ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

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

THE METROPOLITAN AREA (CSA)

The recession deepened in the Tri-Cities metro area labor market during the fourth quarter.  Employment slumped by 0.9% to 231,849, a loss of over 2,100 jobs compared to the same period in 2007.  The number of unemployed workers increased 36.3% to 15,190, a jump of 4,044 on a year-to-year basis.  The large increase in unemployment is not just the workers who have lost their jobs, but also includes nearly 2,000 additional workers who have entered the labor force looking for employment to help support their family incomes.  The jobless rate for the Tri-Cities area rose to 6.2%, compared to only 4.5% a year ago.

In the fourteen NAICS industry sectors, employment levels were higher in three, lower in seven, and unchanged in three (compared to four, nine, and one in the third quarter).  Job growth occurred in education & health, finance, and information services.  Employment declined in retail trade, professional & business services, durable manufacturing, government, nondurable manufacturing, wholesale trade, transport & utilities, and leisure & hospitality.  Employment was stable in mining, construction, 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
         2008    245,150   0.86   231,067  -0.57    14,083  31.96   5.74
         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    245,802   0.95   230,642  -0.97    15,160  43.11   6.17
         08:4    247,039   0.77   231,849  -0.92    15,190  36.28   6.15

THE TRI-CITIES

Recession trends continued to plague all three cities during the October to December period.  Job losses mounted while the number of unemployed was swelled by new job seekers.  Employment declined by 0.4% in Bristol, 1.0% in Kingsport, and 1.7% in Johnson City; unemployment levels increased by 34%, 41%, and 37% respectively.  The fourth quarter jobless rate was 5.8% in Kingsport, 6.0% in Bristol, 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
         2008     27,936   0.83    26,388  -0.36     1,548  26.76   5.54
         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     28,128   1.16    26,439  -0.63     1,689  40.77   6.00
         08:4     28,163   1.22    26,460  -0.36     1,703  34.09   6.05

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
         2008     56,888   0.72    53,576  -0.83     3,311  34.76   5.82
         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     56,727   0.54    53,196  -1.41     3,531  43.25   6.23
         08:4     57,378   0.12    53,813  -1.66     3,565  37.50   6.21

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
         2008     46,397   0.64    43,846  -0.76     2,552  32.87   5.50
         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     46,627   0.68    43,832  -1.19     2,795  43.20   5.99
         08:4     46,662   0.71    43,957  -1.05     2,705  41.44   5.80

THE UNITED STATES

The national labor market slumped further into recession over the autumn months.  Employment fell by 1.5% to 144.5 million, a loss of over 2.2 million jobs compared to 2007.  Unemployment levels increased for the sixth quarter in a row reaching 10.2 million, a year-to-year increase of 45%.  The fourth quarter unemployment rate was 6.6%, compared to 4.6% a year ago.  As in the regional labor market, the level of unemployment has been swollen by nearly one million new job seekers entering the national labor force.

In the fourteen NAICS industry sectors, employment levels were higher in four, and lower in ten (compared to five and nine in the third quarter).  Employment was up in only education & health, government, mining, and other services.  Large job declines were reported in construction, retail trade, professional & business services, and durable manufacturing.  Smaller employment decreases were in leisure & hospitality, finance, nondurable manufacturing, transport & utilities, wholesale trade, 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
          2008    154,287  0.76    145,362 -0.47     8,924   26.09   5.78
          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
          08:4    154,662  0.59    144,501 -1.52    10,161   44.74   6.57
          Note: Data are in thousands.

ANALYSIS

The national and regional labor market pictures that emerge in this report are not a surprise.  The economy is locked in the worst business downturn since 1981-82, and faces the first real risk of a genuine depression since the 1930s.

As discussed in previous reports, the Great Depression was triggered by a collapse of the banking system following the end of the stock market speculative bubble in October 1929.  The clever bankers of the 1920’s became intertwined with the stock market bubble, and when the stock market crashed, it took the banking sector and the national economy down as well.  The process took four years (through 1933) to play out.

This time the speculative bubble was in residential housing between 2003 and 2007.  The clever bankers of our time became intertwined with the real estate bubble, and when the bubble burst in early 2007, it set off a process where the entire financial sector began to collapse – but much more quickly.

That is the extreme risk we face today – the first melt-down of the financial system in over eighty years.  But unlike the 1930’s, we do know what is happening and what needs to be done – fiscal stimulus in whatever amount it takes.  In August 2008 we had the TARP stimulus package of $700 billion, half of which is still unspent.  In February 2009 we have the Obama stimulus package of nearly $800 billion.  Most analysts believe another stimulus round will be necessary.

Even with the unprecedented fiscal intervention in the economy, the business situation is going to get worse over the next several months.  The monthly data will continue to be bleak.  But there will be an end to the recession and a turnaround in economic activity.  In business cycle parlance, we are looking for a “trough” to be followed by a “recovery”.

Many analysts are now looking for the trough by late spring or early summer.  The fiscal stimulus will begin to take hold, and the financial system will finally become functional again (following the process of bank failures, bank mergers, and reregulation).  However, do not expect instant prosperity.

At the trough, the national unemployment rate will be close to nine percent.  And if the recovery is weak, labor market conditions will continue to worsen and we may see double digit jobless rates by the end of the year, before the labor markets begin to improve.  And a major psychological factor is we will officially remain in recession well into the recovery.

Looking back at the business cycles of recent decades, we have precise months for peaks and troughs.  What we forget is that these dates were announced well after the events.  For example, the peak of the current business cycle was December 2007, but this was not announced until December 2008, twelve months later.  The lag in identifying troughs is even longer.

The trough of the 1990-91 recession was March 1991, but it was not identified until November 1992, some seventeen months later.  The trough of the 2001 recession was November 2001, but it was not determined until July 2003, eighteen months later.  So any trough in next few months will not be officially marked until mid 2010!

There are some points of note in the regional labor market picture.  Tri-Cities construction employment was flat in the fourth quarter, after several quarters of growth.  Nationally, construction employment has been dropping since early 2007.  And despite job losses, most of the regional employment gains from 2005 and 2006 have been preserved.  Compared to most other regions, the employment situation in the Tri-Cities has been less affected by the national recession.

Technical Note.  This report was prepared in February 2009, 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.