What To Look For As the Tri-Cities Rebuild
Few would argue that the prime Tri-Cities economic development goal is not job creation. Good jobs. Jobs that at the very least afford families the resource for an adequate standard of living that will help grow the Tri-Cities of tomorrow. Before we can look at that challenge, some benchmarking is necessary.
Last year the Tri-Cities economy added about 1,300 nonfarm jobs. A little more than 1,000 of them were in the three-county Johnson City Metropolitan Statistical Area (MSA). The Kingsport-Bristol MSA didn't have quite as good a year. During the latter part of the year, its monthly jobs growth rate was negative. But stronger first and second quarters carried the four-county area to a net annual gain of almost 300 jobs.
During the eight years since the bottom of the Great Recession the region's economy has gained back 10,200 of the jobs lost. It's slow growth because there are still roughly 900 fewer jobs than there were before the recession.
But what about those jobs that were created? Two wage data benchmarks shed some light on that question.
The first is the Bureau of Labor Statistics’ (BLS) average weekly private sector wage. The 2017 annual numbers are not available yet, but monthly reports show the weekly average for the Johnson City MSA growing at a rapid rate every month last year. In December it was $696 - 13.3% better than December last year. The 2016 annual average was $615. At the same time, private sector workers in Kingsport-Bristol saw their average decline for 10 straight months. It made a 1% year-over-year gain in November and was flat in December at $645 a month. The 2016 annual average was $648. Last year's private sector wage performance is a reversal of what we saw in the early recession recovery years. That's when the Johnson City metro average wage declined for almost three years while it saw slow growth in Kingsport-Bristol.
Since the region has a large public sector, the BLS's average weekly wage for all industries (including government) must also be factored into the wage benchmarking. The most current number for the Johnson City MSA is $768 a week – a 5% year-over-year increase. The Kingsport-Bristol average is $803, which is a 6% improvement.
To get an idea on how wages are performing in relation to what it takes to maintain a "modest, but adequate standard of living" in our area look at the Economic Policy Institute's (EPI) benchmark. It put the baseline for a family of two adults and two children at $50,444 a year in the Johnson City metro area and $49,686 in Kingsport-Bristol. It doesn't take a math wizard to see that the BLS wage benchmarking falls below the EPI baseline. The balancing factor is many – if not most – family households have two incomes. And while the BLS's average wage metrics do a good job of showing the distribution of wages, incomes are not distributed evenly in a real-world economy. For example, Census data shows the most current median family household income in the Johnson City MSA is $58,391, and the average is $72,263. In Kingsport-Bristol the median is $51,886, and the average is $68,583.
That brings us to what the economy is creating. As pointed out earlier in this report the local economy has added over 10,000 of the jobs killed by the recession. Some are good paying jobs with traditional benefits. But many were not. They fit the pattern of a regional – like the national – economy that created more part-time and contract jobs. It's estimated that about one-in-four of the jobs created nationwide since the recession have been part-time. The most current Census Bureau estimates show that 30% of 24-to-64-year-old Tri-Cities workers said they work less than full time. Some of those 54,216 workers would prefer a full-time job. Others work two part-time jobs to make ends meet. And some like working part-time.
Tennessee’s Department of Labor and Workforce Developments, in cooperation with the BLS, has a list of the most in-demand jobs for each state labor market and an estimate of how many of those jobs will be created each year until 2024. The local number is 1,755. Of those jobs, 280 pay enough to meet or exceed the EPI baseline for a family of four. Based on that data, the local economy is creating about six not-so-good jobs for every good job.
Yes, those are just estimates, but they are reliable estimates even if they only describe part of the larger issue of the region's chronic underemployment woes and wage stagnation. The bottom line is while today's labor market and gig economy are a boon to some, it's not providing an inadequate number of good-paying jobs to keep more of the region's young people at home and attract new residents to stimulate our stagnant population growth.
Gallup Chairman and CEO Jim Clifton wrote in his provocative book "The Coming Jobs War" that, after years of polling people worldwide, the most powerful finding was, "The primary will of the world is no longer about peace or freedom or even democracy; it is not about having a family, nor about owning a home or land. The will of the world is first and foremost to have a good job. This is a huge sociological shift for humankind.”
Clifton's book is chock-full of data-driven insights that vary from the growing importance of new forms of education, innovation and entrepreneurship to the realities that the solutions will come at the local – not state or national – level. He contends there are three key energy sources for job creation: The nation's top 100 cities, its top 100 universities and its local non-elected community and civic leaders. But that job-creating calculus isn't limited to the nation's largest cities and universities. It also exists on the city and county level.
It would be easy to get discouraged after looking at all the data about jobs and the economy. That's why economics is called the dismal science. It focuses as much on unintended outcomes and the downside of the economy as what city hall and the chambers of commerce talk about. Despite the shortcomings of some sectors, the Tri-Cities’ economy looks pretty good these days. But it's an economy where much of the middle-class has been shortchanged. Some contend that we're very near what will be the "new normal" for the area economy. Time will either prove or disprove that, but the challenge remains. Is the new normal or status quo good enough for what the region and its communities can become?
Peter Drucker, the father of modern business management, once said, "The best way to predict the future is to create it." Those are good watchwords for the region's prime economic development goal of creating good jobs. Data shows the region's economy has done a pretty good job of digging itself out of the black hole of the Great Recession, but the big challenge is pushing today's Great Restructuring to a higher - more equitable - level that what we've seen so far.