The Tri-Cities labor market fell into a CORVID-19 blackhole in April. The region’s March-April job lost was over 18,000 jobs. Compared to April last year it was down 20,100. That’s more than during the entire Great Recession.
At the same time, the seven-county region’s unemployment rate fell from full-employment status to 13.5% – the worst since the Great Depression – as businesses shut down and consumers stayed at home to curtail COVID-19.
As shocking as April’s numbers are, it’s likely they underestimate the pain. The unemployment rate would have been higher if workers classified as absent from the job for other reasons had been classified as furloughed or unemployed. The report also does not count those who left the labor force and those who had to scale back to part-time. The U6 unemployment rate, which covers the full-range of joblessness was 22.4% in April. The variance between the U6 rate, which is not reported on the local level, has been 3.3% higher than the local U3 rate for the past eight months.
None of the area’s counties were among the lowest or highest April jobless rates in the state. Fayette Co. was the lowest at 9.4%, while Sevier Co. had the highest – 29.5%.
As expected, preliminary nonadjusted numbers from the Bureau of Labor Statistics (BLS) show the Leisure and Hospitality sectors took the biggest hit. The loss was a little better than half of that sector’s jobs total. Leisure and Hospitality account for almost 9% of the local nonfarm jobs. The loss is especially worrisome because of the shakeout in the restaurant, and retail industries already in progress was accelerated by COVID-19. Some of those jobs will not return as local businesses are permanently closed.
Manufacturing jobs were the second hardest hit last month. And the next four major job sectors saw losses of more than 1,000. The least affected sectors were Information and Financial Activities.
Service providing jobs exceeded goods production jobs in the rice cities in 2002. They now account for about half the jobs total. So, when our consumption-based economy shut down, the shock was both swift and deep. Consumer spending accounts for about 70% of the economy. It’s also a major revenue on both the state and local government levels since sales tax is a primary government revenue source.
It seems a paradox that when the region is at a record high jobless rate, some local firms are clamoring for workers. State unemployment checks and the federal supplement created a situation where some jobless workers have a monthly income that’s more than their regular pay. That will end with the expiration of benefits and restarting of the economy.
The big question is how long that will take and how many jobs will be recovered, or new jobs created. Much of the answer to that question depends on when workers will feel safe about returning to the job, and when consumers will venture out in numbers before the stay-at-home orders.
When the current sock hit the economy, the Tri-Cities job market, which has a chronic underemployment issue, was slowly improving but had not attained pre-Great Recession levels. The 2019 net annual job gain was 200 as employers averaged adding 17 new jobs a month. The best net gain was 1,500 jobs in 2016.
According to the BLS household survey, the local labor force declined by over 8,000 from the March total. The employment number was 28,324 lower than March and 31,490 lower than April last year. The employment number and jobs total differ because the payroll report does not count many part-time and contract workers.
Categories: LABOR MARKET