Will the Tri-Cities have enough workers for its open jobs?

November’s Tri-Cities unemployment rate held at a record low for the third straight month. The economy continued adding jobs at a slower rate, and private sector wages increased.

On the surface, Bureau of Labor Statistics (BLS) numbers paint a picture of a strong local labor market. In fact, it’s beginning to look like there too many jobs and not enough workers to grow and sustain the vibrant economy everyone keeps talking about.

Almost every place you see “we’re hiring” signs.

A check of the Tennessee Jobs database found 871 Tri-Cities listings the last week of December – 431 in the three-county Johnson City Metropolitan Statistical Area (MSA) and 440 in the four-county Kingsport-Bristol MSA.

But there’s another side to the BLS numbers. It’s a good sign that the number of people in labor force is trending higher while the jobless rate is dropping. But the process is painfully slow, and it faces a strong demographic headwind. Meanwhile, the labor force participation rate is at a historic low point. The share of working-age Tri-Cities residents in the labor force was 54.6% in the most current Census estimate. Conditions are better in some counties than others. Washington Co. VA has the highest rate – 61.1% – while Unicoi Co. comes in at 49.8%. Most counties are closer to the regional rate.

The Tri-Cities economy continues to add jobs but the growth rate trend has declined for three months.

That low participation rate is one reason the unemployment rate is at record levels. It’s low for several reasons. One is our population is aging and getting progressively older every day. Workers are retiring or being shoved into retirement by employers looking to lower labor costs. Given current conditions, there won’t be any significant relief from that for a decade or so. Another is technology, and higher employer standards are increasing faster than the region’s efforts to produce a better-trained labor force. There’s also an argument that some employers set higher requirements than the open jobs require.

The challenge facing the region is: If you have less labor, you’re going to have less growth unless it’s augmented with technology or higher productivity. And productivity – as measured by per capita gross domestic product – is not growing. It’s down $3,719 from the previous high in Kingsport-Bristol and $1,917 in the Johnson City MSA.

But even with that caveat, November’s Tri-Cities labor market report looks pretty good. But that’s where the next thorny issue pops up. The growth is not evenly distributed.

Employers in the seven-county region have averaged adding 73 nonfarm jobs a month so far, this year.  Good news for sure. But that growth is not spread out evenly across the region. Most of it is happening in the Johnson City MSA.

So far, this year the Johnson City MSA’s economy has been adding an average of 91 new nonfarm jobs a month. The reason the regional growth is lower is Kingsport-Bristol has been losing an average of 18 jobs a month. And even with the gains that have been made the region had 1,400 fewer nonfarm jobs than it did in November 2007.

Employment, the other half of the monthly BLS labor market reports, tells a similar story. It stood at a preliminary, non-adjusted total of 219,450 in November, 3,762 more than November last year and 17,888 fewer than the pre-recession high. The unemployment rate was 3.7% mainly because there are 22,326 fewer people in the labor force than there were at the pre-recession high.

In some ways, a strong labor market where jobs go unfilled is just as bad as one where workers can’t find a job. But it does set the stage for another thing the region needs – population growth. If there are enough good jobs, it will attract new residents to help balance the region’s stagnant population base.

Here is drilled-down capsule version of how November’s jobs and employment reports looked for the region. All comparisons are November year-over-year.


Nonfarm jobs – up 0.9% It’s noteworthy that the metro area had 400 more nonfarm jobs than it did before the recession.

Employment –  up 2.7%. Employment is down 8,872 from the pre-recession high.

Unemployment rate – 3.7%.

Average private sector weekly wage – $674.58, up 9%.


Nonfarm jobs – down 0.1%. There were 1,400 fewer nonfarm jobs than before the recession.

Employment – up 1.2%. There were 7,986 fewer employed people than before the recession.

Unemployment rate – 3.7%.

Average private sector weekly wage – $648, up 0.7%. November was the first month this year that the average weekly wage average wage increased.

City-County November unemployment rates.

BRISTOL TN – 3.4%, up 0.2%

JOHNSON CITY – 3.4%, up 0.5%

KINGSPORT – 3.8%, up 0.4%.

CARTER Co – 3.9%, up 0.4%

GREENE Co – 3.7%, down 0.2%

JOHNSON Co – 3.4%, up 0.4%

HAWKINS Co – 3.8%, up 0.3%.

SULLIVAN Co – 3.6%, up 0.3%

UNICOI Co – 4.5%, up 0.3%

WASHINGTON Co – 3.4%, up 0.3%

Williamson and Davidson counties had November’s lowest unemployment rates – 2.5%.

Lauderdale Co. had the highest – 5.5%.

Eight of the 10 lowest county unemployment rates in November were in Middle Tennessee, with Knox and Sevier counties in East Tennessee rounding out the list of the top 10 lowest rates in the state. All counties in the top 10 had a rate below 3%, and unemployment rates in 87 Tennessee counties remained under 5%.

Tennessee’s rate was 3.1%, and the U.S. rate was 4.1%.

November’s U-6 unemployment rate was 8%, up 0.1. That’s the lowest rate since 2001.

The U-6 unemployment rate counts not only people without work seeking full-time employment, but also counts “marginally attached workers and those working part-time for economic reasons.” Some of these part-time workers counted as employed by U-3 rate could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still, want to work.

The U-6 rate is not available at the local level.


Most of the MID cap would hit Washington and Carter county purchases

Defenders of the mortgage interest deduction (MID) framed changes in the GOP tax plan as a dagger in the heart of the American Dream and possibly an anchor on home prices. They managed some concessions, but the bill passed and now all that remains is to wait and see the consequences – intended and unintended.

From a local perspective capping the MID to $750,000 of mortgage debt will have very little affect – if you take this year’s sales as a benchmark. Those sales are just an example because everything before Dec. 14 is grandfathered.

Thanks to some research and a heat map by Attom Data Solutions we know that during the final months of 2017 there were 77 home purchases (1.4% of all sales) in the Northeast Tennessee portion of the Tri-Cities region with mortgages over the new MID limit. And almost all of them were in Washington and Carter counties. Washington County VA was the only SW Virginia county with purchases above the new limit.

Here’s how those high-end purchases broke down by county.

Washington TN – 41

Carter – 29

Sullivan – 4

Greene – 3

Washington VA – 3

Washington County TN ranked 11th in Tennessee with the number of the high-end purchases in Attom’s study.

Here are the top five counties and the number of high-end purchases:

Shelby – 456

Williamson – 346

Davidson – 321

Rutherford – 128

Grainger – 104

Thirty-nine of Tennessee’s 95 counties had no loans this year above the new MID cutoff.

Nationwide the new tax lowers for MID to 3.9% of homebuyers.

Of course, banks love the jumbo loan like those that were targeted by the GOP tax plan, and it’s possible the new rule will crimp the 2018 high-end sales volume. But most homeowners won’t feel the bite.

What’s more worrisome is the new doubled standard deduction could take a big bite out of the number of people who itemize and that would wipe out other deductions. In other words, for many taxpayers, there’s less of an incentive to itemize.

According to the National Association of Realtors, the final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after Dec. 14, 2017. Current loans of up to $1 million are grandfathered and are not subject to the $750,000 cap. Neither limit is indexed for inflation.

The final bill repeals the deduction for interest paid on home equity debt through December 31, 2025. Interest is still deductible on home equity loans or second mortgages if the proceeds are used to substantially improve the residents.

In the larger MID policy argument, Yale economics professor and Nobel laureate Robert Shiller doesn’t think the MID really matters to the housing market. He does think it matters to rich people and bankers.

“That is going to be a substantial hit to people who are paying a lot of property taxes, and it might be a consideration that you make before you buy a big mansion in some high property tax state,” Shiller told one reporter.

Some advocates warned a MID cap would push home prices down. But much of the back-and-forth over the MID is based the assumption that people with act rationally. But, as Shiller points out, people are not rational when it comes to housing. The human factor — the emotional aspect of most people’s single largest investment, a home — is far greater than the market stimuli that are accorded such importance, he says.

“At the national level, it’s not likely to affect very many people; however, in some high-housing costs markets it is a concern because they will be significant numbers of people who will be affected,” said Joseph Kircher, senior economist at realtor.com.

This time next year, we’ll have a better handle on what the results – or unintended consequences – of the GOP tax plan will have on the housing market.

The mortgage interest deduction was created in 1913. It was a byproduct of Congress making interest deductible when it passed the first income tax.


Johnson City YTD sales tax collections up, Kingsport-Bristol down

Tri-Cities metro areas joined Morristown to trail Knoxville and the state in year-over-year October retail sales tax collections. Kingsport-Bristol also had the worst year-over-year performance of any metro area in the state.

So far, this year collections are up 0.4% in the three-county Johnson City Metropolitan Statistical Area (MSA) when compared to the first nine months of last year and down 0.2% in the four-county Kingsport-Bristol MSA.

Here’s how the year-over-year seasonally adjusted collections looked in Northeast Tennessee, according to Middle Tennessee State University.

Knoxville, up 1.8%

Johnson City down 1.0%

Morristown, down 1.6%

Kingsport-Bristol, down 5.1%.

Statewide, collections were up 2.6%.

Although October was a negative month for Johnson City it broke a three-month decline in collections higher. The opposite was the case in Kingsport-Bristol where October’s lowest performance of the year broke two months of increasing collections.

Here’s how collections look when compared to September.

Knoxville, up 1.3%

Johnson City, up 0.7%

Morristown, down 0.4%

Kingsport-Bristol, down 6.3%

Statewide collections were 0.5% better than September.

Nationwide consumer spending rose 0.3% in October. That was less than the 1% gain in September but what economists called it an acceptable pace.

Some of the increase in spending in October was on necessities such as prescription drugs, but Americans also spent more on recreational goods and plane fares for foreign travel. Both are signs of confidence in the economy.

Spending could get a lift from the Trump administration’s plan to lower income taxes. But with the bulk of the tax relief expected to go to high-income households, economists caution that the boost might be limited.

Economists and retailers are banking on a strong holiday season since consumer confidence recently high a 17-year high.

Unemployment rates on the national and local levels are at record lows that virtually anyone willing to work and meet some basic employer requirements can find a job.

Inflation is also low.



How local city household incomes, worker wages look in Census multi-year estimates

A recently-released set of Census Bureau social and economic multi-year estimates offers a glimpse over a period of time at the six major cities in the Tri-Cities region in their recovery from the Great Recession and still evolving restructuring to a new economy. Five of the selected economic items – medians and mean household incomes and median wages for three types of workers –  show shifts that illustrate some attributes of both the recession and recovery.

These 2012-2016 estimates are being compared to the 2007-2011 estimates, so there’s no overlap of data but still providing a comparison of local economies in pre- and early recession time frame to the restructuring period. I didn’t use the term recover because neither of the region’s economy has recovered to pre-recession levels. That assessment comes from year-over-year and per capita per gross domestic product reports from the Bureau of Economic Analysis. Each data set is designed to provide estimates that describe the aggregate characteristics of an area over a specific time period and should not be looked at as annual averages.

Readers of my reports on the one-year estimates will notice differences with the multi-year estimates. That’s because the impacts of economic events in the five-year studies are more noticeable in smaller areas where changes have a larger affect. Generally, the one-year estimates are preferred since they are more relevant to current conditions. The multi-year estimates provide a smoothing of the upward trend a likely give a better portrayal of the change in proportion over time.

So, what do the five-year estimates say about local cities? In general, median household income and median earnings for all workers in Bristol TN and VA show the largest gains in a comparison of the 2007-2011 and 2012-2016 estimates. Kingsport and Greeneville show a loss in median household income.

Female full-time workers in Bristol VA and Johnson City posted double-digit earnings gains and did well in other cities with the exception of Kingsport and Greeneville.

Median earnings for workers posted the best gains in Bristol TN and VA. Greeneville was the only city with median worker earnings loss.

Male full-time workers in each city except Johnson City and Elizabethton saw their median earnings increase.

Time for a reminder. Remember the one-year estimates give a more accurate look at current conditions. The multi-year estimates show conditions over a time frame. There multiple reports on the 2016 one-year components on this site.

One multi-year dataset of particular interest is the median household incomes compared to the mean – or average – household incomes. The gap between them points to shifts in the share of households by income ranges. The average household income is a good description of how incomes are distributed across an entire community while the median marks the point where half of the households have a higher income, and half have a lower income.

Here’s a snapshot of the household income and wage comparisons of the 2012-2016 aggerate data to the 2007-2011 data.


Bristol, TN – $38,895 up 10.4%.

Bristol, VA – $35,801, up 11.5%.

Elizabethton – $30,649, up 7.2%

Greeneville – $30,671, down 9.8%.

Johnson City – $40,370, up 8.3%.

Kingsport – $39,463, down 1.1%.


Bristol, TN – $53,799, up 7.7%.

Bristol, VA – $49,227, up 15.6%.

Elizabethton – $46,728, up 13.7%.

Greeneville – $46,175, down 0.6%.

Johnson City-  $65,381, up 9.5%.

Kingsport – $60,143, up 8.5%.


Bristol, TN – $25,623, up 9.9%.

Bristol, VA – $24,413, up 5.2%.

Elizabethton – $20,458, up 6.3%.

Greeneville – $23,854, down 1.2%%.

Johnson City – $22,745, up 4%.

Kingsport – $26,338, up 1.5%.


Bristol, TN – $40,728, up 9.5%.

Bristol, VA – $39,511, up 23.5%.

Elizabethton – $29,545, down 13.8%.

Greeneville – $35,210, up 0.4%.

Johnson City – $44,208, down 0.7%.

Kingsport – $42,943, up 3.9%.


Bristol, TN – $30,433 – up 7.8%.

Bristol, VA – $35,249 – up 22.9%.

Elizabethton – $29,132, up 3.1%.

Greeneville – $33,412, down 3.5%.

Johnson City – $35,998, up 13.5%.

Kingsport – $33,563, down 3.1%.




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