ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + Third Quarter 2009 + College of Business and Technology

THE METROPOLITAN AREA (CSA)

The summer months marked the third quarter of severe recession in the Tri-Cities regional labor market. Driven by continuing job losses in manufacturing and construction, area employment fell 4.5% to 222,471 -- a staggering loss of over 10,500 jobs compared to the same period in 2008. Unemployment increased by 59% to 23,356 on a year-to-year basis – a jump of 8,700 in the jobless numbers. The difference in job losses and unemployment represents nearly 2000 discouraged workers who have given up looking for work and have dropped out of the labor force. The unemployment rate for the Tri-Cities area is now 9.5%, compared to only 5.9% a year ago.

In the fourteen NAICS industry sectors, employment levels were higher in four, lower in eight, and unchanged in two (compared to four, eight, and two in the second quarter). Job growth occurred in government, education & health, professional & business services, and retail trade. Large employment declines were reported by construction, durable manufacturing, and nondurable manufacturing. Smaller job losses occurred in wholesale trade, finance, other services, information, and transport & utilities. Employment was unchanged in leisure & hospitality, and 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 236,077 -0.41 223,032 -0.11 13,044 -5.22 5.53
 2005 237,273 0.51 224,768 0.78 12,506 -4.13 5.27
 2006 241,502 1.78 230,068 2.36 11,434 -8.57 4.73
 2007 241,720 0.09 230,988 0.40 10,732 -6.15 4.44
 2008 246,607 2.02 232,706 0.74 13,901 29.53 5.64
 07:1 240,990 0.72 230,021 1.39 10,970 -11.48 4.55
 07:2 240,182 -0.40 230,277 0.33 9,905 -14.80 4.12
 07:3 241,822 -0.22 231,144 0.04 10,678 -5.60 4.42
 07:4 243,885 0.26 232,511 -0.14 11,374 9.27 4.66
 08:1 244,886 1.62 232,229 0.96 12,657 15.38 5.17
 08:2 246,803 2.76 233,485 1.39 13,319 34.46 5.40
 08:3 247,668 2.42 233,017 0.81 14,650 37.20 5.92
 08:4 247,073 1.31 232,094 -0.18 14,979 31.70 6.06
 09:1 245,135 0.10 224,139 -3.48 20,997 65.89 8.57
 09:2 246,716 -0.04 223,335 -4.35 23,380 75.55 9.48
 09:3 245,827 -0.74 222,471 -4.53 23,356 59.42 9.50

THE TRI-CITIES

All of the three cities reflected the continuing severe recession in the region. During the third quarter, employment declined 4.8% in Kingsport, 4.6% in Bristol, and 4.3% in Johnson City. Unemployment increases were in the range of 54% to 65%. The jobless rate was 9.4% in all three cities, compared to 9.5% in the region and 9.6% in the nation. Several counties in the region continue to suffer double digit unemployment rates.

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 27,188 -1.82 25,636 -1.67 1,552 -4.20 5.71
 2005 27,171 -0.06 25,751 0.45 1,420 -8.48 5.23
 2006 27,671 1.84 26,409  2.56 1,262 -11.14 4.56
 2007 27,572 -0.36 26,356 -0.20 1,215 -3.69 4.41
 2008 28,133 2.04 26,626 1.02 1,507 24.02 5.36
 07:1 27,503 -0.04 26,266 0.53 1,237 -10.65 4.50
  07:2 27,442 -0.93 26,296 -0.36 1,146 -12.44 4.18
 07:3 27,635 -0.66 26,436 -0.58 1,199 -2.41 4.34
 07:4 27,708 0.20 26,428 -0.37 1,280 13.63 4.62
 08:1 27,906 1.47 26,575  1.18 1,331 7.59 4.77
 08:2 28,180 2.69 26,754 1.74 1,426 24.43 5.06
 08:3 28,310 2.45 26,698 0.99 1,612 34.50 5.70
 08:4 28,137 1.55 26,476 0.18 1,660 29.72 5.90
  09:1 28,028 0.44 25,654 -3.47 2,374 78.35 8.47
 09:2 28,132 -0.17 25,549 -4.50 2,583 81.08 9.18
 09:3 27,890 -0.06 25,461 -4.63 2,653 64.54 9.44

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 54,097 1.69 51,196 1.98 2,901 -3.17 5.36
 2005 54,598 0.91 51,749 1.08 2,840 -2.12 5.20
  2006 55,544 1.75 52,943 2.31 2,601 -8.43 4.68
 2007 56,123 1.04 53,628 1.29 2,496 -4.03 4.45
 2008 57,112 1.76 53,807 0.33 3,305 32.43 5.79
 07:1 55,834 1.90 53,360 2.67 2,474 -12.42 4.43
 07:2 55,713 0.62 53,392 1.36 2,321 -13.81 4.17
 07:3 55,987 0.92 53,479 0.98 2,507 -0.34 4.48
 07:4 56,959 0.75 54,278 0.20 2,681 13.19 4.71
  08:1 56,746 1.63 53,704 0.64 3,042 22.94 5.36
 08:2 57,055 2.41 53,866 0.89 3,189 37.39 5.59
 08:3 57,221 2.20 53,763 0.53 3,458 37.90 6.04
 08:4 57,427 0.82 53,895 -0.71 3,533 31.77 6.15
 09:1 56,509 -0.42 51,807 -3.53 4,702 54.59 8.32
 09:2 56,771 -0.50 51,652 -4.11 5,119 60.55 9.02
 09:3 56,756 -0.81 51,431 -4.34 5,326 54.03 9.38

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 45,093 -1.76 42,532 -1.57 2,562 -4.85 5.68
 2005 45,209 0.26 42,783 0.59 2,426 -5.29 5.37
 2006 46,036 1.83 43,860 2.52 2,176 -10.31 4.73
 2007 45,688 -0.75 43,758 -0.23 1,931 -11.26 4.23
 2008 46,722 2.26 44,187 0.98 2,535 31.29 5.43
 07:1 45,485 -0.19 43,499 0.57 1,985 -14.31 4.36
 07:2 45,508 -1.34 43,706 -0.37 1,802 -20.16 3.96
 07:3 45,847 -1.13 43,874 -0.62 1,972 -11.21 4.30
 07:4 45,914 -0.35 43,951 -0.49 1,963 2.91 4.28
 08:1 46,259 1.70 43,982 1.11 2,277 14.70 4.92
 08:2 46,896 3.05 44,442 1.64 2,474 37.27 5.28
 08:3 47,065 2.65 44,339 1.06 2,726 38.20 5.79
 08:4 46,670 1.65 44,007 0.13 2,663 35.63 5.71
 09:1 46,237 -0.05 42,539 -3.28 3,698 62.40 8.00
 09:2 46,888 -0.02 42,413 -4.52 4,476 80.92 9.55
 09:3 46,588 -1.01 42,196 -4.83 4,391 61.10 9.43

THE UNITED STATES

The labor market recession worsened in the United States during the third quarter. Employment fell by 4.1% to 140.1 million -- a loss of over 5.9 million jobs since the same period in 2008. Unemployment was higher for the ninth quarter in a row, rising by 58% to 14.8 million (an increase of 5.5 million compared to 2008). The summer unemployment rate was 9.6%, compared to 6.0% a year ago.

The job losses due to the recession continued to spread among the fourteen NAICS industry sectors. Employment levels were higher in one, and lower in thirteen (compared to two and twelve in the second quarter). Employment was up in only education & health services. Large job declines were reported in durable manufacturing, professional & business services, construction, and retail trade. Smaller employment decreases were in finance, nondurable manufacturing, transport & utilities, leisure & hospitality, wholesale trade, information services, government, other services, and mining.

 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
 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
 09:1 153,659 0.55 140,125 -3.20 13,534 67.77 8.81
 09:2 154,697 0.28 140,592 -3.81 14,105 74.17  9.12
 09:3 154,923 -0.31 140,069 -4.08 14,854 58.52 9.59
 Note: Data are in thousands.

ANALYSIS

The economic picture in the third quarter appears confusing. The national media has been filled with the good news that production increased in the third quarter. As measured by real GDP, output grew at an annual rate of three percent in the July to September period, and the composition of the growth was normal, and not due to some quirk in the data. Many analysts and politicians were quick to claim that the recession was over.

In contrast, the labor market data in this report – both national and local – show no end to the recession. The critical measure here is “payroll employment” which comes from a large survey each month of employers. This is commonly referred to as the “establishment survey”. The starting date for the recession is January 2008 when payroll employment declined for the first time. The monthly loss of payroll jobs has become smaller, but the U.S. economy is still shedding about 200,000 jobs each month. The recession will not be truly over until these monthly job losses become monthly job gains. And we are probably a few months away from that point in time.

The growth in output is very significant however, and is the most encouraging “green shoot” that the end of the recession is close. Employment growth usually lags behind any increase in production. Business firms want to have solid evidence of a market turnaround before adding additional workers.

The labor market indicator that gets the most attention is the national unemployment rate. The jobless percentage in October is over ten percent. The last two times we had double-digit unemployment were the 1981-82 recession, and the last year of the Great Depression in 1940. Unemployment levels will not decline until job creation is strong enough to (1) put the unemployed workers back to work, and (2) create enough new jobs to absorb the annual growth in the labor force. This means that the national unemployment rate is going to go even higher.

The outlook then is for output to increase, and for labor market conditions to improve with some lag. It will be early 2010 before all of the elements are in place for a broad economic recovery. As we have discussed in these reports, most analysts expect the recovery to be slow with feeble economic growth. But there is an unprecedented amount of fiscal and monetary stimulus in the economy, so the recovery may be stronger than anticipated.

How does this outlook affect the Tri-Cities? After a gentle 2008 downturn, regional business conditions are now linked to the national business cycle, so the level and timing of recovery in the nation will set the course for recovery in the Tri-Cities.

Technical Note. This report was prepared in November 2009, and is based upon the 2008 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.