ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

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

THE METROPOLITAN AREA (CSA)

During the summer months, the regional labor market saw the biggest gain in employment since the 2001 recession. Metro area employment rose by 2.8% to 230,336, a gain of over 6,300 jobs compared to the same period in 2005. This marks the sixth quarter in a row of employment growth. The number of unemployed workers decreased 1.3% to 11,595, while the jobless rate for the Tri-Cities metro area during the August to September quarter fell to 4.8% (compared to 5.0% a year ago).

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

 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
  06:3 241,931 2.63 230,336 2.83 11,595 -1.26 4.79

THE TRI-CITIES

All of the Tri-Cities participated in the strong regional labor market performance. During the third quarter, each city saw higher employment and lower unemployment. Compared to 2005, job levels were up 4.4% in Johnson City, 2.4% in Kingsport, and 1.8% in Bristol. Coupled with lower unemployment levels, the jobless rate fell to 4.5% in Johnson City, 4.7% in Bristol, and 5.0% in Kingsport (compared to the regional rate of 4.8%).

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
 06:3 27,435 1.38 26,151 1.77 1,284 -6.01 4.68

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
 06:3 56,229 4.04 53,690 4.36 2,539 -2.27 4.52

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
 06:3 45,857 2.22 43,552 2.41 2,304 -1.25 5.02

THE UNITED STATES

During the summer months, the business expansion that is driving the U.S. economy continued. Employment levels increased for the 17th quarter in a row, and reached 145.3 million for a year-to-year growth rate of 1.6%. Unemployment declined by 5.0% to 7.1 million, reducing the national jobless rate to 4.7% (compared to 5.0% in the same period in 2005).

During the July to September period, eleven of the fourteen NAICS industrial sectors again reported higher employment levels. Job gains were led by professional & business services, education & health services, leisure & hospitality services, construction, finance, government, and wholesale trade. Smaller employment increases were seen in mining, durable goods manufacturing, transport & utilities, and other services. Job declines occurred in retail trade, nondurable goods manufacturing, 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
 06:3 152,436 1.30 145,332 1.63 7,104 -4.96 4.66
 Note: Data are in thousands.

ANALYSIS

The third quarter was a continuation of the strong labor market performance of recent quarters -- from the national level right down to the local level. The U.S. economy is in the midst of the expansion phase of the business cycle, and if previous history is a guide, then the United States economy can look forward to continued robust economic conditions well into next year.

Job creation at the national level has been well above the one percent rate now for nine quarters, and has been over two percent in recent periods. This rate of job expansion is not sustainable since it exceeds the natural rate of growth of the labor markets (one percent) and would lead to inflationary pressures driven by tight labor markets. The slight decline in employment growth since the winter months is thus a good sign.

The Federal Reserve System keeps a close eye on labor market conditions and any possible emergence of “cost-push” inflationary pressures. This slight cooling of the national labor market together with recent moderation in the “core inflation” rate and a slowing of growth in real GDP have all caused the Fed to sit tight on interest rates for the present.

The regional labor market picture for the summer months is very remarkable – the jump in employment was over 6,000 new jobs and is the best economic growth we have seen in five years. So far this year, employment gains have averaged two percent. And linked to this job growth, the unemployment levels have dropped. How much longer can this outstanding performance continue? That is difficult to say. At some point the regional labor market will encounter demographic limits imposed by the population base of the area. Job creation continues to be concentrated in the services industries, and business activity in the Tri-Cities remains vulnerable to a decline in any major service sector.

Technical Note. This report was prepared in November 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.