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Boyd Center warns of slowing job growth even as Tennessee GDP rises
Summary
Dr. Larry Kessler told the Senate Finance, Ways and Means Committee that Tennessee's GDP gains mask a weaker labor market: employment growth has fallen from roughly 60,000 new jobs per year pre-pandemic to about 24'5,000 in 2025, and the state faces a persistent mismatch between available workers and job openings.
Dr. Larry Kessler, director at the Boyd Center for Business and Economic Research at the University of Tennessee, told lawmakers the state's economy shows a paradox: continued GDP growth with muted job creation.
"So my name is Larry Kessler. I'm with the Boyd Center for Business and Economic Research at the University of Tennessee, and it's an honor to be here today," he said as he opened his presentation. Kessler said national and state GDP recovered strongly after the pandemic, but employment gains have slowed: "we forecasted about 24,000 new jobs created in 2025. I think now that the data is out, it's about 25,000." He contrasted that with pre-pandemic averages of about 60,000 jobs per year.
Kessler told the committee the discrepancy stems from sector-specific weakness (construction and health services), slower manufacturing gains and demographic pressures including retirements that reduce the labor supply. He summarized the labor shortage measure by saying the gap between labor supply and demand is currently about 20,000 positions statewide, "the lowest it's been in about five years," but still sizable.
The report frames the slowdown as a medium-term challenge: the Boyd Center projects roughly 31,000 new jobs in 2026 and a long-run average near 40,000 annually from 2027'035, but Kessler said aging and participation trends will keep growth below pre-pandemic levels unless labor-force participation improves. He recommended lawmakers consider policies that address health and education outcomes to raise participation and support sustained employment gains.
