ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + First Quarter 2006 + College of Business and Technology

NEW BENCHMARK DATA

This labor market report is based on the new 2005 Benchmark of the Current Population Survey, U.S. Bureau of Labor Statistics. Each year, the BLS issues revised data for the labor markets in counties and cities, therefore the labor market data in this report are not comparable with the data in previous reports. The revised figures show that the regional economy performed slightly better in 2005 than indicated by the previous data, and as a result, unemployment rates have been revised downwards.

THE METROPOLITAN AREA (CSA)

The favorable labor market trends of 2005 gained momentum during the first quarter of the new year. Regional employment increased by 1.6% to 223,427, a gain of over 3,500 jobs compared to a year ago! Reflecting the higher job levels, the number of unemployed workers decreased 14.5% to 11,959. The jobless rate for the Tri-Cities metro area during the January to March period was 5.1%, compared to 6.0% in the same period of 2005.

Among the fourteen NAICS industrial sectors, higher employment levels were reported by eight, job declines by five, while employment remained stable in one. Job gains were led by government, education & health services, other services, retail trade, transport & utilities, information services, professional & business services, and wholesale trade. Job losses occurred in durable manufacturing, nondurable manufacturing, construction, finance, and leisure & hospitality. Employment was unchanged in mining.

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 232,340 0.25 221,186 -0.47 11,155 17.23 4.80
 2002 233,603 0.54 220,479 -0.32 13,124 17.66 5.62
 2003 236,736 1.34 223,088 1.18 13,648 3.99 5.77
 2004 235,582 -0.49 222,523 -0.25 13,060 -4.31 5.54
 2005 235,798 0.09 223,428 0.41 12,370 -5.28 5.25
 04:1 235,399 0.06 221,379 0.00 14,020 1.13 5.96
 04:2 234,694 -0.42 222,096 0.03 12,598 -7.68 5.37
 04:3 235,984 -0.28 222,871 0.09 13,113 -6.18 5.56
 04:4 236,252 -1.30 223,745 -1.11 12,507 -4.57 5.29
 05:1 233,884 -0.64 219,897 -0.67 13,987 -0.23 5.98
 05:2 236,405 0.73 223,874 0.80 12,531 -0.53 5.30
 05:3 235,731 -0.11 223,989 0.50 11,742 -10.46 4.98
 05:4 237,171 0.39 225,952 0.99 11,219 -10.30 4.73
 06:1 235,386 0.64 223,427 1.61 11,959 -14.50 5.08

THE TRI-CITIES

The strong regional performance extended to all three cities during the first quarter. Job growth exceeded one percent while unemployment levels saw double digit declines. These conditions marked the best labor market conditions during the past year. Compared to 2005, job levels were up 1.9% in Johnson City, 1.4% in Bristol, and 1.2% in Kingsport. Unemployment was down in all three cities, dropping the jobless rate to 4.9% in Johnson City, 5.0% in Kingsport, and 5.1% in Bristol (compared to the regional rate of 5.1%).

Bristol TN-VA Urbanized Area Labor Market

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 27,153 0.37 25,981 -0.37 1,172 20.28 4.31
 2002 27,218 0.24 25,803 -0.68 1,414 20.72 5.20
 2003 27,638 1.55 26,024 0.85 1,615 14.17 5.84
 2004 27,100 -1.95 25,540 -1.86 1,560 -3.36 5.76
 2005 26,986 -0.42 25,568 0.11 1,419 -9.09 5.26
 04:1 27,177 -1.52 25,458 -2.26 1,719 10.85 6.33
 04:2 27,076 -1.87 25,523 -1.75 1,553  -3.87 5.74
 04:3 27,144 -1.91 25,634 -1.26 1,510 -11.66 5.56
 04:4 27,004 -2.49 25,545 -2.16 1,460 -7.80 5.40
 05:1 26,771 –1.49 25,190 -1.05 1,581 -8.03 5.91
 05:2 27,121 0.17 25,670 0.58 1,451 -6.60 5.35
 05:3 27,063 –0.30 25,697 0.24 1,366 -9.53 5.05
 05:4 26,990 -0.05 25,714 0.66 1,277 -12.54 4.73
  06:1 26,922 0.56 25,552 1.44 1,370 -13.83 5.09

Johnson City Urbanized Area Labor Market

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 51,885 -0.23 49,322 -0.84 2,563 13.36 4.94
 2002 52,223 0.65 49,206 -0.24 3,017 17.71 5.78
 2003 53,098 1.68 50,143 1.90 2,955 -2.06 5.57
 2004 53,948 1.60 51,058 1.83 2,889 -2.24 5.36
 2005 54,291 0.64 51,509 0.88 2,781 -3.73 5.12
 04:1 53,715 2.79 50,661 3.09 3,054 -1.95 5.69
 04:2 53,575 1.71 50,857 2.38 2,718  -9.42 5.07
 04:3 53,912 1.71 50,978 1.79 2,934 0.41 5.44
 04:4 54,589 0.24 51,738 0.12 2,851 2.40 5.22
 05:1 53,782 0.13 50,621 -0.08 3,161 3.50 5.88
  05:2 54,293 1.34 51,464 1.19 2,829 4.10 5.21
 05:3 54,047 0.25 51,449 0.92 2,599 -11.44 4.81
 05:4 55,040 0.83 52,502 1.48 2,538 -10.99 4.61
 06:1 54,240 0.85 51,576  1.89 2,664 -15.72 4.91

Kingsport Urbanized Area Labor Market

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 45,468 0.25 43,413 -0.42 2,056 16.99 4.52
 2002 45,457 -0.02 43,040 -0.86 2,417 17.61 5.32
 2003 45,824 0.81 43,150 0.26 2,675 10.65 5.84
 2004 44,986 -1.83 42,407 -1.72 2,579 -3.57 5.73
 2005 44,762 -0.50 42,349 -0.14 2,413 -6.46 5.39
 04:1 44,919 -1.32 42,178 -1.71 2,741 5.11 6.10
 04:2 44,979 -1.80 42,428 -1.62 2,551 -4.78 5.67
 04:3 45,162 -1.69 42,552 -1.31 2,609 -7.41 5.78
 04:4 44,884 -2.50 42,469 -2.24 2,415 -6.86 5.38
 05:1 44,419 -1.11 41,680 -1.18 2,739 -0.10 6.17
 05:2 45,007 0.06 42,473 0.11 2,534 -0.68 5.63
 05:3 44,861 –0.67 42,528 -0.06 2,333 -10.59 5.20
 05:4 44,759 -0.28 42,714 0.58 2,045 -15.33 4.57
 06:1 44,413 -0.01 42,180 1.20 2,232 -18.49 5.03

THE UNITED STATES

The national labor market saw its best quarterly performance since the 2001 recession, reflecting a business expansion with no signs of slowing. Employment levels increased for the 15th quarter in a row, and reached 142.1 million for a year-to-year growth rate of 2.1%. Unemployment declined by nearly ten percent to 7.5 million, reducing the national jobless rate to 5.0% (compared to 5.6% in the same period in 2005).

During the January to March period, thirteen of the fourteen NAICS industrial sectors again reported higher employment levels. Job gains were led by professional & business services, education & health services, construction, leisure & hospitality services, finance, and government. Smaller employment increases were seen in wholesale trade, retail trade, transport & utilities, mining, durable goods manufacturing, information services, and other services. Only nondurable goods manufacturing suffered a decline in job levels.

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 143,734 0.81 136,933 0.03 6,801 19.48 4.73
 2002 144,863 0.79 136,485 -0.33 8,378 23.19 5.78
 2003 146,510  1.14 137,736 0.92 8,774 4.73 5.99
 2004 147,401 0.61 139,252 1.10 8,149 -7.12 5.53
 2005 149,320 1.30 141,730 1.78 7,591 -6.86 5.08
 04:1 146,249 0.45 137,333 0.70 8,916  -3.34 6.10
 04:2 147,132 0.29 139,050 0.89 8,082 -9.02 5.49
 04:3 148,190 0.82 140,189 1.50 8,001 -9.71 5.40
 04:4 148,034 0.87 140,435 1.31 7,598 -6.51 5.13
 05:1 147,507 0.86 139,180 1.35 8,326 -6.61 5.64
 05:2 149,159 1.38 141,662 1.88 7,497 -7.23 5.03
 05:3 150,476 1.54 143,001 2.01 7,475 -6.57 4.97
 05:4 150,139 1.42 143,075 1.88 7,064 -7.04 4.70
 06:1 149,601 1.42 142,082 2.09 7,518 -9.70 5.03
 Note: Data are in thousands.

ANALYSIS

Labor market performance was very good during the first quarter, from the national level right down to the local level. In fact, the winter months actually set some records. But there always seems to be some problems among the good news.

The national economy saw the best labor market performance since the 2001 recession. For the past seven quarters, the business expansion has been going gangbusters, with job creation well above the one percent rate. The last three quarters have seen employment growth at the two percent level. And this level of job expansion has taken big chunks out of the number of unemployed workers. Between the first quarters of 2005 and 2006, the unemployment level fell by over 800,000 persons. And that is the problem!

This level of job creation is not sustainable, and as the labor market tightens, there will be a cost-push boost to the level of inflation. The national labor force cannot grow any faster than the general population in the long run. And the U.S. population has been expanding at about one percent a year since the middle of the last century. Thus the strong job growth since 2003 creates concerns about price stability in the eyes of the Federal Reserve System, our central bank. To offset any inflationary pressures, the Fed has been raising short term interest rates to slow the rate of the economic expansion. This is partly due to the very strong national labor market as well as higher energy prices.

The regional labor market picture continues to have both good and bad elements. Overall job growth was very good in the January to March period. Eight sectors saw increased employment (up from six sectors in the autumn quarter). All three cities enjoyed a second quarter of job growth and double digit drops in unemployment. The problem is that our local job creation continues to be concentrated in the services industries.

The largest job losses continue to be in the critical manufacturing sectors, and now we see a job decline in construction as well. With unbalanced job growth, regional and local business activity remains vulnerable to a decline in any one of the major services sectors.

Special Note. This labor market report is based on the new 2005 Benchmark of the Current Population Survey, U.S. Bureau of Labor Statistics. At present, revised data have been released for 2004, 2005, and 2006. Special thanks go to Mark Herron, Tennessee Department of Labor and Workforce Development, and Susan McIver, Virginia Employment Commission, for providing the revised benchmark data.

Technical Note. This report was prepared in May 2006, and is based upon the 2005 Benchmark of the Current Population Survey, U.S. Department of Labor. The labor markets for Bristol, Johnson City, and Kingsport are presented in terms of the U.S. Census Bureau concept of the "urbanized area" which includes the core city and the contiguous urban fringe. The urbanized area for each city is based upon demographic patterns from the 2000 Census of Population. The data in this report are not adjusted for seasonality, so comparisons should be made on a year-to-year basis.

More information. This report was prepared by Dr. F. Steb Hipple, Professor of Economics, and Research Associate, BBER. For more information, please contact Dr. Hipple c/o Department of Economics, Finance, and Urban Studies, Box 70686, East Tennessee State University, Johnson City, Tennessee 37614. Phone/Voicemail: 423-439-5304. Fax: 423-439-8583. E-Mail: Hipples@etsu.edu. Internet: http://faculty.etsu.edu/hipples.