ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

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

THE METROPOLITAN AREA (CSA)

The regional labor market continued to improve during the spring months, marking the fifth quarter in a row that employment has increased. Metro area employment rose by 1.9% to 228,018, a gain of over 4,100 jobs compared to the same period in 2005. With higher job levels, the number of unemployed workers decreased 6.5% to 11,719. The jobless rate for the Tri-Cities metro area during the April to June quarter was 4.9%, compared to 5.3% a year ago.

Among the fourteen NAICS industrial sectors, higher employment levels occurred in eight, job declines in five, while employment remained stable in one. Job gains were led by education & health services, government, other services, retail trade, information services, transport & utilities, professional & business services, and wholesale trade. Job losses occurred in construction, durable manufacturing, finance, nondurable manufacturing, 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
 06:2 239,737 1.41 228,018 1.85 11,719 -6.48 4.89

THE TRI-CITIES

The strong regional performance was reflected in the individual labor markets for the Tri-Cities. During the second quarter, each city reported increased employment and lower unemployment. Compared to 2005, job levels were up 2.8% in Johnson City, 1.5% in Kingsport, and 1.1% in Bristol. Coupled with lower unemployment levels, the jobless rate fell to 4.8% in Johnson City, 4.9% in Bristol, and 5.0% in Kingsport (compared to the regional rate of 4.9%).

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 -13.34 5.09
 06:2 27,315 0.72 25,969 1.16 1,346 -7.20 4.93

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
 06:2 55,571 2.35 52,925 2.84 2,647 -6.45 4.76

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
 06:2 45,404 0.88 43,126 1.54 2,278 -10.11 5.02

THE UNITED STATES

The national labor market continued to reflect the strong business expansion that is driving the U.S. economy. Employment levels increased for the 16th quarter in a row, and reached 144.2 million for a year-to-year growth rate of 1.8%. Unemployment declined by 7.5% to 6.9 million, reducing the national jobless rate to 4.6% (compared to 5.0% in the same period in 2005).

During the April to June period, eleven of the fourteen NAICS industrial sectors reported higher employment levels. Job gains were led by professional & business services, education & health services, construction, finance, leisure & hospitality services, government, and wholesale trade. Smaller employment increases were seen in transport & utilities, mining, durable goods manufacturing, and other services. Job declines occurred in nondurable goods manufacturing, retail trade, and information services.

 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
 06:2 151,154 1.34 144,221 1.81 6,933 -7.52 4.59
 Note: Data are in thousands.

ANALYSIS

The second quarter was, in many ways, a replay of the outstanding labor market performance of the first quarter. Favorable market trends were seen from the national level right down to the local level.

The U.S. economy enjoyed another quarter of robust business expansion. For the past eight quarters, job creation has been well above the one percent rate. The last four quarters have seen employment growth averaging two percent. And this pace of job expansion has substantially reduced the number of unemployed workers and has resulted in very tight labor markets.

As we noted in the previous report, this high level of job creation and reduction in unemployment is not sustainable. The national labor force grows about one percent each year in line with overall population growth. The nearly two percent job growth over the past year must lead to a tighter labor market, generating “cost-push” pressures on the inflation rate.

The Federal Reserve System, our central bank, is the government watchdog on the inflation front. The Fed has to deal with internal price pressures created by labor market forces and external price pressures created by global energy markets. At present, the Fed has paused in its series of interest rate hikes, but it will continue to monitor labor market and energy market conditions.

The regional labor market picture is also largely unchanged. Job growth was very good in the April to June period as eight sectors again reported higher job levels. All three cities saw a third quarter of job growth and significant declines in unemployment. However, local job creation continues to be concentrated in the services industries, and business activity in the Tri-Cities remains vulnerable to a decline in any one major service sector.

Technical Note. This report was prepared in August 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, Geography, 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.