Is there a bottom-line to the Tri-Cities jobs situation?


EMPLOYMNET

Data Source – Dr. Steb Hipple’s quarterly labor market analysis for the urban area data and non adjusted Bureau of Labor Statistics for the MSA data

News that the local labor market has posted the worst Q4 job losses since 2009 was a shocker to some. It’s a reminder of the truth to the frog and boiling water story.

Scroll to the bottom of this post for a chart that shows the 2007-2013 monthly employment in the Tri-Cities. You’ll see we hit bottom in Jan. 2010 then began a strong recovery. That recovery began running out of steam in Dec. 2011. Since then employment has been spikey, but the trend was lower. Charting Dr. Steb Hipple’s tracking by quarter is a more dramatic representation of the situation. It also illustrates the jobs picture in the city urban areas as opposed to the MSA level.

The local job market isn’t in the toilet. But it’s not vibrant.  For those who live on the short-term the outlook isn’t that good – especially those looking for a job. The long-term is probably better, but it’s hazy. The contradictions is in many ways the economy is doing better than the jobs market.

Look at the charts and you’ll see the Kingsport urban area took the biggest jobs hit almost all year in 2013. While Bristol’s urban area didn’t dodge the bullet, its loss share was proportionally less.

Johnson City’s urban area job creation performance suffered more in Q2 and Q3 than the full MSA, but ended up in the same place with a year-over-year loss of 3.43 and 3.79%.

How do we dig our way out of the job creation mess?

1 – Get some context on the nature of the problem. The labor force is changing. So is the demographic of the region. Heavy manufacturing still plays a dominant place in our economy, but it’s not king anymore and it won’t come back. Many workers will have several jobs in the new economy and there will be more contract work. While that’s good news for labor costs, it’s not-so-good for the overall economy – especially on that depends on consumption.

JC Urban MSA EMPLOYEDPPP

Data source – Dr. Steb Hipple’s quarterly labor market analysis for the urban area data and non adjusted Bureau of Labor Statistics for the MSA data.

2 – Some local businesses are creating good, high paying jobs. But if you create two high-paying jobs for engineers and there are 30 engineers who want a job 28 of them are going to be disappointed. That means the 28 are going to have to leave the area if they want to work in their chosen field unless there’s an immediate influx of firms that need engineers. That’s a bitter pill for the folks who can’t find work where they want to live, but complaining about the lack of jobs when there are other areas with ample jobs doesn’t do much good. Mobility, in many cases, is the right step on the road to success.

3 – The local and national economy are creating more low-paying, part-time jobs. In the long run, that is expected to continue.

Underemployment is a trend that’s being felt throughout the economy nationwide not just here. The problem is higher structural employment and there’s no short-term fix for that.

Local governments and the state have and are expanding one solution – creating higher skilled laborers.  It’s not a quick fix and it has broader implications. Studies show that even the lower-skilled workers make more money if they live in areas with a high education level. Communities colleges are uniquely suited to fill that role and are doing so here in the Tri-Cities

Business is also going to have to step up to the problem.  Spending on in-house training has been flat since 2001 across the nation, according to Training magazine. Smaller businesses have been especially reluctant to pony up. Up until now, they had more applicants than jobs and didn’t need to do anything except hang out the “help wanted” sign and take the best applicant.

Tri-Cities employedPPP

Employment has been declining since the first quarter of 2011. The only variation in the trend was a bump up in Q4 2011. It as declined for eight straight quarters. Job losses occurred in the last seven quarters.

We also have a demographics issue nationwide and here in the Tri-Cities. In fact, it’s probably a little more pronounced here because the media age of our population is older than the national median.

This isn’t a precise number, but it paints a picture about the demographic issue.

In the four-county Kingsport-Bristol MSA’s  about 10 people a day are reaching the 67 years-old threshold. If all thing were constant with the current Census numbers that will continue for the next 17 years.

That doesn’t mean that everyone who reaches 67 drops out of the labor force.

More people are working longer and increasing numbers of older people are starting their own business. Alan Guinn and Steve Hawkins discussed that trend on a recent interview on the Steve Hawkins Show.  One national count put that number at 35% of the new businesses created last year.

Bottom line:

-This new economy that is emerging will treat those with high-tech skills and education better than others.

-Yesteryear’s model of manufacturing that created an economy that build a solid middle-class for low-skilled workers is over. The numbers of “have” households are increasing just as the “have-not” households are increasing faster.

It’s won’t happen immediately but the economy and demographics will merge to a conversation about a labor shortage in the not-too-distant future.  In fact, it’s also a hot topic for some areas.

An analysis by Economic Modeling Specialists International found there is persistent shortages exist for engineers, highly skilled health workers, computer-related occupations, certain manufacturing skilled-trades workers and financial specialists such as accountants and financial analysts.

In fact, they are shortages in skill levels across the board. Technology has and will continue to push the skills limit that is now leaving much of the workforce behind. For example, metal-cutting machines are now computer controlled to produce the same cut with the exact specifications that is beyond the capabilities of a human laborer.  It takes programmers and machinists who can work with to get to that level of precision. And, despite the increases, not all health care workers are in high demand. The one that require years of training — doctors, nurses, therapists and other specialists that is in demand.

At some point, the invisible hand of supply and demand will move more people to get the skills needed for jobs that pay more.

There will also have to be a better rate of job creation. Government can’t create those jobs, but it can provide a business climate that makes job creation attractive. The communities and regions that find a way to get that done will be tomorrow’s winners. Those who don’t….well, it’s an ugly picture.

RELATED STORIES:

Click on the Tri-Cities Jobs link at the top of CoreData’s home page and there are over a year’s worth stories tracking the local jobs economy.

The time line for the chart below is Jan 2007 – Dec. 2013. Data source is non seasonal adjusted data from the Bureau of Labor Statistics.

Tri-Cities jobsPPP

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