Think tank’s report identifies opportunities to leverage the state’s economic growth to improve Tennesseans’ economic security, ensure access to high-quality, high-wage jobs
NASHVILLE – While Tennessee continues to experience tremendous economic growth, many residents are struggling to make ends meet, according to a new policy brief Thriving State, Strained Households released today by nonpartisan think tank ThinkTennessee. The analysis highlights where and how our economy is thriving – Tennessee is now the 15th largest state by population and employment and 17th largest economy by GDP – and where Tennessee workers are being left behind. The policy brief provides a summary of key findings and policy recommendations from the comprehensive State of Working Tennessee report, also released this week by ThinkTennessee.
“Tennessee’s economic ascent is undeniable – but that success should be lifting more Tennessee families,” said Erin Hafkenschiel, president of ThinkTennessee. “Too many households are falling behind as costs of living skyrocket. Thoughtful, innovative policies to ensure Tennesseans have access to high-quality, high-growth, high-wage jobs can help spread economic prosperity more equitably across our state.”
Key Takeaways:
- Nearly one in two employed Tennesseans work in the state’s four largest industries. But they are not the fastest growing industries or highest wage jobs. Nearly half of Tennessee’s workforce is in four primary industries—manufacturing, healthcare, retail trade, and government—yet these sectors are not the fastest-growing or highest-paying. Meanwhile, higher-wage sectors like management and professional, scientific, and tech services are growing more rapidly but employ fewer Tennesseans.
- Workers in several critical industries are not earning a living wage. Employees in essential industries—such as retail, agriculture, food services, and early childhood education—earn between $9 to $20 less per hour than the estimated Tennessee living wage of $36.31.
- While growth is occurring in most of the state, some counties are not sharing in the state’s prosperity. Despite overall statewide prosperity, 18 counties, primarily in rural and West Tennessee, have experienced declines in population, employment, or GDP, affecting communities already in economic distress.
- Tennessee has invested heavily in tax incentives for businesses, though more can be done to ensure these jobs are benefiting Tennessee workers. Tennessee has invested nearly $2 billion in business tax incentives since 2017. While these have stimulated job growth, many lack quality standards or transparency measures to ensure long-term benefit to workers.
- Tennessee’s low labor force participation rate is contributing to a worker shortage. Labor force participation in Tennessee stands at 59.5%, trailing both regional and national averages and contributing to an estimated 59,000-worker shortage, despite low unemployment. Women, older adults, and those with less education have the lowest workforce participation rates in the state.
- Wages aren’t keeping up with rapidly rising costs, leaving families struggling to pay for basic necessities. Although average annual wages have risen by 20.6% since 2020, the costs of essential needs have surged much higher: median home prices are up 67.6%, vehicle ownership costs by 28.6%, and childcare by 21.4%, leaving families stretched thin.
To ensure more Tennessee families can benefit from the state’s growth, the brief recommends policymakers focus on strategies such as boosting access to high-quality jobs, supporting working families with childcare and paid family leave, increasing transparency and job standards for economic incentives, improving the affordability of essentials, and more.
The policy brief Thriving State, Strained Households: Tennesseans Face Rising Costs Despite Economic Boom and the complete State of Working Tennessee report can be found on ThinkTennessee’s website at thinktennessee.org/research/economy.
