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.

MORE JOBS IN OCTOBER…BUT

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.

WAGES UP IN PART OF REGION

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 

Categories: CORE DATA, LABOR MARKET