ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + Second Quarter 2008 + College of Business and Technology

THE METROPOLITAN AREA (CSA)

The labor market situation in the Tri-Cities metro area continued to weaken during the second quarter. Employment fell by a relatively modest 0.2% to 231,229, a loss of 518 jobs compared to the same period in 2007. However, the number of unemployed workers unexpectedly surged by 36.3% to 13,528, a jump of 5,600 on a year to year basis. As a result, the jobless rate for the Tri-Cities metro area during the April to June period jumped to 5.5%, compared to only 4.1% a year ago.

In the fourteen NAICS industry sectors, employment levels were higher in four, lower in eight, and unchanged in two (compared to five, six, and three in the first quarter). Job growth occurred in education & health, construction, information services, and finance. Employment fell in government, professional & business services, durable manufacturing, nondurable manufacturing, wholesale trade, retail trade, transport & utilities, and leisure & hospitality. Job levels were stable in mining, and other services.

 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 237,051 1.58 223,288 1.43  13,763 4.16 5.81
 2004 236,141 -0.38 223,084 -0.09 13,057 -5.13 5.53
 2005 237,424 0.54 224,919 0.82 12,505 -4.23 5.27
 2006 241,968 1.91 230,567 2.51 11,402 -8.82 4.71
 2007  243,069 0.45 232,397 0.79 10,672 -6.40 4.39
 06:1 239,536 1.79 227,180 2.68 12,355 -12.22 5.16
 06:2 241,501 2.02 229,921 2.56 11,580 -7.68 4.80
 06:3 242,856 2.07 231,579 2.42 11,277 -4.62 4.64
 06:4 243,980 1.78 233,585 2.39 10,395 -10.21 4.26
 07:1 241,960 1.01 230,934 1.65 11,026 -10.76 4.56
 07:2 241,671 0.07 231,747 0.79 9,924 -14.31 4.11
 07:3  243,496 0.26 232,903 0.57 10,593 -6.07 4.35
 07:4 245,148 0.48 234,002 0.18 11,146 7.23 4.55
 08:1 242,981 0.42 230,511 -0.18 12,470 13.10 5.13
 08:2 244,757 1.28 231,229 -0.22 13,528 36.32 5.53

THE TRI-CITIES

The regional labor market picture was reflected in the data for the three cities. During the second quarter, the number of jobs fell slightly in each city while the number of job seekers unexpectedly jumped. Employment declined by only 0.1% in Bristol, 0.3% in Johnson City, and 0.4% in Kingsport. In contrast, unemployment levels increased by 26%, 40%, and 38% respectively. The jobless rate was 5.3% in Bristol, 5.4% in Kingsport, and 5.7% in Johnson City (compared to 5.5% for the entire metro area).

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 27,691 1.83 26,071 1.15 1,620 14.15 5.85
 2004 27,182 -1.84 25,629 -1.69 1,553 -4.14 5.71
 2005 27,170 -0.05 25,749 0.47 1,421 -8.51 5.23
 2006 27,696 1.93 26,435 2.66 1,261 -11.28 4.55
 2007 27,706 0.04 26,485 0.19 1,221 -3.14 4.41
 06:1 27,520 2.41 26,139 3.36 1,381 -12.77 5.02
 06:2 27,715 2.08 26,408 2.71 1,306 -9.28 4.71
 06:3 27,845 1.96 26,619 2.59 1,227 -9.99 4.41
 06:4 27,702 1.30 26,574 2.01 1,128 -13.04 4.07
 07:1 27,601 0.29 26,347 0.79 1,255 -9.13 4.55
 07:2 27,591 -0.45 26,432 0.09 1,159 -11.25 4.20
 07:3 27,805 -0.14 26,605 -0.05 1,200 -2.20 4.32
 07:4 27,825 0.44 26,555 -0.07 1,270 12.56 4.56
 08:1 27,596 -0.02 26,257 -0.34 1,340 6.78 4.85
 08:2 27,871 1.01 26,403 -0.11 1,468 26.59 5.27

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 53,200 2.02 50,204 2.23 2,996 -1.44 5.63
 2004 54,144 1.77 51,240 2.06 2,904 -3.07 5.36
 2005 54,670 0.97 51,831 1.15 2,839 -2.26 5.19
 2006 55,723 1.93 53,134 2.51 2,589 -8.81 4.65
 2007 56,482 1.36 54,025 1.68 2,457 -5.08 4.35
 06:1 54,916 1.12 52,100 1.93 2,816 -11.86 5.13
 06:2 55,516 2.08 52,838 2.54 2,678 -6.27 4.82
 06:3 55,669 2.03 53,165 2.40 2,504 -5.21 4.50
 06:4 56,789 2.46 54,433 3.16 2,357 -11.45 4.15
 07:1 56,089 2.14 53,621 2.92 2,468 -12.38 4.40
 07:2 56,106 1.06 53,803 1.83 2,303 -14.00 4.10
 07:3 56,422 1.35 53,956 1.49 2,465 -1.57 4.37
 07:4 57,311 0.92 54,718 0.52 2,593 10.03 4.52
 08:1 56,586 0.89 53,650 0.05 2,936 18.98 5.19
 08:2 56,828 1.29 53,614 -0.35 3,214 39.56 5.66

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 45,901 1.10 43,209 0.56 2,692 10.57 5.86
 2004 45,130 -1.68 42,566 -1.49 2,564 -4.75 5.68
 2005 45,272 0.32 42,847 0.66 2,425 -5.42 5.36
 2006 46,178 2.00 44,012 2.72 2,166 -10.67 4.69
 2007 46,103 -0.16 44,183 0.39 1,920 -11.36 4.17
  06:1 45,668 2.02 43,358 3.18 2,310 -15.72 5.06
 06:2 46,244 2.19 43,999 2.96 2,245 -10.95 4.85
 06:3 46,526 2.23 44,314 2.64 2,212 -5.40 4.75
 06:4 46,276 1.57 44,377 2.11 1,899 -9.59 4.10
 07:1 45,816 0.32 43,806 1.03 2,009 -13.01 4.39
 07:2 45,948 -0.64 44,140 0.32 1,808 -19.47 3.93
 07:3 46,313 -0.46 44,362 0.11 1,952 -11.77 4.21
 07:4 46,335 0.13 44,422 0.10 1,912 0.70 4.13
 08:1 45,856 0.09 43,644 -0.37 2,212 10.08 4.82
 08:2 46,446 1.08 43,952 -0.43 2,495 37.99 5.37

THE UNITED STATES

The second quarter was largely a repeat of the very weak first quarter. Employment was 146.2 million compared to 146.0 million in 2007, an increase of only 0.1%. With no real job growth, unemployment levels increased for the fourth quarter in a row. The number of jobless workers jumped 19.6% to a level of 8.1 million. The April to June unemployment rate was 5.2%, compared to 4.4% a year ago. As in our regional labor market, the size of the unemployment increase was unexpected.

Among the fourteen NAICS industry sectors, eight saw higher employment while the number of jobs declined in six (unchanged from the first quarter). Employment was up in education & health services, leisure & hospitality, government, professional & business services, other services, mining, wholesale trade, and transport & utilities. Employment was down in construction, durable manufacturing, retail trade, nondurable manufacturing, finance, 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
 2006 151,428 1.41 144,427 1.90 7,001 -7.77 4.62
 2007 153,124 1.12 146,047 1.12 7,078 1.10 4.62
 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
 07:4 153,752 0.81 146,732 0.45 7,020 8.90 4.57
 08:1 152,822 0.53 144,755 0.04 8,067 10.19 5.28
 08:2 154,264 0.95 146,165 0.09 8,099 19.61 5.25
 Note: Data are in thousands.

ANALYSIS

The most significant event in the second quarter was the unexpected surge in the number of unemployed workers – both at the national level and the regional level. This increase is much larger we would expect given the changes in employment and normal growth in the labor force.

The number of workers holding jobs is flat at the national level and down slightly in the Tri-Cities region. This shows slow growth in the national economy and a slight decline in the region. This is not a recession.

Yet the number of unemployed workers has jumped significantly and has suddenly reached levels not seen since the economic slump of the early 2000’s. Unemployment by definition is job seekers who have not been successful in their job hunt. The jump in unemployment is not due to job losses, but rather an unexpected surge in new job seekers entering into the job market.

Why are millions of Americans suddenly leaving home and trying to find work? The answer is very simple – inflation! The higher cost of living has decimated family living standards. The only recourse is to put additional family members to work, so in the second quarter millions of Americans entered the labor market trying to find work to augment falling household incomes.

The big question remains whether the national economy is in a recession and what will be the impact on the regional economy. The answer remains “We do not know yet.” A recession is popularly defined as two quarters of decline in real GDP. Yet real GDP has modestly increased in the first and second quarters. Most analysts expect this slow growth to continue in the rest of 2008, but a few are still anticipating a recession.

As we know from the recovery phases of the last two business cycles (the recessions of 1990/91 and 2001), slow growth in the economy translates into flat employment levels and rising unemployment and jobless rates. We see that today in the labor market. As we observed in our last report, analysts refer to these present conditions as a “growth recession”.

What is the outlook? The national economy is still wobbly. Consumer spending is weak and investment is still in a decline. At a minimum the national labor market will probably see further deterioration. In the region, labor market conditions will continue to follow those national trends with an adverse impact on local business activity.

Technical Note. This report was prepared in August 2008, and is based upon the 2007 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 and Finance, 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.