Tri-Cities’ labor market picture darker than June’s unemployment report


The Tri-Cities economy added 4,300 jobs in June, and the unemployment rate dropped to 9.1%.

On the surface, that sounds like good news.  But it’s only a small part of the story. The Bureau of Labor Statistics’ June reports show a sober picture for the seven-county region’s labor market that was still struggling to recover from the Great Recession when COVID-19 pushed the economy off a cliff.

June’s unemployment dropped to 9.1%, but that’s a misleading number. It’s the U3 report that omits many of the people out of work. There’s also another factor. The BLS report list 19,795 as the number of people who are unemployed. However, there at a little over 13,000 people receiving unemployment and the $600 a week federal add on affords them more than they were making in their jobs.

Here’s the big-picture context.

The economy has clawed back about 6,000 of the 19,000 jobs lost in April. But while there were more jobs in June than May, there were almost 4,000 fewer employed people. Some of that can be attributed to the aging of the labor force.

Nonfarm jobs are slowly being added, but at the same time, the number of permanent job losses typical to a recession are beginning to show up.

The unemployment rate drop wasn’t driven by higher employment. It was down because labor force participation declined. When that happens, it’s not a good sign.

Almost all of the region’s job sectors reported monthly job gains in June. The exceptions were Manufacturing and Government.

June’s manufacturing in the Kingsport-Bristol Metropolitan Area (MSA)  increased by 100 in June and down by 3.4% from June last year. There were 300 fewer government jobs than in May and the total is down 13.6% from June last year.

Manufacturing in the Johnson City MSA was down by 100 in June and the year-over-year total is down by 3.4%. The number of government jobs was down by 1,100 and down 4.2% from June last year.

The strongest gains came in sectors that took the biggest initial hit: Leisure and Hospitality, Education and Health Services, and Other Services.

But when compared to Jan., construction was the only sector with a positive number in June. Attribute that the booming housing market – the only local economy sector that in a recovery status.

The outlook for a local jobs recovery is much like the national story. COVID-19 delivered serious damage. Locally, it pushed the nonfarm jobs total back by two decades. Some of those 19,000 jobs lost in April will come back sooner than others. Others will never return because we’ve moved past the initial shock and are now suffering the employment effects of the recession. What we saw during the Great Recession was a hollowing out of the area’s Mom and Pop businesses. Expect more of that in the current recovery. At the same time, there’s a growing strength in the number of entrepreneurs in the region that are classified as nonemployer businesses. They don’t have storefronts because they’re freelancers, independent contractors, or remote workers.

When the number of June nonfarm jobs is compared to where the Tri-Cities started the year, construction is the only positive sector. Clicking on the chart renders a larger version.

Some of those effects of April’s layoffs have been muted by the $600 a week federal add-on to unemployment checks. That goes away next week, and Congress hasn’t agreed on what to do next or when it will happen. It’s pretty much agreed that there will be a second round, but not at the current level. Republicans said no more to a program that resulted in many people making more on unemployment than they did working. The reason it’s keeping workers at home instead of going back to work.

Some local employers are hiring, but many have reduced the hours of current workers and those being brought back. That means take-home wages are taking a hit.

The full effect of what the outcome won’t be fully seen in local consumer spending, rents, and mortgage payments until Aug. and Sept. In some cased the effect will show up later because the savings rate has increased as individuals and families that could have squirreled away what savings they could.



Nonfarm jobs Jan 1990 – June 2020. What we’re seeing is more losses in one month than during the Great Recession benchmarked against the almost labor market recovery when the pandemic hit.

 Copyright 2020 – Don Fenley

Categories: LABOR MARKET