds of job creation, and in the years that followed, they accounted for less than half.

Employers have mirrored this shift, redirecting growth and investment toward Sun Belt states, which typically offer lower wages and more flexible regulatory environments. In the five years leading up to the pandemic, higher cost states like California (No. 1), New York (No. 5), and Washington (No. 6) led the nation in job growth. However, none of them appeared in the top growth states in the years after. Instead, Texas, Florida, Arizona, North Carolina and Georgia emerged as the top five job creating states from 2019 through 2024.

While these regions still offer greater affordability and lower wages than high cost-of-living areas, the movement away from high cost-of-living areas has translated to stronger wage growth in more affordable metros, creating a trend of wage convergence. The southeast, in particular, is experiencing elevated wage growth driven by talent migration, and strong activity in industries such as construction, professional and business services, education and health services. Additionally, many states in the southeast are attracting substantial manufacturing investment due to favorable economic policies and the availability of skilled labor.

Businesses have followed this regional momentum as well. In 2021, an estimated 6,400 firms moved to new states, a 68% increase from 2011. Even if businesses didn't move headquarters, many opened new operational centers across the US. Companies moved for a variety of reasons, including proximity to newly concentrated talent pools, lower labor costs and advantageous state tax structures and incentives. These relocations have been especially common among technical, professional, finance and scientific industries — including Fortune 500 companies such as Tesla, Caterpillar and Oracle. The southern region of the US has been the biggest beneficiary, emerging as the only US region with a net inflow of businesses. States like Texas, Georgia and the Carolinas, already top destinations for migrating workers, have also become leading locations for business headquarters and expansions.

Behind AGS’ Market Analysis

To ensure our market tiering framework remains aligned with current labor market conditions, the market analytics team conducted a broad review of wage levels across US metropolitan areas using established public and third-party data sources. This analysis incorporated wage information across key occupational groups relevant to AGS Managed Services (AGS) clients, providing a balanced view of compensation patterns across the country.

All US metropolitan statistical areas (MSAs) were reviewed and grouped into five general market categories based on relative wage levels. These categories reflect natural differences across regions. For example, major coastal hubs consistently fall into higher wage tiers, while more affordable metros cluster in the mid to lower wage tiers.

To validate the directional shifts indicated in the wage data, we also reviewed a range of widely available labor market indicators, including measures of employment, population change, job openings and wage trends from the Bureau of Labor Statistics (BLS). These indicators provide additional context for talent supply, demand and long- and short-term labor market dynamics across regions.

This broader view helps ensure that market categories reflect sustained economic patterns rather than temporary fluctuations. Maintaining an accurate understanding of relative labor market conditions supports more informed decision making when advising clients on competitive pay expectations across different markets.

What We Learned: Regional Wage Growth Trends

Overall, average weekly earnings grew by 34.4% from 2019 to 2025 as the US economy evolved through periods of economic growth, inflation, tighter labor markets and changes where both workers and employers decided to relocate. Regionally, the US Census West region (California, Washington, Arizona, Montana, etc.) led with wage growth of 36.4%, followed by the US Census Northeast region at 34%, the US Census South region at 33.1% and the US Census Midwest region which trailed the national average.

While the West and Northeast experienced the strongest overall growth, the South saw some of the most significant movements among individual metropolitan areas. Several MSAs such as Atlanta, Austin, Raleigh-Durham and Charlotte saw exceptional growth in wages, shifting them upward within broader market categories. This pattern reflects the substantial economic activity and population inflows into these metros over the past several years.

Rising Markets Across the South

In this section, we highlight four metropolitan areas that have recently moved into a higher wage tier and explore the economic conditions behind that shift. These cities share several common characteristics that have contributed to sustained economic expansion: strong population growth, relatively low unemployment and an influx of new businesses. Although these metros historically fell into midrange wage categories, recent wage gains have placed them toward the upper end of their previous tier, prompting their movement into a higher category.

Austin, TX

Austin leads the nation in economic growth with 51% GDP growth from 2019-2023. Austin's multi-sector growth has contributed to strong wage growth. Average weekly earnings in Austin significantly outpaced overall US wage growth at 44% from 2019 to 2025 (compared to 34.4% national average). This was partially driven by high population growth, with many high earners moving to the state (particularly from traditional tech hubs in California). While a low unemployment rate has contributed to a very competitive market for talent, high densities of skilled labor make Austin an attractive spot for sourcing. As a result many large companies have moved or expanded operations into the area. In terms of educational attainment, the metro ranked No. 8 in the nation in 2025, with 67.3% of residents over 25 holding a bachelor's degree and 29.56% holding a graduate degree. While Austin is widely known as a tech hub, other industries like space technology, automotive manufacturing and semiconductor manufacturing have large operations in the metro.

Austin's popularity as a hub for skilled talent is reflected in the many companies that have moved into the area, including Tesla, Meta, Microsoft, Apple, NXP Semiconductors and Samsung. AGS' data shows strong growth in the IT labor category as well. Bill rates have grown by 18%, driven by IT infrastructure and IT applications roles.** Austin's wage growth is likely to continue as the city works to attract not only tech companies but engineering and advanced manufacturing as well.

Atlanta, GA

Area Development ranked Georgia as the Top State for Doing Business for the 12th consecutive year in 2025, with Atlanta serving as the state’s primary commercial hub. Over the past decade, wages in Atlanta have steadily increased, placing the metro within a higher wage tier. From 2019 to 2025, average weekly earnings grew by 30% supported by low unemployment rates, tight labor supply and strong job growth. Key industries, including manufacturing, IT and data center construction, continue to expand, with major employers such as Microsoft, Google, Mercedes-Benz and Visa establishing or growing their presence in the region.

Recent labor market data reflect the continued rise in wages across this metro. Sectors such as light industrial and professional services have seen some of the strongest gains since 2020, while wages in IT have grown at a steadier pace. These trends indicate that Atlanta’s compensation levels are increasingly aligned with higher wage markets. Given its expanding industry base and competitive position relative to other US metros, Atlanta is well positioned for continued wage growth in the years ahead.

Raleigh-Durham, NC

The Raleigh-Durham area – home of Research Triangle Park – has traditionally been a hotspot for research and development. The area is home for a lot of skilled talent, with both Raleigh and Durham ranking in the top 10 most educated cities in the United States in 2025. Biotechnology and pharmaceuticals are thriving, with Biogen, IQVIA, Syngenta and LabCorp being major employers in the Raleigh-Durham area. Aside from life sciences, Raleigh is also an attractive destination for IT, boasting major employers like Red Hat, Epic Games and SAS Institute. The area's average weekly earnings grew by 33% from 2019 to 2025, slightly below that national average. Strong population growth coupled with continuously low unemployment rates have led to a competitive labor market, pushing average wages in the Raleigh-Durham metro into higher-wage territory.

Organizations across industries like finance, information technology, professional services and healthcare are hiring in this market. In recent years, Apple, MetLife and Deutsche Bank have expanded operations in the area. AGS data indicates strong wage growth in Scientific & Healthcare (+33%) and IT (+15%) labor categories from 2020 to 2025.** With competitive wage levels and sustained corporate expansions in the area, wages in the Raleigh-Durham area will continue to grow.

Charlotte, NC

Often considered the second largest banking hub in the US, Charlotte has become a hot spot for IT and professional talent. Although wage growth in the metro – about 23% since 2019 – has trailed the national average, overall wage levels have risen steadily as the region continues to expand. Strong population growth combined with low unemployment has created a tight labor market, supporting continued economic development. A wide range of companies across industries have either moved to the area or increased their presence, further strengthening Charlotte’s position as a growing economic hub.

Finance is traditionally the largest consumer of IT and professional talent, with major players like Bank of America and Truist Financial headquartered in Charlotte. However, an increasing number of tech companies have a presence in Charlotte, including Microsoft, IBM, Cisco and Accenture. Charlotte is an increasingly desirable destination for manufacturing and engineering, with companies like Honeywell and Daimler Trucks North America having a substantial presence. AGS data demonstrates large increases in bill rates for engineering (+101%), professional services (+93%), and IT (+33%) labor categories.** Charlotte is positioned to continue to grow with a tight labor market and growing employer base.

Final Insights

The past five years have reshaped the US labor market in ways that continue to influence wage levels, talent availability and business location decisions. Structural shifts brought on by the pandemic, from the rapid adoption of remote work to large scale worker migration, have redistributed both people and companies across the country, accelerating wage growth in regions that were historically more affordable. As these dynamics evolve, several metropolitan areas in the southeast, including Atlanta, Austin, Charlotte and Raleigh Durham, have seen sustained increases in wages, strong population inflows, expanding business activity and increasingly competitive labor markets.

By using a broad, data driven review of wage trends, unemployment patterns, job openings and long-term demographic shifts, the analysis ensures that regional labor market insights accurately reflect current economic conditions. These findings support more informed decisions around competitive pay, sourcing strategies and workforce planning. As wage patterns converge and talent markets continue to evolve, maintaining timely and forward-looking labor market intelligence remains essential. The trends outlined in this whitepaper highlight the importance of continual monitoring to keep compensation strategies aligned with both current conditions and the direction the labor market is heading.

** Calculated by Allegis Global Solutions’ Analysts

(Citations here are just to the BLS data, calculations were done by AGS)

Contributing Author: Caitlin Wynn