Taken from the Knoxville News Sentinel
As manufacturing jobs in Knox County have slipped overseas or just disappeared, jobs in department stores, hospitals and restaurants apparently have increased.
According to a study by the Metropolitan Planning Commission, Knox County’s three major employment sectors in 2007 were retail trade, health care/social assistance and accommodation/food services. The three biggest employers in those sectors were Wal-Mart, Covenant Health and McDonald’s, respectively.
“Traditionally, retail trade, accommodations and food service aren’t (the focus of) economic development and recruitment efforts,” said Bryan Berry, who along with Terry Gilhula produced the study.
Gilhula said that traditionally those sectors aren’t economic development drivers because they are lower-paying economic sectors.
Using U.S. Department of Commerce figures, the MPC study showed that manufacturing accounted for 22.4 percent of Knox County jobs in 1970 and as late as 1990 still accounted for 14.2 percent. However, by 2006 – the latest year for which data was available – manufacturing had fallen to 7 percent of Knox County jobs.
On the other hand, service industry jobs – which amounted to 25 percent of Knox County jobs in 1970 – claimed 33.4 percent of the job market in 1990 and 42.1 percent in 2006.
Three sectors accounted for 40 percent of the Knox County work force in 2007, according to the report. Retail trade made up 14.7 percent of jobs, or 33,142 employees. Health care/social assistance accounted for 14.4 percent of the work force at 32,515 employees, and accommodation/food services claimed a 10.5 percent share, with 23,732 workers.
Regardless of the pay differentiation, Knox County showed good job growth compared to the state in 2007. The county’s work force totaled 225,940 workers in 2007, accounting for 7.4 percent of the state’s jobs. During 2000-2007, Knox County’s work force grew 11.6 percent, or 23,530 workers, while the Tennessee labor force rose 5.8 percent and the national work force was up 7.4 percent.
Unemployment in Knox County averaged 3.7 percent from 2000-2007, while it averaged 5.1 percent for the state and 5 percent for the nation during that period.
“Knox County’s expanding labor force and low unemployment rates signaled a healthy labor market this decade, consistently outperforming state and national measures,” the report said.
“Our unemployment rates are typically below national and state rates,” Gilhula said. “Even historically if you look at downturns, Knox County’s unemployment rate tends to be a little bit insulated.”
The report noted that about 18,470 of the 30,629 jobs added to the Knox County market from 2001-2006 were a result of national economic growth trends.
“Of course you have to bear in mind that all of the information in our report is before some significant events,” Gilhula said, referring to the spikes in fuel costs, crisis with Wall Street and the financial industry, and other economic maladies of the last few months.
“As you know, with recent economic events, consumer confidence is at a low, consumer spending is at a low, and unemployment rates are starting to climb. That’s going to impact the retail trade sector, which is one of Knox County’s biggest employers – Wal-mart, Kroger, Food City, Goody’s, Home Depot,” he said.
“And with retail trade, you have the partner sector of accommodations – hotel and restaurant industries. When consumer spending goes down, so does travel and eating out. People’s discretionary income starts to get a little tight, so we suspect those sectors are going to feel the pain, or a pinch anyway,” Gilhula added.
“It’s going to hit Knox County. We are not totally shielded – we may be a little insulated – but it will affect us,” he said.
Also, as the agency that processes and reviews development plans for Knoxville and Knox County, MPC has a window into the housing and development sectors of the economy. Planners have noticed an apparent effect of the housing market slump being felt across the country: rezoning requests for residential development and subdivision concept plan submissions are off by about 80 percent in Knoxville and Knox County in 2008 compared to the previous year.
Marking the initial design phase of a project, concept plans are a barometer of future residential growth, Gilhula said.
“Concept plans are 80 percent off and that should indicate over the next couple of years the supply of new building lots is going to be pretty static,” he said. “We will still see some construction activity as existing inventory lots are used, but looking forward, residential development is really going to be slowed.”
Construction jobs increased 26 percent from 16,667 in 2001 to 21,017 in 2006. On further analysis, Berry said it appeared the increase was likely a blip due to some major public works projects such as SmartFIX40, the widening of Interstate 40 through downtown Knoxville.
In summary to the MPC report, Gilhula and Berry noted that their study has limitations – describing Knox County’s strengths and weaknesses but not explaining them – and that more research is needed. Some of their conclusions were that Knox County generally enjoyed higher rates of labor force growth and lower unemployment than the rest of the state and the nation and despite the drain of manufacturing jobs, the county has strengths that could be built on.
“Knox County holds relative competitive advantage in construction, retail trade, information, finance/insurance and accommodation/food services industries, with job growth outperforming national averages. Economic development efforts should focus on these area strengths,” according to the report.
Business writer Ed Marcum may be reached at 865-342-6267.
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