ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + First Quarter 2015 + College of Business and Technology

(This report is based on revised benchmark data. See the note at the end of the report.)

THE METROPOLITAN AREA (CSA)

The two sources of labor market data continue to tell different stories about regional labor market performance. According to the Current Population Survey (CPS), regional employment grew only 0.1% in the first quarter, after eleven consecutive quarters of falling employment. In contrast, the Current Employment Survey (CES) puts job growth at a strong 1.6% over the winter months, and this is on top of three years of generally higher employment levels. [See the note on data sources below.]

First, the negative view from the The Current Population Survey which is the source of the tables used in this report. In the first quarter, labor market trends remained largely unchanged in the Tri-Cities Consolidated Statistical Area (CSA). After nearly three years of decline, regional employment managed a meager 0.1% increase to 213,478. Unemployment continued to fall, decreasing 7.1% to 14,589 as discouraged job seekers abandoned the regional labor force. The jobless rate for the metro area was 6.4% (compared to 6.9% in 2014 and 8.1% in 2013). With the labor force shrinking by 0.4%, the falling jobless rate is a sign of labor market weakness.

Second, the positive view from the Current Employment Survey which is the source of employment data by NAICS industry sector. According to the CES data, total payroll employment in the metro area grew by 1.6% during the January to March quarter. Among the twelve regional NAICS industry sectors, employment levels were higher in eight, lower in only one, and unchanged in three (compared to higher in six and lower in six sectors in the fourth quarter). Job growth was led by leisure & hospitality, retail trade, and manufacturing. Smaller job gains were reported by transport & utilities, education & health services, professional & business services, construction, and information services. A small job loss occurred in wholesale trade. Employment was unchanged in financial services, other services, and government.

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2007 244,704 0.45 234,109 0.92 10,595 -8.87 4.33
 2008 247,668 1.21 233,447 -0.28 14,222 34.22 5.74
 2009 247,965 0.12 224,752 -3.72 23,213 63.22 9.36
 2010 239,478 -3.42 217,213 -3.35 22,265 -4.08 9.30
 2011 242,277 1.17 221,769 2.10 20,509 -7.89 8.47
 2012 237,986 -1.77 219,844 -0.87 18,142 -11.54 7.62
 2013 233,616 -1.84 215,816 -1.83 17,799 -1.89 7.62
 2014 227,230 -2.73 212,077 -1.73 15,153 -14.87 6.67
 12:1 238,808 -1.07 219,952 0.34 18,857 -14.93 7.90
 12:2 239,040 -1.72 220,730 -0.69 18,310 -12.68 7.66
 12:3 237,329 -2.21 218,873 -1.38 18,456 -11.01 7.78
 12:4 236,765 -2.09 219,821 -1.71 16,944 -6.70 7.16
 13:1 235,861 -1.23 216,809 -1.43 19,052 1.04 8.08
 13:2 235,740 -1.38 217,425 -1.50 18,315 0.03 7.77
 13:3 233,332  -1.68 215,427 -1.57 17,906 -2.98 7.67
 13:4 229,529 -3.06 213,604 -2.83 15,925 -6.01 6.94
 14:1 228,911 -2.95 213,204 -1.66 15,707 -17.56 6.86
 14:2 228,113 -3.24 213,153 -1.97 14,960 -18.32 6.56
 14:3 227,096 -2.67 210,994 -2.06 16,102 -10.07 7.09
 14:4 224,799 -2.06 210,957 -1.24 13,842 -13.08 6.16
 15:1 228,067 -0.37 213,478 0.13 14,589 -7.12 6.40

THE TRI-CITIES

Labor market conditions were mixed in the first quarter among the three cities. After three years of declining job levels (as measured by the CPS data), employment grew 0.4% in Johnson City and was essentially unchanged in Bristol and Kingsport. Matching the regional pattern, unemployed workers continued to exit the labor market in each city, contracting the labor force, and reducing the unemployment rates. The jobless rate was 6.0% in Bristol, 6.4% in Johnson City, and 6.4% in Kingsport. As in the metro area, the lower rates in each city reflect labor market weakness. (Payroll employment data are not available for the cities but would undoubtedly show job growth in line with the CSA metro pattern.)

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 32,481 0.22 31,055 0.38 1,426 -3.03 4.39
 2008 32,960 1.48 31,205 0.48 1,755 23.10 5.32
 2009 32,931 -0.09 29,962 -3.99 2,969 69.19 9.02
 2010 32,590 -1.03 29,745 -0.72 2,845 -4.19 8.73
 2011 33,114 1.61 30,461 2.41 2,653 -6.75 8.01
 2012 32,638 -1.44 30,263 -0.65 2,375 -10.49 7.28
 2013 32,178 -1.41 29,882 -1.26 2,296 -3.29 7.14
 2014 31,682 -1.54 29,663 -0.73 2,019 -12.09 6.37
 12:1 32,742 -0.15 30,231 0.68 2,511  -9.24 7.67
 12:2 32,782 -1.24 30,393 -0.54 2,389 -9.34 7.29
 12:3 32,607 -2.05 30,188 -1.17 2,419 -11.82 7.42
 12:4 32,420 -2.30 30,241 -1.55 2,179 -11.63 6.72
 13:1 32,310 -1.32 29,885 -1.14 2,425 -3.43 7.50
 13:2 32,422 -1.10 30,089 -1.00 2,333 -2.34 7.20
 13:3 32,210 -1.22 29,904 -0.94 2,306 -4.69 7.16
 13:4 31,771 -2.00 29,649 -1.96 2,122 -2.61 6.68
 14:1 31,896 -1.28 29,785 -0.33 2,110 -12.97 6.62
 14:2 31,829 -1.83 29,804 -0.95 2,025 -13.21 6.36
 14:3 31,684 -1.63 29,549 -1.19 2,135 -7.39 6.74
 14:4 31,319 -1.42 29,514 -0.45 1,805 -14.95 5.76
 15:1 31,676 -0.69 29,772 -0.04 1,904 -9.79 6.01
 

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 60,977 1.53 58,372 1.96 2,605 -7.22 4.27
 2008 61,391 0.68 57,761 -1.05 3,629 39.30 5.91
 2009 61,505 0.19 55,868 -3.28 5,637  55.32 9.17
 2010 58,250 -5.29 52,830 -5.44 5,419 -3.86 9.30
 2011 58,792 0.93 53,777 1.79 5,015 -7.46 8.53
 2012 57,709 -1.84 53,387 -0.73 4,322 -13.82 7.49
 2013 56,262 -2.51 51,959 -2.68 4,303 -0.43 7.65
 2014 54,351 -3.40 50,716 -2.39 3,635 -15.53 6.69
 12:1 57,992 -1.46 53,549 0.35 4,443 -19.05 7.66
 12:2 57,921 -1.74 53,533 -0.45 4,388 -15.21 7.58
 12:3 57,321 -2.32 52,903 -1.36 4,418 -12.50 7.71
 12:4 57,604 -1.85 53,565 -1.43 4,039 -7.10 7.01
 13:1 57,053 -1.62 52,468 -2.02 4,585 3.21 8.04
 13:2 56,784 -1.96 52,307 -2.29 4,477 2.02 7.88
 13:3 55,923 -2.44 51,563 -2.53 4,360 -1.32 7.80
 13:4 55,290 -4.02 51,498 -3.86 3,791 -6.13 6.86
 14:1 54,752 -4.03 51,069 -2.67 3,683 -19.67 6.73
 14:2 54,464 -4.08 50,889 -2.71 3,575 -20.14 6.56
 14:3 54,188 -3.10 50,268 -2.51 3,919 -10.10 7.23
 14:4 53,998 -2.34 50,637 -1.67 3,361 -11.34 6.23
 15:1  54,827 0.14 51,300 0.45 3,528 -4.23 6.43
 

Kingsport Urbanized Area Labor Market

 
 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2007 50,171 -0.34 48,115 0.34 2,056 -14.07 4.10
 2008 50,734 1.12 47,916 -0.41 2,818 37.08 5.55
 2009 51,046 0.62 46,333 -3.30 4,713 67.27 9.23
 2010 49,718 -2.60 45,094 -2.67 4,624 -1.90 9.30
 2011 50,379 1.33 46,124 2.28 4,256 -7.97 8.45
 2012 49,339 -2.07 45,569 -1.20 3,770 -11.41 7.64
 2013 48,460 -1.78 44,745 -1.81 3,715 -1.46 7.67
 2014 46,888 -3.24 43,733 -2.26 3,156 -15.05 6.73
 12:1 49,408 -1.36 45,510 0.04 3,898 -15.17 7.89
 12:2 49,580 -2.11 45,758 -1.14 3,822 -12.40 7.71
 12:3 49,353 -2.43 45,501 -1.65 3,852 -10.74 7.81
 12:4 49,013 -2.37 45,506 -2.04 3,507 -6.43 7.16
 13:1 48,918 -0.99 44,974 -1.18 3,944 1.18 8.06
 13:2 48,984 -1.20 45,131 -1.37 3,853 0.79 7.87
 13:3 48,501 -1.73 44,751 -1.65 3,750 -2.65 7.73
 13:4 47,436 -3.22 44,124 -3.04 3,312 -5.55 6.98
 14:1 47,219 -3.47 43,997 -2.17 3,222 -18.31 6.82
 14:2 47,158 -3.73 44,037 -2.42 3,120 -19.01 6.62
 14:3 46,919 -3.26 43,548 -2.69 3,371 -10.12 7.18
 14:4 46,258 -2.48 43,348 -1.76 2,910 -12.14 6.29
 15:1 46,991 -0.48 43,966 -0.07 3,025 -6.11 6.44

THE UNITED STATES

Building on the strong performance of the fourth quarter, the national economy continued to gain momentum in the winter months (as measured by the CPS household survey). Employment rose 2.0% to 147.1 million, unemployment fell 15.5% to 9.1 million, and the jobless percentage declined to 5.8% (compared to 6.9% in 2014 and 8.1% in 2013). Employment levels have been rising for the past eighteen quarters, and during thirteen of the last fourteen quarters, the rate of job growth was above the critical one percent threshold which is necessary to accommodate population expansion. Taken together, the last two quarters mark the highest rate of job creation since the end of the 2008-09 Great Recession.

The first quarter CES payroll data are consistent with the CPS data, and show continued employment growth across all twelve of the national NAICS industry sectors. Job gains were led by professional & business services, education & health, leisure & hospitality, construction, retail trade, manufacturing, and transportation & utilities. Smaller employment increases occurred in financial services, wholesale trade, government, other services, and information services.

 
 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
 2014 155,922 0.34 146,305 1.65 9,616 -16.09 6.17
 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
 14:3 156,636 0.26 146,951 1.52 9,685 -15.61 6.18
 14:4 156,144 0.87 147,597 2.18 8,547 -17.36 5.47
  15:1 156,193 0.76 147,102 1.98 9,092 -15.52 5.82
 Note: Data are in thousands.

ANALYSIS

Based on the CPS household data, employment in the United States is now the highest level in history, exceeding the previous highpoint in 2007. However, as 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 in the national labor force. Since 2007, this growth has added over eight million potential workers to the economy who remain outside of the “official” labor force numbers. The official unemployment rate for the first quarter is 5.8%, but if the missing 8.5 million workers are included, then the effective unemployment rate remains in double digits at 10.5%. At the present employment growth rate, we are looking at six to seven years before the eight million missing workers are finally added to the employment rolls and the economy is at full employment.

Tri-Cities CSA Labor Market Employment

 
 Establishment Household 
 Survey (CES) Survey (CPS) 
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch 
  2007 202,225 0.69 234,109 0.92 
 2008 203,025 0.40 233,447 -0.28 
 2009 194,275 -4.31 224,752 -3.72 
 2010 192,850 -0.73 217,213 -3.35 
  2011 196,325 1.80 221,769 2.10 
 2012 197,133 0.41 219,844 -0.87 
 2013 197,408 0.14 215,816 -1.83 
 2014 198,583 0.60 212,077 -1.73 

In the Tri-Cities metro area, we have conflicting data. According to the CPS data, employment has been falling for three years, causing many unsuccessful job seekers to drop out of the area labor force. These workers may end their job search and remain in the area, or they may relocate to other areas where employment prospects are better. As a result, the level of unemployment declines, the unemployment rate falls, and the labor force contracts. Taken together, these are signs of a weak regional economy. But according to the CES data (which is only available for the metro area), employment has been expanding over the same period.

Usually the CPS and CES data show similar changes, but since 2011, we have a significant divergence. This raises the question of the relative accuracy of the two sources. In recent retail sales reports, there is an increase in retail activity which was not matched by the CPS employment data. To have money to spend, people need to work. If we match the retail data (based on tax collections) to the CES regional employment data, the paradox vanishes. So apparently the better source of jobs data is the CES payroll series. This raises red flags about the accuracy of the BLS household data for states and counties and cities.

Looking ahead, the national economy is expected to continue its overall growth. Despite small production gains in the first quarter, other indicators like employment and retailing remain strong. The regional economy also has a good outlook. In line with national patterns, metro area payroll employment should continue to expand and provide the income basis for more retail growth.

Data Sources. This report is based on two monthly data surveys from the U.S. Bureau of Labor Statistics (BLS). The data used for the labor market tables are based on the monthly survey of the homes where people live. This survey is officially the Current Population Survey (CPS), but the term “household survey” is preferred by the BLS. The CPS provides labor market information for the nation, states, counties, and cities. The data used for employment by industry are based on the monthly survey of the places where people work. This survey is officially the Current Employment Survey (CES), but the term “establishment survey” is preferred by the BLS. This survey is also called the “payroll survey”. The CES provides payroll employment data for the nation, states, and metropolitan areas.

Technical Note on the Tables. This report was prepared in May 2015, and is based upon the 2014 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.

New Annual CPS Benchmark Data. This labor market report is based on the new 2014 BLS Benchmark of the Current Population Survey. Each year, the BLS issues revised data for the labor markets in states, metro areas, cities, and counties. The 2014 benchmark revisions are unusual since they cover the years 2000 to 2014. The benchmark revisions usually cover only the five preceding years.

 
 2013 Benchmark 2014 Benchmark
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch 
 2008 233,510 0.36 233,447 -0.28
 2009 223,514 -4.28 224,752 -3.72
 2010 226,089 1.15 217,213 -3.35
 2011 230,095 1.77 221,769 2.10
 2012 227,945 -0.93 219,844 -0.87
 2013 222,552 -2.37 215,816 -1.83
 2014 220,463 -0.94 212,077 -1.73
 

The table compares the Tri-Cities metro area employment under the old 2013 benchmark and the new 2014 benchmark over the 2008 to 2014 period. The revisions for 2008 and 2009 are small, while the changes in 2010 and later show larger job losses than previously reported.

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.