ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + Second Quarter 2014 + College of Business and Technology

THE METROPOLITAN AREA (CSA)

During the second quarter, the Tri-Cities Consolidated Statistical Area (CSA) continued to shed jobs and see jobless workers departing the labor force. Compared to the same period in 2013, regional employment was lower by 0.4% to 222,604. Employment has now declined for the past nine quarters, driving increasing numbers of jobless workers out of the regional labor force. As a result, unemployment fell 19.5% to 15,077, the labor force contracted by 1.9% to 237,681, and the jobless rate for the metro area fell to 6.3% (compared to 7.7% a year earlier). Under these conditions, a falling unemployment rate is a sign of labor market weakness rather than strength.

Among the twelve regional NAICS industry sectors, employment levels were higher in six, lower in four, and unchanged in two sectors (compared to seven, three, and two in the first quarter). Job growth was led by leisure & hospitality, professional & business services, and construction. Smaller employment gains were reported by other services, transport & utilities, and information services. Job losses occurred in government, manufacturing, education & health services, and finance. Employment was unchanged in retail trade and wholesale trade

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2007 243,442 0.65 232,670 1.01 10,771 -6.59 4.42
 2008 247,849 1.81 233,510 0.36 14,340 33.13 5.79
 2009 246,934 -0.37 223,514 -4.28 23,420 63.32 9.48
  2010 248,812 0.76 226,089 1.15 22,723 -2.97 9.13
 2011 251,275 0.99 230,095 1.77 21,179 -6.79 8.43
 2012 246,628 -1.85 227,945 -0.93 18,683 -11.79 7.58
 2013 240,868 -2.34 222,552 -2.37 18,317 -1.96 7.60
 11:1 250,141 2.14 227,508 3.43 22,632 -9.23 9.05
 11:2 251,817 0.63 230,141 0.97 21,676 -2.79 8.61
 11:3 252,198 0.61 230,652 0.91 21,547 -2.50 8.54
  11:4 250,942 0.60 232,080 1.84 18,863 -12.51 7.52
 12:1 247,839 -0.92 228,434 0.41 19,405 -14.26 7.83
 12:2 247,532 -1.70 228,666 -0.64 18,866 -12.96 7.62
 12:3 245,888 -2.50 226,897 -1.63 18,991 -11.86 7.72
 12:4 245,253 -2.27 227,784 -1.85 17,468 -7.39 7.12
 13:1 242,292 -2.24 223,052 -2.36 19,240 -0.85 7.94
 13:2 242,168 -2.17 223,442 -2.28 18,726 -0.74 7.73
  13:3 240,690 -2.11 222,106 -2.11 18,584 -2.14 7.72
 13:4 238,324 -2.83 221,606 -2.71 16,718 -4.30 7.01
 14:1 237,591 -1.94 221,524 -0.69 16,067 -16.49 6.76
 14:2 237,681 -1.85 222,604 -0.38 15,077 -19.48 6.34

THE TRI-CITIES

During the April to June period, employment was higher by 0.5% in Bristol, but fell 1.1% in Johnson City and 0.6% in Kingsport. Matching the regional pattern, large numbers of unemployed workers are exiting the labor market in each city. This has lowered jobless levels by double digits, contracted the labor force, and reduced jobless rates. The percent of workers unemployed fell to 6.2% in Johnson City, 6.3% in Kingsport and 6.6% in Bristol. As in the metro area, the lower jobless rates in each city are a result of weakness in the labor market.

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_
 2007 32,317 0.14 30,876 0.18 1,441 -0.91 4.46
 2008 32,989 2.08 31,222 1.12 1,767 22.58 5.36
 2009 32,890 -0.30 29,857 -4.37 3,032 71.64 9.22
 2010  33,133 0.74 30,130 0.91 3,004 -0.95 9.07
 2011 33,656 1.58 30,822 2.30 2,834 -5.66 8.42
 2012 33,049 -1.80 30,594 -0.74 2,455 -13.37 7.43
 2013 32,746 -0.92 30,305 -0.94  2,441 -0.57 7.45
 11:1 33,261 1.98 30,379 3.17 2,882 -9.02 8.67
 11:2 33,609 1.40 30,841 2.09 2,769 -5.70 8.24
 11:3 33,993 1.47 30,988 1.78 3,004 -1.59 8.84
 11:4  33,760 1.46 31,081 2.18 2,679 -6.23 7.94
 12:1 33,136 -0.37 30,603 0.74 2,534 -12.09 7.65
 12:2 33,207 -1.20 30,713 -0.42 2,494 -9.92 7.51
 12:3 33,129 -2.54 30,572 -1.34 2,558 -14.87 7.72
 12:4 32,723 -3.07 30,489 -1.90 2,234 -16.63 6.83
 13:1 32,727 -1.24 30,242 -1.18 2,484 -1.95 7.59
 13:2 32,899 -0.93 30,415 -0.97 2,484 -0.40 7.55
 13:3  32,856 -0.83 30,358 -0.70 2,498 -2.33 7.60
 13:4 32,502 -0.67 30,206 -0.93 2,296 2.80 7.07
 14:1 32,579 -0.45 30,408 0.55 2,171 -12.60 6.66
 14:2 32,717 -0.55 30,565 0.49 2,152 -13.37 6.58
 

Johnson City Urbanized Area Labor Market

 
 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2007 60,658 1.91 58,000 2.24  2,658 -4.72 4.38
 2008 61,431 1.27 57,767 -0.40 3,663 37.83 5.96
 2009 61,140 -0.47 55,490 -3.94 5,649 54.23 9.24
 2010 62,046 1.48 56,454 1.74 5,592 -1.02 9.01
 2011  62,492 0.72 57,241 1.39 5,250 -6.10 8.40
 2012 61,276 -1.95 56,781 -0.80 4,495 -14.39 7.34
 2013 59,071 -3.60 54,567 -3.90 4,504 0.20 7.62
 11:1 62,439 2.49 56,828 3.53  5,611 -7.03 8.99
 11:2 62,602 -0.08 57,155 -0.02 5,448 -0.78 8.70
 11:3 62,483 0.01 57,143 0.21 5,340 -2.01 8.55
 11:4 62,443 0.50 57,840 1.94 4,603 -14.62 7.37
 12:1  61,693 -1.19 57,065 0.42 4,628 -17.52 7.50
 12:2 61,455 -1.83 56,887 -0.47 4,568 -16.15 7.43
 12:3 60,802 -2.69 56,228 -1.60 4,574 -14.35 7.52
 12:4 61,154 -2.06 56,944 -1.55 4,209 -8.55 6.88
 13:1 59,547 -3.48 54,895 -3.80 4,652 0.52 7.81
 13:2 59,400 -3.35 54,760 -3.74 4,639 1.56 7.81
 13:3 58,824 -3.25 54,202 -3.60 4,622 1.05 7.86
 13:4  58,514 -4.32 54,411 -4.45 4,103 -2.53 7.01
 14:1 57,824 -2.89 54,036 -1.56 3,788 -18.58 6.55
 14:2 57,765 -2.75 54,179 -1.06 3,586 -22.71 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_
 2007 49,906 -0.01 47,811 0.57 2,096 -11.74 4.20
 2008 50,764 1.72 47,921 0.23 2,843 35.66 5.60
 2009 50,761 -0.01 46,030 -3.95 4,731 66.40 9.32
 2010 51,033 0.54 46,452 0.92 4,481 -3.16 8.98
 2011 51,588 1.09 47,349 1.93 4,240 -7.45 8.22
 2012  50,509 -2.09 46,688 -1.39 3,821 -9.86 7.57
 2013 49,488 -2.02 45,735 -2.04 3,753 -1.79 7.58
 11:1 51,316 2.52 46,731 4.01 4,585 -10.58 8.93
 11:2 51,769 0.54 47,465 1.23 4,304 -6.44 8.31
 11:3 51,829 0.84 47,570 1.08 4,260 -1.76 8.22
 11:4 51,439 0.49 47,629 1.50 3,810 -10.57 7.41
 12:1 50,761 -1.08 46,700 -0.07 4,061 -11.43 8.00
 12:2 50,734 -2.00 46,885 -1.22 3,848 -10.59 7.59
 12:3 50,410 -2.74 46,592 -2.06 3,819 -10.35 7.57
 12:4 50,133 -2.54 46,575 -2.21 3,558 -6.62 7.10
 13:1 49,835 -1.82 45,871 -1.77 3,964 -2.39 7.95
 13:2 49,854 -1.73 45,980 -1.93 3,873 0.64 7.77
 13:3 49,488 -1.83 45,723 -1.86 3,764 -1.42 7.61
 13:4 48,774 -2.71 45,364 -2.60 3,411 -4.14 6.99
 14:1 48,630 -2.42 45,323 -1.20 3,307 -16.56 6.80
 14:2 48,783 -2.15 45,689 -0.63 3,093 -20.13 6.34

THE UNITED STATES

The pace of job creation in the national economy remained strong during the spring months as national employment grew 1.4% to 146.4 million. With higher job levels, the number of unemployed workers fell 17.8% to 9.5 million, reducing the second quarter jobless rate to 6.1% (compared to 7.4% in 2013 and 8.0% in 2012.

Job levels have been rising for the past fifteenth quarters. During ten of the last eleven quarters the growth rate in job creation was above the critical threshold of one percent which is necessary to accommodate population growth. The two consecutive quarters of significant job growth in 2014 mark the best labor market performance since the second half of 2012

Among the twelve national NAICS industry sectors, employment increased in eleven and decreased in one sectors (compared to ten and two in the first quarter). Job gains were led by professional & business services, leisure & hospitality, education & health, retail trade, construction, wholesale trade, and transportation & utilities. Smaller employment increases occurred in manufacturing, financial services, other services, and government. Job losses were limited to the information services sector. Notably, the decline in government employment has ended and the government sector is now adding positions.

 
 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 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
 2009 154,142 -0.09 139,878 -3.77 14,265 59.84 9.25
 2010 153,889 -0.16 139,064 -0.58 14,825 3.93 9.63
 2011 153,617 -0.18 139,869 0.58 13,747 -7.27 8.95
 2012 154,975 0.88 142,469 1.86 12,506 -9.03 8.07
 2013 155,389 0.27 143,929 1.02 11,460 -8.36 7.37
 11:1 152,731 -0.35 138,218 0.65 14,513 -8.94 9.50
 11:2 153,628 -0.36 139,939 0.27 13,689 -6.37 8.91
 11:3  154,392 -0.14 140,407 0.35 13,985 -4.72 9.06
 11:4 153,715 0.14 140,913 1.06 12,802 -8.95 8.33
 12:1 153,972 0.81 140,680 1.78 13,292 -8.42 8.63
 12:2 155,096 0.96 142,641 1.93  12,455 -9.01 8.03
 12:3 155,618 0.79 143,006 1.85 12,613 -9.82 8.10
 12:4 155,212 0.97 143,549 1.87 11,663 -8.90 7.51
 13:1 154,679 0.46 142,180 1.07 12,499 -5.97 8.08
 13:2 155,854 0.49 144,332 1.19 11,521 -7.50 7.39
 13:3 156,234 0.40 144,758 1.23 11,477 -9.01 7.35
 13:4 154,790 -0.27 144,447 0.63 10,343 -11.32 6.68
 14:1 155,012 0.22 144,250 1.46 10,762 -13.90 6.94
 14:2 155,895 0.03 146,423 1.45 9,472 -17.79 6.08
 Note: Data are in thousands.

ANALYSIS

The labor market patterns that have dominated the national and regional labor markets for the past two years continued into the second quarter of 2014. The U.S. economy is creating new jobs while the Tri-Cities is losing jobs. The good news is that the national economy continues to grow at a significant rate, while the job decline in the region may be bottoming out.

As we have discussed in previous reports, the long run growth rate of the U.S. population is one percent, and this carries over into a one percent annual growth rate of the national labor force. The data above shows that national employment has been rising by more than one percent in ten of the past eleven quarters. The job creation in the first six months of 2014 averaged 1.5%, the best level of job creation since 2012. These new jobs will accommodate the natural growth of the labor force, and provide re-employment for some of the workers who have been idled since the Great Recession of 2008-09.

During the second quarter, over 7.7 million discouraged workers still remained out of the labor force due to the lingering effects of the Great Recession. If these long-term unemployed are added back into the labor force, the “effective unemployment rate” increases to 10.5%, compared to the 6.1% official rate. It should be noted that both the effective and official rates have been slowly declining.

In the region, employment has been falling for the last nine quarters. However, the rate of decline was only 0.4% in the second quarter, following a 0.7% drop in the first quarter. (In 2013 as a whole, the Tri-Cities saw a 2.4% drop in employment levels.) We seem to be approaching the bottom of the employment contraction in the local economy. A large number of unsuccessful job seekers have been dropping out of the regional labor market. As a result, the level of unemployment declines, the unemployment rate falls, and the labor force becomes smaller. Together these are signs of a weak labor market.

The measure of national production levels is real GDP, and quarterly changes are reported as an annualized rate. During the first quarter, real GDP was estimated to have declined 2.1% below the fourth quarter of 2013, creating fears of a new recession. As seen in this report, national employment increased in the first quarter casting doubt on the accuracy of this production number. On a year-to-year basis, real GDP grew 1.9%. This is line with the employment growth of 1.5%. And as noted above, we have solid year-to-year job gains in the second quarter as well. There is no new recession.

Thus the economic outlook is for slow and steady improvement. As the national economy continues to add jobs at the current significant rate, we will see a continuing decline in long-term unemployment. And a stronger U.S. economy will ultimately provide a boost to employment levels in the Tri-Cities region as well.

Technical Note. This report was prepared in August 2014, and is based upon the 2013 benchmark of the Current Population Survey, U.S. Bureau of Labor Statistics (BLS). The labor markets for Bristol, Johnson City, and Kingsport are presented in terms of the U.S. Census Bureau concept of the urbanized area (UZA) which includes the core city and the contiguous urban fringe. The urbanized area for each city is based upon demographic patterns from the 2010 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.