What the ‘State of Working Tennessee’ report says about entrepreneurship and innovation efforts
The following encapsulates some key takeaways from ThinkTennessee's State of Working Report.
Tennessee’s economy is surging. Over the past decade, the state has added more than 840,000 jobs, welcomed 636,000 new residents, and increased its gross domestic product by $223.3 billion. The state now ranks 13th nationally for population growth and 10th for GDP growth.
According to the recent State of Working report by ThinkTennessee, entrepreneurship has played a key role in that growth. Between 2015 and 2024, business formation in Tennessee rose 56.4 percent, outpacing both the Southeast (46 percent) and the nation (38.1 percent). Much of that growth occurred during the COVID-19 pandemic. The retail sector led the way, followed by professional services, construction, and manufacturing.
R&D efforts are also notably expanding, though Tennessee lags behind national benchmarks.
In 2021, R&D contributed $3.8 billion to the state’s economy, or 0.9 percent of GDP. Nationally, R&D accounts for 2.3 percent of GDP. Tennessee ranks 25th in R&D as a share of GDP. Very “middle of the pack.”
Unlike many states, Tennessee relies more heavily on government and nonprofit sectors for R&D. About 54.4 percent of R&D value comes from private businesses, compared to 85.4 percent nationally. Nonprofit institutions account for about a third of the funding, and the government contributes 13.5 percent.
Higher education institutions — both public and private — make up 18.4 percent of the state’s R&D output.
Despite strong economic indicators, the report showed that Tennessee still faces a labor shortage. In 2025, there were only 73 available workers for every 100 jobs.
According to the Boyd Center for Business and Economic Research at the University of Tennessee, future job growth could be constrained as the Baby Boomer generation continues to retire.
Labor force participation has also declined. From 2019 to 2024, the rate dropped from 61.8 percent to 59.6 percent.
- Young adults ages 16 to 24 saw a 6.4 percentage point decrease.
- Adults over 55 saw a 4.5 percentage point decrease, as well.
- Adults 25 to 54 increased from 77.8 percent in 2015 to 80.6 percent in 2024.
While Tennessee’s economy is thriving, many households are not fully benefiting from the boom. Rising costs, stagnant wages in some sectors, and limited access to high-quality jobs continue to challenge families across the state.
You can read many more takeaways from the nearly 70-page report here.
Learn more about ThinkTennessee.
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