Great Recession remodeled Johnson City metro area’s business landscape


During the first examination of the Census Bureau’s Tri-Cities business patterns report, we established that region lost 635 firms in the 2007-2014 study period. Retail establishments and construction firms took the hardest hit. That was constant for both the Kingsport-Bristol and Johnson City metro areas.


Part 1 Tri-Cities business pattern overview 

Part 2 – Kingsport-Bristol 


In many ways, the Johnson City metro area suffered more from the recession than Kingsport-Bristol. Before the recession, it had the highest average private sector wage. But after over two years of private sector wage contraction, it dropped behind Kingsport-Bristol. And –  as more often not – ranked as the metro area with the lowest average private sector wage in the state.

The contradiction is Johnson City’s economy remains more vibrant than the rest of the region – at least on the surface. Compared to its pre-recession high, the metro area’s real GDP is down 0.4% from the pre-recession high. But its housing markets – both resale and new home construction – leads the region.  It also maintains its position in overall retail sales and consistently accounts for nearly half of the regional’s retail sales tax collections.

The Census Bureau’s Business Pattern study shows seven Johnson City metro business categories grew during the 2007-2014 study period. Here’s the third part of that study’s examination focusing on a total number of employees and annual payroll.

It’s a pattern story that shows not only what business sectors prospered and those that loss but is the beginning of a new benchmark for what the post-recession economy looks like.

The same caveat from the first report stands for this report. Since the study period ended in 2014, it misses the growth of 2015, which was the region’s best business economy in years, and some strong performance by the Johnson City metro economy. The sectors are ranked by those that grew the most during the study period followed those with the most total establishment losses. Spoiler alert: just because the number of establishment declined doesn’t necessarily mean that sector’s share of employees or payroll growth also declined.

JOHNSON CITY METRO

The metro area lost 191 businesses during the recession. Total annual payroll was up 13.5%, so when adjusted for inflation workers saw a 1.2% buying power loss.

HEALTH CARE and SOCIAL ASSISTANCE

Health care is one of the metro area’s core industry, and it prospered during the recovery period. All three benchmarks were positive, and the annual payroll increase stood head and shoulders above the other sector. The number of establishments grew by 31 during the study period, and the number of employees increased by 2,761. The sector’s annual payroll also increased by 60.1%.

 ACCOMMODATIONS AND FOOD SERVICES

Although this sector doesn’t provide the highest quality jobs, the number and variety of food services outlets is prized by the area culture.

The number of establishments increased by 23, but total employment was down by 531. The total annual payroll was up 16.4% from the 2007 baseline so the buying power growth during the seven-year period was 2.2%.

 INDUSTRIES NOT CLASSIFIED

The Census Bureau doesn’t offer much insight in this category. It lists an increase of seven establishments. But the total number of employees and annual payroll data was not listed.

EDUCATION SERVICES

This is another core sector and like health care grew across all benchmarks. Total number of establishments increased by five, the number of employees increased by 194 and the annual payroll was up 33.4%.

FINANCIAL SERVICES

Although the total number of firms in this sector increased by two during the recovery, the number of employees declined by 864. Only two other sectors saw larger employee losses. It’s also not surprising that the sector’s total annual payroll took a 14.9% hit when you consider the number of workers who lost their jobs.

 UTILITIES

This is another category where the Census Business Pattern Study doesn’t offer a lot of information. The number of establishments is up by one, but no employee or annual payroll benchmarks are listed.

REAL ESTATE and RENTAL and LEASING

The Johnson City metro’s housing market – both resale, new residential and multi-family consistently outperformed the rest of the region during the recovery from the Great Recession. But with that performance aside, there was only one new firm during the recovery and the sector lost 397 employees. The annual payroll was up 13.9% – not enough to keep buying power at pre-recession levels after the inflation adjustment.

SECTORS THAT LOST ESTABLISHMENT

Those were the sectors that saw growth in the total number of establishments. The remaining 12 sectors saw their establishment totals decline. It’s noteworthy that the total number of employees in two sectors – Retail Trade; and Arts Entertainment and Recreation – added employees. Administrative Support and Waste Management and Transportation and warehousing also had annual payroll growth that carried its employees past the inflation adjustment to more buying power than they had before the recession.

 CONSTRUCTION

The recession hit construction hard in both Tri-Cities metro areas. By the end of the study period (2014), there were 82 fewer construction firms in the Johnson City metro area with 1,101 fewer employees and a total annual payroll that had declined by 28.6%. Even though the Johnson City metro new home industry is the strongest in the Tri-Cities it’s still operating at only half of its pre-recession capacity. That and a decline in infrastructure development and maintenance has taken a heavy toll.

RETAIL TRADE           

Johnson City’s metro area has maintained its retailing position throughout the recovery. It still accounts for just under half of the retail sales tax collections in the region and claims the lion’s share of retail sales compared to the area’s other cities. But the recession and the increasing competition from on-line shopping has taken a toll. There are 47 fewer retail establishments than there were before the recession. However, the number of employees increased by 261. The payroll benchmark new isn’t as good. Total payroll is down 9.6%.

MANUFACTURING

The recession saw 39 manufacturing firms closed with a loss of 3,580 employees. Total annual payroll is down 14.6%.

OTHER SERVICES (except public administration)

This sector had a loss of 34 establishments and 391 employees. The annual payroll is 6% higher than it was before the recession.

WHOLESALE TRADE

There are 14 fewer establishments in the metro area than before the recession and 186 fewer employees, but the annual payroll for those firms that hung on is up 10.4%.

 ADMINISTRATIVE AND SUPPORT AND WASTE MANAGEMENT AN REMEDIATION SERVICES

Here’s another example of fewer firms – down 13 – but more employees – up 86 since the recession. The annual payroll in this sector was 24.2% higher in 2014 than it was in 2007.

 TRANSPORTATION AND WAREHOUSING

This is a classic example of the effect of an economic downturn. There are fewer firms – 9 – fewer employees – down 62 – and a higher annual payroll. Up 17.9%.

 PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES

The recession claimed eight of this sector’s firms with a loss of 1,256 employees. The annual payroll is down 11.2%.

ARTS ENTERTAINMENT AND RECREATION

There are seven fewer firms, 36 fewer employees, but the annual payroll for the firms that survived is up 5.8%.

INFORMATION

There’s little good news in this section, which included print media and broadcasters, shows across the board losses. There are three fewer establishments, employee loss is down 263, and the annual payroll is down 6.5%. Unlike Kingsport-Bristol the number of Johnson City metro area print establishments TV broadcasters did not close or drop local news programming. The Kingsport Daily News ceased publication, and one WKPT eliminated its local news staff.

 MANAGEMENT OF COMPANIES and ENTERPRISES

The study shows two fewer firms, 100 fewer employees and an annual payroll 9.9% less than it was before the recession.

 

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