Newly released Tri-Cities employment data show the seven-county region had 400 more jobs than February, and the unemployment rate dropped to 4.1% in March. But neither the Bureau of Labor Statistics (BLS) jobs report nor the employment report reflects the effect of COVIC-19. But what the most recent annual revisions do show is the local labor market began weakening late last summer.
The COVIC-19 effect won’t show up until April because the BLS reports are based on the second week of the month – between March 8 and 14. The first wave of local accelerated unemployment claims was not filed until March 28. Since then, 20,879 NE Tenn. residents have filed for unemployment.
But that doesn’t mean March’s reports are useless. They contain the annual jobs revisions, which offer a more accurate labor market picture than the earlier monthly and preliminary yearly reports. Those more accurate numbers are not very good news. The report shows a weaker job market than indicated before the just-completed annual revision. The bottom line is the Tri-Cities had a net gain of 200 nonfarm jobs in 2019 for a 0.1% growth rate. That’s 267 fewer jobs than the pre-recession benchmark. Those earlier preliminary reports show the region had clawed back the number of jobs lost during the Great Recession.
The household survey began showing employment gains in the early spring of last year. The payroll report’s preliminary reports pointed to the economy slowly adding jobs, but it was only a slight slowing of the job creation rate. The region’s year-over-year job growth rate peaked in 2011 during the first stage of recovery from the Great Recession. That 1.8% growth rate dropped to sub-one percent gains the next year. The best two years were 2015 (0.7% – a net gain of 1,300 jobs) and 2016 (0.8% – a net gain of 1,500 jobs). Job growth dropped to 0.4% in 2017. Revised reports show it was flat in 2018 and 0.1% in 2019.
Revised data show job creation began softening more rapidly in August and crossed into negative trend territory in November. It’s been there ever since.
While the household survey continues showing employment gain, that growth rate also began arching lower in Decembers, so both reports are now telling the same story.
Since these labor market reports are backward-looking, they don’t show the effect of the thousands of job losses that occurred in the past month. Since many of the layoffs hit the businesses that have socially dense conditions, it can be assumed that the Leisure and Hospital and Retail sectors will take some of the biggest hits. But the pain won’t be confined to restaurants and retail.
The big questions now are how much of the labor market will recover, and when?
Extraordinary relief measures have extended unemployment for many employees. It’s more generous and begs the question. When the economy begins reopening during the first week of May, how many businesses will reopen, and will those employees receiving 16-weeks of unemployment feel safe enough to return to the jobs? There’s also the possibility that some employees will opt to stay on unemployment until it runs out.
And some of the changes necessitated by the ‘stay-at-home’ days are expected to accelerate trends previously at play. For instance, e-commerce is expected to increase as well as a shift toward more work-at-home to take advantage of the cost savings. This includes telemedicine and is an extension of the ongoing debate about healthcare and how to pay for it.
While there’s rampant speculation about what the next phase of life with COVID-19 will bring there’s one thing that isn’t speculation. The next couple of months of economic data are going to be ugly. On the unemployment front that might mean seeing a historic low rate quickly become a new record high.
Categories: LABOR MARKET