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All the talk about how retail jobs have sucked the life out of the local jobs economy is more myth that fact

By donfenley.com on May 4, 2017 • ( 1 )

It’s common knowledge that the Great Recession hollowed out much of the Tri-Cities’ middle class – that good paying jobs like those in manufacturing were replaced with low-paying in the retail sector.

There’s just one problem with that common knowledge. While some of it’s true, it’s not entirely accurate. Yes, many good jobs in manufacturing were replaced with jobs that don’t pay as well and offered few – in any – benefits. But retail jobs shouldn’t be the scapegoat for a broader problem.

Let’s look a little closer at the retail story. The carts at the bottom of this report clearly show the winners and losers.
It has traditionally been the fourth largest area job provider. But its Tri-Cities ranks only grew by 500 jobs when you compare the March total to the 2008 pre-recession annual benchmark That’s the year before the Great Recession hit the local economy.

And retail’s job growth isn’t evenly distributed among the region’s two metro areas. In fact, the only area they increased was in the Johnson City Metropolitan Statistical Area (MSA).

Despite the fact that the Pinnacle has sucked the oxygen out of most retail discussions reviewing job numbers tell a different story. Pinnacle Developer Steve Johnson recently said his development is now the largest employer in Bristol. No one disputes that statement. It’s a successful development and he was right about its potential. But while the Pinnacle has shifted retail sales patterns to Bristol and away from Kingsport, the number of retail jobs in the Kingsport-Bristol Metropolitan Statistical Area has not increased. In March than there were 300 fewer of them than there was before the recession.

The Johnson City metro area is the region’s retail sales leader and has been for quite a while. It has increased its market share in the wake of the Pinnacle’s impressive growth. Data in ETSU Economist Steb Hipple’s Q4 retail sales report shows the Johnson City metro area had a 31.3% share of all Tri-Cities retail sales followed by the areas outside the three metro areas – 29.4%. The Kingsport metro area had a 22.2% share while the Bristol TN/VA area claimed a 17.1% share.

So, why all the talk about the growth in retail jobs when the growth isn’t that great. Simply put, it’s a convenient scapegoat for a broader situation.

Retail jobs increased by 800 from the pre-recession benchmark in the Johnson City Metropolitan Area (MSA) area and declined by 300 in the Kingsport-Bristol MSA. A net gain of 500 jobs in a seven-county region with a dynamic new regional retail destination in a little over eight years isn’t earth-shaking.

But there’s more to the retail story – one that is likely more significant that what has been broadly discussed locally. Retail’s outlook is in the shadow of the storm clouds of technology – the primary culprit in the loss of local manufacturing jobs. And then there’s the downsizing. Writing in the Atlantic Derek Thompson pointed out that retail had shed nearly 100,000 jobs since October – more than the total number of coal miners and steel workers currently employed in the U.S. And the number of retail bankruptcies are increasing.

What’s going on?

Mainstay department stores are laying off and consolidating stores in an attempt to solve their problem of declining profits and too many outlets. Some other well-established chains are doing the same. And clothing retailers are told online sales will soon claim a 35% go 40% market share of that market.

A surplus of retail space and too many outlets is not just a national problem. Those pressures are being felt here, too. In a recent interview, Mr. Johnson said he thought 1 million square feet of retail at the Pinnacle might be enough. He is now pivoting the plans to include more entertainment components.

The biggest regional job growth has been in the Education and Health Care Services – 1,000 in Kingsport-Bristol and 1,800 in Johnson City. This is a tough sector because it includes some of the region’s highest paying jobs and some of the lowest. And it commands a top spot in the job growth projections mainly due to the region’s rapidly aging population.

During the resetting of the economy, Kingsport’s share of low-income households has remained steady with the 2008 share. But the share in Johnson City and Bristol has increased.

At the same time, Johnson City has seen the largest overall increase in high-income households while Kingsport saw the largest increase of households in the highest two income ranges.

That’s not an argument that everything is rosy. The new economy has rewarded some and punished others just as it has hollowed out the blue-collar, middle-class households built by the region’s manufacturing industries. Technology has and will continue to replace jobs at a faster pace than those in the current labor force upgrade their skills. And all the indicators point to a future where retail jobs, despite the fact that most are not the favorites of many locals, is in for a bumpy ride on the road to where our new economy plateaus