ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

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

THE METROPOLITAN AREA (CSA)

The labor market downturn in the Tri-Cities metro area deepened during the third quarter. Employment slumped by 1.0% to 230,562, a loss of over 2,300 jobs compared to the same period in 2007. The number of unemployed workers increased 43.2% to 15,173, a jump of 4,580 on a year-to-year basis. As employment has declined over the past three quarters and inflation has worsened, new workers have entered the labor force seeking jobs to help support family incomes. Consequently, the jobless rate for the Tri-Cities metro area rose to 6.2%, compared to only 4.4% a year ago.

In the fourteen NAICS industry sectors, employment levels were higher in four, lower in nine, and unchanged in one (compared to four, eight, and two in the second quarter). Job growth occurred in education & health, construction, information services, and finance. Employment fell in professional & business services, government, durable manufacturing, nondurable manufacturing, leisure & hospitality, wholesale trade, retail trade, transport & utilities, and other servicers. Job levels were stable 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 233,364 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
 08:2 244,781 1.29 231,268 -0.21 13,513 36.17 5.52
 08:3 245,735 0.92 230,562 -1.01 15,173 43.24 6.17

THE TRI-CITIES

During the third quarter, job losses became more severe in all three cities, while the number of new job seekers increased significantly. Employment declined by 0.6% in Bristol, 1.2% in Kingsport, and 1.5% in Johnson City; while unemployment levels increased by 41%, 43%, and 43% respectively. The jobless rate was 6.0% in Bristol, 6.0% in Kingsport, and 6.2% in Johnson City (compared to 6.2% 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 27,858 0.97 26,399 -0.13 1,459 25.85 5.24
 08:3 28,123 1.15 26,432 -0.65 1,692 41.01 6.02

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 56,859 1.34 53,647 -0.29 3,212 39.49 5.65
 08:3 56,705 0.50 53,171 -1.46 3,534 43.36 6.23

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 46,445 1.08 43,950 -0.43 2,495 38.00 5.37
 08:3 46,617 0.66 43,819 -1.22 2,788 43.35 6.00

THE UNITED STATES

After two weak quarters, the national labor market clearly slumped into recession over the summer months. Employment fell by 0.5% to 146.0 million, a loss of nearly 700,000 jobs compared to 2007. Unemployment levels increased for the fifth quarter in a row reaching 9.4 million, a year-to-year increase of over thirty percent. The July to September unemployment rate was 6.0%, compared to 4.7% a year ago. As in the regional labor market, the level of unemployment has been swollen by new job seekers entering the national labor force.

Employment fell in the majority of NAICS industry sectors for the first time since the last recession. Five sectors saw higher employment while the number of jobs declined in nine (compared to eight and six in the second quarter). Employment was up in education & health services, government, leisure & hospitality, mining, and other services. Employment was down in construction, durable manufacturing, retail trade, professional & business services, nondurable manufacturing, finance, wholesale trade, information services, and transport & utilities.

 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
 08:3 155,399 0.96 146,029 -0.47 9,370 30.17 6.03
 Note: Data are in thousands.

ANALYSIS

In the national economy, the first two quarters of the year saw rising unemployment and declining payroll jobs, while overall employment was stagnant. The stock market was in retreat and retail sales were dropping. However, output did not decline but showed some modest growth. It was difficult to see where the economy was headed, especially with the massive stimulus being provided by the Federal Reserve System and the U.S. government in response to the crisis in the financial system.

All doubts are now removed - the U.S. economy is in a recession. Output (measured by real GDP) is finally declining and labor market conditions have begun to deteriorate rapidly. How have we come into this situation of a financial crisis now followed by a recession?

In the mid 2000’s there was a speculative bubble in the housing market. And like all bubbles it would eventually peak and then collapse. However, financial firms saw immense profits by lending to housing speculators, and began to feed large sums of money into the bubble. Thus the bubble continued and expanded and drew the financial sector even further into the process. When the bubble finally popped in spring 2007, it did more than punish the foolish housing speculators. The collapse of housing prices began a chain reaction through the imprudent financial sector. Without massive government intervention we were facing a repeat scenario of the Great Depression.

In the late 1920s, a stock market bubble became intertwined with the banking system and the stock market collapse in October 1929 triggered a collapse of the financial sector. The government and central bank did not intervene, and the Great Depression ensued.

Today, the U.S. government and the Fed are in frantic co-operation with other countries and central banks to head off a global economic collapse. And that cooperation and massive stimulus interventions have worked. The United States and the world community have ducked the bullet – there will be no repeat of the 1930s.

The collapse in the housing market since early 2007 has put downward pressure on the overall economy. But now the added problems and turmoil in the financial sector have triggered a full-blown recession. Analysts believe we are facing the worst business cycle contraction in a generation.

The recessions of 1990-91 and 2001 were rather mild. The unemployment rate did not increase that much and the actual downturns only lasted nine to ten months. The last “bad” recession was 1981-82 where the unemployment rate went over ten percent and the recession lasted much longer than usual.

It is expected that the national economy will continue to slump into the first part of 2009. Economic growth may resume in late 2009 or early 2010. The unemployment rate will continue to increase through this period. Labor market recovery will depend upon the timing of a strong recovery in the overall economy.

What are the implications for the Tri-Cities? So far, economic conditions in the region have reflected the events at the national level. This pattern should continue. As the national economy goes through this severe and extended recession and recovery cycle, so will the regional economy.

Technical Note. This report was prepared in November 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.