A worker looking for a job in California is stepping into a very different market than someone doing the same search in North Dakota. The gap between those two experiences is widening, and new data shows just how uneven the landscape has become. For commercial real estate investors, the divide is increasingly tied to where growth can be sustained and where it may stall.
A widening labor divide
Figures compiled by Visual Capitalist using data from the U.S. Chamber of Commerce and the Bureau of Labor Statistics point to a stark divide. In California, there are 184 available workers for every 100 job openings. In North Dakota, there are just 54. In practical terms, that means intense competition for jobs in one state and a persistent shortage of workers in the other.
That contrast is not just a short-term fluctuation. It reflects bigger structural differences that are becoming more visible as the overall labor market cools.
See also: Employ workers in California? Review your arbitration agreement
Surplus talent in coastal markets
In many coastal states, the issue is not a lack of talent. It is the opposite. California, New York, Massachusetts, Washington and New Jersey continue to draw large numbers of highly educated workers. But hiring has slowed in sectors that typically absorb that talent, particularly technology and finance. Tech layoffs alone have topped 84,000 this year, adding more candidates to an already crowded field.
The result is a growing surplus of workers. California alone has a labor surplus of nearly 500,000 workers when measured against current job openings. At the same time, the broader job market is no longer as expansive as it was just a few years ago. Open positions nationwide have dropped from 12.2 million in 2022 to 7.6 million today.
That shift is also showing up among younger workers. According to the New York Fed, 42% of recent graduates are underemployed, a sign that entry-level roles are not keeping pace with the number of people entering the workforce.
From a commercial real estate perspective, that kind of labor surplus can have mixed effects. Workers staying put longer can support apartment demand, but slower hiring and weaker business expansion can weigh on office leasing and new development.
Worker shortages in the Plains and South
In the Plains and parts of the South, the dynamic is almost the reverse. States such as North Dakota and South Dakota have roughly twice as many job openings as available workers. Employers are not struggling because demand is weak—but because there are not enough people to hire.
The industries most affected tend to be those that depend on local labor pools, including energy, agriculture, manufacturing, construction and healthcare. These are not sectors that can easily shift to remote work or tap into distant talent.
Population trends are a big part of the story. Slower growth, the outmigration of younger residents and an aging workforce have all reduced labor supply in these regions. Even when populations are stable, the available workforce does not always align with the skills employers need.
Similar challenges are showing up in parts of the South. In Alabama, nearly three in 10 small businesses reported in May being unable to fill open roles, citing a lack of qualified applicants. That kind of constraint can slow expansion plans and delay projects, even in markets where demand for space remains steady.
Why geography matters more now
For commercial real estate investors, these differences are becoming harder to ignore. Labor availability now plays a more direct role in shaping local market performance. In areas with worker shortages, development timelines can stretch and operating costs can rise. In areas with worker surpluses, demand may soften as hiring slows and companies take a more cautious approach to growth.
The broader labor market is still relatively healthy by historical standards, but it is clearly less dynamic than it was during the post-pandemic surge. Hiring has slowed, job openings are down and mobility has declined.
What stands out is how much geography now matters. Two markets can look similar on the surface but operate under very different labor conditions. For investors and developers, that gap is becoming an increasingly important part of the equation.
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