Tri-Cities job creation flat in May; how recovery stacks up so far

Tri-Cities employers added no new non-farm jobs in May. There were 1,700 fewer people employed, and the unemployment rate increased to 3.2%. That’s not all that bad. During the past five years, jobs have declined three times during the April-May transition. And the Bureau of Labor Statistics (BLS) reports are preliminary and not seasonally adjusted. So, there will be adjustments during the next two months. But don’t expect much change for the positive. The May-June reports always show a jobs decline as schools shut down for the summer.


According to the numbers the Tri-Cities continues to be at full employment as it has been most of this year. The “we’re hiring” signs have not come down. There are jobs for almost every who wants work. And there is still grousing that employers can’t find enough skilled workers. At the same time, the local average private sector wage continues to be among the lowest in the state. There has been improvement, but when adjusted for inflation against the pre-recession benchmark, the annual private sector wage in the Johnson City metro area left workers with $31 a week less buying power at the end of 2017. The buying power for Kingsport-Bristol MSA private sector workers was down $67 a week.

The most current inflation-adjusted household incomes also show Kingsport-Bristol peaked in 2008 and declined by 6.3% in 2016. The Johnson City MAS peak was in 2005. It had declined by 10.5% in 2016.  Data for 2017 will be available this fall.


That’s not unique to the Tri-Cities. According to a Washington Post analysis of May’s BLS real earnings report, wages are not just flat for the biggest group of workers – they’re falling. That analysis focused on manufacturing and construction jobs and nonsupervisory workers in the service industries like health care. Those workers account for four-fifths of the privately employed workers in the United States.

Economists say falling wages could increase levels of U.S. inequity, which are already at historic levels. In the workforce, it means those who already make less are falling further behind when the economy is seeing 2.9% growth.  That means almost all of the gains of that economic growth are going to those already at the top of the economic ladder.

A rising jobless rate when the labor force is increasing is a good sign because the employment situation is pulling more people into the market. When the unemployment rate falls because of participation, it’s usually a bad sign.


In many ways, the Tri-Cities economy is booming. The labor market is improving even though there are some soft dynamics at play. That soft dynamic is the difference between having a job and a good job, and a deeper dive into the data shows the local economy is generating more jobs than good jobs.  The housing market is booming. Existing home sales are up. So is the average sales price. And a record low inventory of homes for sales has pushed it into a sellers’ market. Builders are straining to keep up with new home demand and retail sales tax collections are up, so consumers are confident.



Almost all sectors continue to see growth, but the growth rate is slowing down. For instance, employers are adding jobs, but the year-over-year moving average trend has been negative for eight months. The declines range from 0.1% to 0.3%. That’s not enough for a dramatic immediate visible effect, but it does show a slowing growth rate.

The year-over-year employment trend growth rate is positive. But it had declined by a fraction of a point each month since June last year when it peaked at 2.1%. Last month it was 1%. The labor force picture is similar. While the improving jobs market has pulled more people into the labor force, the growth rate is slowing, and the number of workers aging out of the labor force is increasing. The labor market and economic bottom line are it will become increasingly difficult to achieve economic growth with a declining labor force unless there’s a significant productivity increase from technology.


Rising prices and a very tight inventory is beginning to take a slight toll on existing home sales. They’re still at record levels, but like other sectors, the growth rate is beginning to slow.


The Great Restructuring of the economy from the Great Recession isn’t complete yet. And although there has been progressing in this slow recovery, a comparison of the labor force and employment to the region’s pre-recession benchmark illustrates how much things have changed. There are 14,918 fewer employed people and 20,426 fewer people in the labor force than before the recession.  That shows that much of the full-employment status comes from a smaller labor force and less employment. Most of that is due to a rapidly aging population, and a labor market reset from a manufacturing-based to a service-based economy. Technology also took a big bite out of employment.  Add that to the region’s historic underemployment situation, and you have a soft recovery from the Great Recession. There has been progress on beefing up the local skilled workforce. But it’s a structural labor market problem with a slow recovery curve.



One bright spot in May’s report is average weekly wages for private sector works in the Tri-Cities’ two metro area increased. The preliminary, non-adjusted total for Kingsport-Bristol was $662.40, up 5.1% from May last year. The weekly average in the Johnson City MSA was $762.60, up 9.9% from last year.

May’s private sector wage average in the Johnson City MSA ranked 6th among Tennessee’s 10 metro area while Kingsport-Bristol was next to last.


Here’s how May’s unemployment rates looked in the cities above 25,000 population and counties that make up the Tri-Cities region.

Carter – 3.5%, up 0.2%

Greene – 3.3%, up 0.1%

Hawkins – 3.4%, up 0.1%

Johnson – 2.9%, unchanged

Sullivan – 3.1%, up 0.1%

Unicoi – 3.2%, up 0.3%

Washington County 3%, up 0.2%

Bristol – 3.4%, up 0.3%

Johnson City – 3%, up 0.2%

Kingsport – 3.1%, unchanged

Tennessee – 3%, up 0.2%

United State – 3.6%, down 0.1%



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