Local economy adds jobs, unemployment rates low – but all is not well

The Tri-Cities economy continued adding jobs in October, and the region’s unemployment rate was in the mid-3% range while labor participation lagged. It has become a common “good-news, bad-news” factor as the region continues to struggle with chronic underemployment conditions and the restructuring from a manufacturing base to a service economy. By unemployment rate standards the region is at full employment, but there’s more to that story.

The local labor market is following a state pattern of record low unemployment reports. But a Wall Street Journal analysis titled “Why Are People in red states Dropping Out of the Labor Force?” and a separate WSJ article titled “Tennessee’s Historically Low Unemployment Rate Isn’t All Good,” took some of the shine off the record low rates. It also put new focus – from a different authority – on state-level issues that apply strongly to the local labor market.

A key issue is the labor force participation rate – a key metric of the economy’s health. While it has been declining nationwide, it is declining faster in red states. Ditto for the local decline. Simply put, the unemployment rate is so low because fewer people are in labor force. Some have retired, some are in the gray economy working off the books, and others have just dropped out.

The WSJ analysis found states with economies heavy in the manufacturing and retail sectors have suffered the most while areas where the focus is on rapidly growing value-added sectors have profited more.

The number of working age people not in the Kingsport-Bristol Metropolitian Statistical Area (MSA) labor force has increased to 119,783 from its pre-recession benchmark of 103,685, according to Census data. The number in the Johnson City MSA increased to 70,631 from its pre-recession benchmark of 63,947. That means 47.2% of working people in Kingsport-Bristol and 42.5% in the Johnson City MSA were not in the labor force last year. A declining labor force means results in lower productivity and a lower local Gross Domestic Product (the total economic output). Currently, neither the Kingsport-Bristol or Johnson City MSAs have returned to previous highs. Kingsport-Bristol has seen year-over-year real GDP declines for the past four years, according to the Bureau of Economic Analysis.

University of Tennessee economics professor Matthew Murray summed up the issue this way: “We’re dealing with the legacy problem of an older, uneducated population.” He also cited the state’s drug problem as a drag on the economy.  On the local level, you can add a rapidly aging population to that equation since NE Tennessee has a higher median age and concentration of elders than the rest of the state.

A common local complaint about the decline in the number of people looking for jobs is, there are too many people on welfare, receiving food stamps and getting public housing assistance, so they’re not trying to find a job.

Compared to a pre-recession benchmark the number of Kingsport-Bristol Supplement Social Security (SSI) recipients has decreased by 37 people to a 2016 total of 8,465 – 6.8% of local households. The number of people receiving cash public assistance has increased by 1,219 to its 2016 total of 4,864 (3.9% of households), and the number of people receiving food stamps has increased by 3,645 to a 2016 level of 20,187 – 16.3% of Kingsport-Bristol households.

In the Johnson City MSA, the number of SSI recipients has increased by 790 to its current level of 4,941 – 5.9% of households. The number of cash public assistance recipients has increased by 239 to its 2016 level of 1,774 – 2.1% of households – and the number of food stamp recipients has increased by 6,567 to its current level of 14,993 – 18% of Johnson City MSA households.

Kingsport-Bristol’s poverty rate in 2016 was 18.2%. It was 17.2% in the Johnson City MSA.

During the same period, the number of Social Security recipients in the Tri-Cities increased by 14,301 – 39.8% of Johnson City MSA households and 45.3% of Kingsport-Bristol households. Back of the envelope calculations show that about 15 Tri-Cities residents turn 65 every week as the bulk of the Baby Boom Generation is moving toward the traditional age of retirement.


October’s preliminary, non-adjusted payroll report shows the Tri-Cities had 1,400 more nonfarm jobs than it did October last year.  That regional growth was due to the new jobs in the three-county Johnson City MSA. The four-county Kingsport-Bristol MSA had 100 fewer jobs than October last year.

So far, this year the region has averaged adding 140 new nonfarm jobs a month. The Johnson City MSA has accounted for 90 of those jobs a month. Compared to the pre-recession high Johnson City now has more nonfarm jobs than it did before the recession while Kingsport-Bristol had 1,000 fewer jobs than it did before the recession.

Switching from the raw job numbers to a three-month trend average shows the Johnson City MSA increasing jobs in at a rate of a more than 1% per month. Kingsport-Bristol’s growth rate trend was at 0% in October and hasn’t been above 1% since May last year.

October’s employment report shows an increase of 5,854 people in the seven-county region since October last year. At the same time, the number of people in the labor force was up by 1,403 people.

Compared to the pre-recession high, there were 20,946 fewer people in the labor force in October and employment was down by 15,958.

The three-month moving trend show employment has been steadily increasing since March. The labor force trend began increasing in July after declining since October last year.


Private sector wages followed October’s jobs trend pattern – as they have since the first of the year.

Private sector workers in the Johnson City metro area had an October average that was 9% better than last year. Kingsport-Bristol workers saw their average wage decline by .07% from October last year. The weekly average in Kingsport-Bristol has declined every month this year.

October’s preliminary wage data shows the weekly average in the Johnson City MSA was $691.48 up $57.16 from October last year.

Kingsport-Bristol’s average was $647.27, down $4.57 from October last year.

October preliminary unemployment rates in the region were:

Bristol – 3.3%

Johnson City – 3%

Kingsport – 3.4%

Carter Co. – 3.6%

Greene Co. – 3.9%

Hawkins Co. – 3.5%

Johnson Co. – 3%

Sullivan Co. – 3.3%

Unicoi Co. –  4.3%

Washington Co. –  3.1%

Related story: Tri-Cities economy looks good, but….. Benchmarking the recovery, looking for a new normal 


Kingsport jobs: Where the workers live

Look at any of the roads around Kingsport on any weekday morning or afternoon, and it’s immediately apparent there’s a lot of commuting going on out there. For this report, we’ll drill down on Kingsport. A similar report on Johnson City will follow in the coming weeks.


According to the Census Bureau, there’s a total of 40,321 jobs in Kingsport.

Only 23.8% of those jobs are filled by workers who live in Kingsport. And the biggest share of those workers who commute to Kingsport is not from Johnson City or the other cities and town high on the list. The biggest share – 54.6% – hail from “all other locations.”

Throw a wider net on the data, and it shows some of those “all other locations” workers come from places like the 328 from North Carolina or 91 Georgians. Virginia’s count totals 3,655, but a bunch of those folks shows up in the city and county courts.

Some other examples:

Kentucky – 61.

South Carolinian – 59.

Mississippi – 43.

West Va. – 27.

Pennsylvania – 24.

Ohio – 21.


And there are another 154 from “all other locations.”

While those are gee-wiz examples, they’re not what gets the most attention.

What’s the local mix and where do the largest share come from is the biggie?

Johnson City is the obvious city, but the share is not as much as some think. Mount Carmel and Church Hill make up almost as many Kingsport bound workers, and when you throw Bloomingdale into the mix, Johnson City isn’t a contender.

Backing off to the big picture there are not many exceptions to what you would guess about the age, income and type job commuters have as opposed to those who live and work in Kingsport.

The exceptions are shares in the Trade, Transportation, and Utilities job sector. The commuters account for 23.2% (7,114 workers) of those jobs in Kingsport.

Workers who live and work in Kingsport account for the largest share of those in the 55 and older age group, 24.3% (2,335 workers) and those who earn $1,250 per month or less, 26.7% (2,558 workers.)

The other age group that shows a slight difference is the larger commuter share of workers who are 29 or younger. They account for 21.7% (6,659 workers) of that age group compared to 21.5% (2,065 workers) who live and work in Kingsport.

Remember how this report started with a look at the roads during commute time? Well, you don’t have to look very long to see that the area’s commuter pattern has outstripped its infrastructure.

Interstate 26 is crowded and a real mess when there’s a wreck.

But that’s nothing compared to Highway 11W where the traffic closest to the Hawkins-Sullivan county line equal or exceed what you find on the Interstate.

The Tennessee Department of Transportation’s most current average daily traffic counts shows there are 33,468 vehicles on 11W between University Dr. and Lewis Ln. Compare that to 28,415 at the station at N. Eastman Rd. and 11W. And when there’s a wreck on 11W traffic – and driver frustrations – are a real mess.

Data for this report comes from the Census Bureau On The Map labor market functions and the Tennessee Department of Transportations traffic counts for 2016. The On The Map data is from 2015.





Part 2 Tri-Cities rental situation – fewer single-family units, higher vacancy rates

There were more rental property vacancies in over than half of the Tri-Cities region’s zip code during the third quarter of this year than last year. And a comparison of non-owner-occupied investment properties shows there are about 11,000 fewer rental properties than last year.

Earlier this month the first part of a third-quarter analysis of the area rental property status show signs of both strength and weakness in the local rental marketplace. That report can be found HERE . The overall situation was an average return on investment was down from last year, but not to an alarming degree. It also pointed out that the number of large apartment complexes had increased, and that investors are closely watching Sullivan County where local governments have goosed the apartment complex supply in hopes of attracting new residents. Data for the analysis is single-family properties. That report also capsuled current rents and the 2018 HUD Fair Market Rents.

Thanks to Attom Data Solutions Q3 Residential Vacant Property and Zombie Report we have a Part 2 look at the rental situation.

That report shows there were a little more than 111,000 non-owner-occupied investment properties in the region. During the same period last year, there were about 122,000. In the third quarter, 4,787 of them were vacant. During the same period last year, there were 4,321 vacancies.

The biggest increase in vacancies from Q3 last year was reported in Johnson City’s 37615 area. This year there were 113 vacancies compared to 34 in Q3 last year. Big increases were reported in Elizabethton (37643) and Kingsport (37660, 37664 and 37663).

The median vacancy rate for the Northeast Tennessee zip codes was 4.5% (4.6% last year) and 0.14% in SW Va. (0.24% last year) The 10.3% rate in Bristol, VA stood in stark contrast to the other areas where very low or zero vacancy rates were noted. But even that high rate was down from last year when there were 287 vacancies compared to 259 this year.

Midway in Greene County had the region’s highest rental vacancy rate of 9.3% followed by Bulls Gap 8.9 % and Rogersville 8.2%.

The lowest three rates in the NE Tenn. zips was Limestone 1.4%, Roan Mountain 1.5% and Bluff City 1.9%.

Vacancy rates in the primary Johnson City zip codes ranged from 3.97% in 37604 to 3.27% in 37601.

In Kingsport the ranged from 7.43% in 37665 to 4.27% in 37664.


Tri-Cities economy looks good, but….. Benchmarking the recovery, looking for a new normal

Local employment rates are at historic lows. Homebuilders are the busiest they’ve been since the recession, and there are ample signs of new commercial developments and renovations underway. Consumers are confident and spending. All-in-all the local economy looks pretty good. But what looks good on the surface can be deceiving – especially when you’re still recovering the worst economic downturn since the Great Depression.

Still is the operative word because it acknowledges that the local economy is still seeking a new normal.

The fundamentals of the two Metropolitan Statistical Areas that make up the Tri-Cities have inched toward recovery, but a check of the basics show it’s not there yet. And there’s a caveat that has to be considered. Most discussions about recovery use pre-recession benchmarks. The problem with that is the local economy will likely never return to some pre-recession levels.

Our labor force is older and getting progressively older every day. The labor force participation rate is ebbing toward 50%, and productivity is down. Using per capita gross domestic product (the total goods and service output) as a productivity metric shows it has been down five times in the past eight years in both MSAs. Compared to the last high it has declined $3,719 in Kingsport-Bristol and $1,917 in the Johnson City MSA. Some – but not all – of that is a condition of an aging labor force. Bottom line: You can’t grow an economy when productivity is declining.

And then there’s the reality that some of the mainstays of the local pre-recession economy are gone for good. What all of this means is the local economy is still seeking its new normal where the service and healthcare sectors are the primary economic drivers instead of manufacturing and goods production.

With that said, it’s important to look at what things looked like before the recession and how they’ve evolved to begin getting a picture of the new normal that’s evolving. That’s why the annual Business Patterns report from the Census Bureau is so important. Other reports give good monthly and quarterly looks at employment, sales tax collections, and home sales. But the annual Business Patterns is a more detailed dive into how many and what type of businesses are driving today’s economy.

Here’s a quick look at how the Tri-Cities economy looks according to the current Business Patterns Reports compared to the year before the Great Recession began.


There are 635 fewer businesses in the seven-county region than there were before the recession.  Those businesses have 14,995 fewer employees and an annual payroll that is $1.02 billion more than it was before the recession.


Here are the types of businesses that have increased.

Accommodations and food services – up 69.

Health care and social assistance – up 44.

Educational services – up 17.

Mining, quarrying, oil and gas extraction – up 11

Utilities – up 4.

Information – up 1.


Here are the types of businesses that now have fewer outlets:

Construction – down 197.

Retail trade – down 173

Other services – down 123

Manufacturing – down 84

Transportation and warehousing – down 57

Professional, scientific and technical services – down 43

Wholesale trade – down 37

Administrative, support, waste management, and remediation services – down 24

Real estate, rental, and leasing – down 23

Management of companies – down 12

Arts and entertainment – down 11

Agriculture, forestry, fishing, hunting – down 9

Finance and insurance – down 4.


A frequently asked question is where are all these new jobs that have been created? Here’s how business sectors look based on those that increased workers since the recession.

Health care and social services – up 2,566.

Transportation and warehousing – up 974.

Management of companies – up 431.

Education services – up 216.

Accommodation and food services – up 185.


Here’s the rundown by sectors that lost workers during the recession and recovery.

Manufacturing – down 7,841.

Professional, scientific and technical services – down 2,724.

Construction – down 2,586.

Other services – down 1,337.

Administrative, support, waste management, and remediation – down 1,322

Wholesale trade – down 1,117.

Finance and insurance – down 1,031

Retail trade – down 675.

Information – down 653.

Real estate, rental, and leasing – down 486

Agriculture, forestry, fishing, and hunting – down 101

Arts, entertainment, and recreation – down 87

Utilities – down 6.


Last but not least on this set of business pattern lists is the annual payrolls of companies at this point of the economy’s resetting. The plus and minus area comparisons of the pre-recession annual payroll of each sector compared to the most recent collection of data by the Census Bureau.

Health care and social assistance – up $521 million.

Manufacturing – up $140 million.

Accommodation and food services – up $62.1 million.

Transportation and warehousing – up $56.6 million.

Management of companies – up $45.4 million.

Administrative, support, waste management and remediation – up $40.9 million.

Retail trade – up $22.1 million.

Wholesale trade – up $21.9 million.

Finance and insurance – up $20.8 million.

Education services – up $14.9 million.

Real estate, rental, and leasing – up $4.7 million.

Information – up $4.6 million.

Utilities – up $4.6 million.

Arts, entertainment, and recreation – up $2.1 million.

Other services (except public admin) – up $0.5 million.

Agriculture, forestry, fishing, and hunting – down $1.9 million.

Professional, scientific and technical services – down $5.7 million.

Construction – down $26,2 million.

Mining, quarrying, oil and gas extraction – down $34.8 million.



%d bloggers like this: