ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

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

THE METROPOLITAN AREA (CSA)

During the summer months, the regional labor market continued to set new records and become much tighter as a result. In the third quarter, the metropolitan area employment rose by 2.5% to 236,710, a gain of over 5,700 jobs compared to the same period in 2006. This marks the tenth quarter in a row of employment growth, and the seventh quarter where the increase has topped two percent. With the continued expansion in jobs, the number of unemployed workers saw another double-digit drop, falling 14.5% to 9,687. The jobless rate for the Tri-Cities metro area during the July to September period was 3.9%, compared to 4.7% a year ago.

Among the fourteen NAICS industrial sectors, employment levels were higher in eight sectors, while falling in four, and unchanged in two. Job growth was led by construction, followed by government, finance, education & health, leisure & hospitality, retail trade, information services, and transport & utilities. Job losses occurred in professional & business services, durable manufacturing, nondurable manufacturing, and other services. Employment levels were stable in the wholesale trade 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 233,364 0.44 220,150 -0.47 13,214 18.46 5.66
 2003 236,298 1.26 222,567 1.10 13,731 3.91 5.81
 2004 235,100 -0.51 222,090 -0.21 13,010 -5.25 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
 07:2 244,325 1.97 234,371 2.79 9,954 -14.16 4.07
 07:3 246,398 1.69 236,710 2.48 9,687 -14.49 3.93

THE TRI-CITIES

The record setting labor market performance was reflected in all three urban centers. During the third quarter, job levels were up 3.3% in Johnson City, 2.5% in Kingsport, and 1.9% in Bristol. Matching the regional trends, unemployment levels again fell sharply in all three cities. The jobless rate was down to 3.8% in Kingsport, 3.9% in Johnson City, and 3.9% in 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_
 2001 27,153 0.37 25,981 -0.37 1,172 20.28 4.31
 2002 27,194 0.15 25,775 -0.79 1,419 21.14 5.22
 2003 27,618 1.56 26,001 0.88 1,617 13.92 5.85
 2004 27,081 -1.94 25,534 -1.79 1,547 -4.33 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
 07:2 27,966 1.75 26,788 2.32 1,177 -9.79 4.21
 07:3 28,170 1.36 27,058 1.87 1,112 -9.53 3.95

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 52,147 0.50 49,107 -0.44 3,040 18.59 5.83
 2003 52,996 1.63 50,008 1.83 2,988 -1.70 5.64
 2004 53,858 1.63 50,964 1.91 2,895 -3.13 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
 07:2 56,406 2.55 54,115 3.43 2,291 -14.54 4.06
 07:3 56,866 2.64 54,649 3.33 2,217 -11.92 3.90

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 45,401 -0.15 42,967 -1.03 2,435 18.44 5.36
 2003 45,728 0.72 43,043 0.18 2,685 10.29 5.87
 2004 44,896 -1.82 42,340 -1.63 2,556 -4.80 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
 07:2 46,542 1.72 44,736 2.85 1,806 -19.95 3.88
 07:3 46,943 1.39 45,178 2.51 1,765 -20.89 3.76

THE UNITED STATES

In contrast to the tightening local labor markets, conditions in the national labor market eased slightly in the third quarter. Employment levels increased for the 20th quarter in a row, but at a slowing rate. Employment was 146.7 million, for a year-to-year growth rate of 1.0%. Unemployment increased for the first time since the last recession. The number of jobless workers was higher by 1.3% reaching a level of 7.2 million. As a result, the unemployment rate was 4.7%, unchanged from a year ago. This is actually a welcome turn in the U.S. labor market situation.

Second quarter employment patterns continued into the third quarter for the fourteen NAICS industrial sectors. Eleven sectors reported higher job levels, led by education & health services, leisure & hospitality, professional & business services, wholesale trade, retail trade, and finance. Smaller employment gains occurred in government, other services, transport & utilities, mining, and information services. Job declines were reported by durable manufacturing, construction, and nondurable manufacturing.

  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
  07:2 152,811 1.10 146,040 1.26 6,771 -2.34 4.43
 07:3 153,922 0.97 146,723 0.96 7,199 1.33 4.68
 Note: Data are in thousands.

ANALYSIS

Several significant patterns have emerged in national and local labor market conditions during the third quarter. At the national level, the labor market has turned a very significant corner. Employment growth has now aligned itself with the overall growth of the labor force – about one percent a year. And as the job expansion rate has declined to a sustainable level, the number of people unemployed has begun to expand as well. This is a good thing.

As we have discussed in previous reports, a continuous fall in unemployment and the jobless rate is not sustainable, and can actually help trigger a recession. Tight labor markets create cost-push inflationary pressures which will be met by higher interest rates as the Federal Reserve tries to keep a lid on price levels. This easing in the U.S. labor market gives the Fed the flexibility needed to use lower interest rates to deal with the growing crisis in the U.S. financial system. We can expect the level of unemployment to grow at the same rate as the overall labor force.

At the local level, the labor market continues to become tighter and tighter. This is not sustainable and creates a set of local problems. We are seeing record setting levels of job creation and reduced unemployment rates. This has created a local labor shortage. Employers are unable to hire the number and quality of workers desired, which puts upward pressure on wages and local prices. In addition, economic developers have difficulty in attracting new businesses to the area because of the labor shortage.

One of the key factors in the local employment growth has been a boom in construction employment. This is in dramatic contrast to the decline in construction activity at the national level. As it turns out, the local construction boom is focused in non-residential construction, especially in the Kingsport and Bristol areas. As these projects are completed, we can expect construction related employment to decline. Fortunately, the bulk of local job growth is in the services industries, and these are “permanent” jobs in contrast to the temporary nature of much of construction employment.

Technical Note. This report was prepared in November 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.