ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + First Quarter 2007 + College of Business and Technology

NEW BENCHMARK DATA

This labor market report is based on the new 2006 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. The revised figures for our area show only small changes from the previous estimates.

THE METROPOLITAN AREA (CSA)

The record setting levels of job creation of 2006 continued into the New Year. During the first quarter, metro area employment rose by 2.4% to 231,096, a gain of over 5,300 jobs compared to the same period in 2006. This marks the eighth quarter in a row of employment growth, and the fifth quarter where the increase has topped two percent. With the continued expansion in jobs, the number of unemployed workers saw a drop of 5.4%, falling to 11,589. The jobless rate for the Tri-Cities metro area during the January to March period was 4.8%, compared to 5.2% a year ago.

Employment growth was more widely distributed among the fourteen NAICS industrial sectors during the first quarter -- rising in eight while falling in four. Job gains occurred in government, retail trade, education & health services, information services, finance, construction, leisure & hospitality, and other services. Job losses were limited to professional & business services, durable manufacturing, nondurable manufacturing, and wholesale trade. Employment was unchanged in transportation & utilities and the mining sectors.

         Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2004 235,100 na 222,090 na 13,010 na 5.53
 2005 236,188 0.46 223,776 0.76 12,412 -4.60 5.26
 2006 240,674 1.90 229,255 2.45 11,418 -8.01 4.74
 05:1 234,000 -0.38 220,050 -0.35 13,951 -0.90 5.96
 05:2 235,461 0.52 222,898 0.56 12,563 -0.16 5.34
 05:3 236,814 0.62 225,040 1.21 11,774 -9.38 4.97
 05:4 238,478 1.09 227,118 1.61 11,360 -8.29 4.76
 06:1 238,018 1.72 225,761 2.60 12,257 -12.14 5.15
 06:2 239,604 1.76 228,008 2.29 11,596 -7.70 4.84
 06:3 242,312 2.32 230,983 2.64 11,329 -3.78 4.68
 06:4 242,762 1.80 232,270 2.27 10,492 -7.65 4.32
 07:1 242,685 1.96 231,096 2.36 11,589 -5.45 4.78

THE TRI-CITIES

All three cities have participated in the strong regional labor market performance. During the first quarter, job levels were up 2.7% in Johnson City, 2.3% in Kingsport, and 2.1% in Bristol. Matching the regional trends, unemployment levels declined in all the cities. The jobless rate fell to 4.6% in Kingsport, and 4.7% in both Johnson City and Bristol.

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_
 2004 27,081 na 25,534 na 1,547 na 5.71
 2005 27,053 -0.11 25,643 0.43 1,409 -8.89 5.21
 2006 27,583 1.96 26,324 2.66 1,259 -10.68 4.56
 05:1 26,744 –1.53 25,177 -1.04 1,567 -8.81 5.86
 05:2 27,030 -0.12 25,590 0.28 1,440 -6.66 5.33
 05:3 27,027 0.36 25,850 0.90 1,357 -8.93 4.99
 05:4 27,230 0.88 25,957 1.56 1,273 -11.35 4.68
 06:1 27,347 2.26 25,980 3.19 1,367 -12.72 5.00
 06:2 27,485 1.68 26,180 2.31 1,305 -9.39 4.75
 06:3 27,792 2.15 26,562 2.76 1,230 -9.39 4.42
 06:4 27,708 1.76 26,575 2.38 1,133 -11.03 4.09
 07:1 27,841 1.81 26,530 2.12 1,311 -4.13 4.71

Johnson City Urbanized Area Labor Market

          Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2004 53,858 na 50,964 na 2,895 na 5.37
 2005 54,325 0.87 51,506 1.06 2,819 -2.60 5.19
 2006 55,205 1.62 52,611 2.15 2,595 -7.97 4.70
 05:1 53,945 0.63 50,775 0.49 3,170 2.93 5.88
 05:2 54,035 1.02 51,170 0.81 2,865 4.91 5.30
 05:3 54,241 0.85 51,611 1.47 2,630 -9.96 4.85
 05:4 55,079 0.96 52,467 1.47 2,612 -8.24 4.74
 06:1 54,451 0.94 51,658 1.74 2,793 -11.89 5.13
 06:2 55,001 1.79 52,320 2.25 2,681 -6.42 4.88
 06:3 55,406 2.15 52,889 2.48 2,517 -4.31 4.54
 06:4 55,964 1.61 53,576 2.11 2,388 -8.59 4.27
 07:1 55,666 2.23 53,056 2.71 2,610 -6.55 4.69

Kingsport Urbanized Area Labor Market

          Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2004 44,896 na 42,340 na 2,556 na 5.69
 2005 44,993 0.21 42,583 0.57 2,410 -5.72 5.36
 2006 45,862 1.93 43,684 2.58 2,179 -9.60 4.75
 05:1 44,468 -0.79 41,749 -0.78 2,719 -0.81 6.11
 05:2 44,968 0.16 42,439 0.19 2,529 -0.31 5.62
 05:3 45,252 0.47 42,922 1.07 2,330 -9.38 5.15
 05:4 45,283 1.01 43,221 1.81 2,062 -13.21 4.55
 06:1 45,277 1.82 42,979 2.95 2,298 -15.50 5.07
 06:2 45,754 1.75 43,498 2.50 2,256 -10.76 4.93
 06:3 46,301 2.32 44,070 2.67 2,230 -4.26 4.82
 06:4 46,116 1.84 44,186 2.23 1,929  -6.44 4.18
 07:1 46,114 1.85 43,981 2.33 2,133 -7.17 4.63

THE UNITED STATES

Over the winter months, the national labor market continued to create new jobs at a high rate. Employment levels increased for the 19th quarter in a row, and reached 144.7 million for a year-to-year growth rate of 1.8. Unemployment declined by 2.6% to7.3 million, dropping the jobless rate to 4.8% (compared to 5.0% in the same period in 2006).

During the January to March winter quarter, 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, government, finance, wholesale trade, and transport & utilities. Smaller employment increases occurred in mining, information services, other services, and retail trade. Job declines were limited to nondurable goods manufacturing, durable goods manufacturing, and construction.

          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
 2006 151,428 1.41 144,427 1.90 7,001 -7.77 4.62
 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
 06:4 152,520 1.59 146,073 2.10 6,446 -8.74 4.23
 07:1 152,013 1.61 144,692 1.84 7,321 -2.63 4.82
 Note: Data are in thousands.

ANALYSIS

The strong labor market performance of recent years continued into the first quarter of 2007 at all levels -- national, regional, and local. The additional gains in employment made another dent in the number of jobless workers. The unemployment rates are now at levels we have not seen since the late 1990’s. Based on this labor market performance, the times are very good. But what should we be worrying about?

Many analysts are worrying about the clock -- the national business expansion is showing signs of aging. Job creation in the U.S. has been around the two percent level for the past two years. As we have noted in previous reports, this rate of job expansion is not sustainable since it exceeds the natural rate of growth of the labor markets (one percent). When labor markets get too tight, this will lead to inflationary pressures driven by higher labor costs.

The Federal Reserve System continues to monitor labor market conditions (and the energy markets as well) for any possible emergence of “cost-push” inflationary pressures. The Fed remains poised for a return to incremental rises in interest rates to combat inflation, and to sustain the business expansion.

Another source of concern is the job losses in manufacturing and construction at the national level. During the early years of the business expansion, construction was a significant engine of national economic growth. In 2006, manufacturing saw some small gains in employment. These conditions have changed, and the goods producing sector has become a drag on the national economy.

The regional labor market continues to be strong. With the revised data, the employment increases of late 2006 have been only slightly reduced. The significant item is that the strong job creation is now in its fifth quarter, and the job growth is occurring in a larger number of the NAICS industrial sectors. (However, local manufacturing employment continues to decline.) Overall, local business conditions should continue to be robust over the immediate future.

Technical Note. This report was prepared in May 2007, and is based upon the 2006 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 . Website: http://faculty.etsu.edu/hipples.