Although Tennessee’s unemployment rate has remained unchanged for the past three months, the state’s economic outlook is nevertheless improving, driven by growth in the Middle Tennessee region.
That was the take-home message from Dr. David Penn, director of the Middle Tennessee State University Business and Economic Research Center, who delivered remarks at MTSU’s Economic Outlook Conference on Sept. 27.
“Employment is still growing by one-point-seven percent every year. Depending on what happens with government employment, it’s conceivable Tennessee could reach recovery to pre-recession levels within about 12 to 18 months, at [the current] rate of growth,” said Penn.
The Tennessee heartland continues to show economic improvement, but growth has slowed across other parts of the state, Penn said, adding that statewide sales tax collections appear to be braking. The recovery’s sluggishness is actually due in no small part to the economic woes of Tennessee’s overseas trading partners, such as Japan, China and the European Union – and in general the state’s reliance on exports, he said.
Although the number of new unemployment claims is at its lowest level since 2007, and is continuing to slowly fall, the state’s unemployment rate has in fact slowly increased over the year, holding steady at eight-and-a-half percent for the past few months, despite a decline in the number of layoffs, Penn said.
Tennessee is still among the top 10 states for high unemployment rates, he added.
But the unemployment rate will be the last number to change as a result of former workers rejoining the labor force at a faster rate than jobs are created, and should not be considered an indicator of improvement, or the lack of it, in the economy, Penn said.
“[The] labor force [number] has hardly changed over the year,” Penn said. “What’s happening here is that folks are jumping back into the labor force after jumping out in 2010, when the participation rates dropped fairly significantly. They’re jumping back in, [and] the number of jobs is just barely growing enough to absorb them, keeping the unemployment rate almost unchanged over the year.”
Additionally, the rate of growth in real earned income has been “accelerating generally” since early 2012, and has been increasing at about the same pace as the national growth rate, Penn said.
Counties with the lowest unemployment rates are for the most part located in the Middle Tennessee. Several of them are about two percentage points below the state average.
Rutherford and Williamson Counties both place high on the Bureau of Labor Statistics list comparing job and wage growth in the 334 largest counties nationwide, with Rutherford ranking sixth and Williamson coming in at 15 in job growth.
However, when it comes to wage growth, Williamson far outpaces Rutherford, coming in at eighth while Rutherford lags behind at 249.
Davidson comes in at No. 86 nationally for job growth and No. 254 for wages. Knox, Hamilton and Shelby are also included on the list, coming in ranked at Nos. 260, 193 and 186, respectively, in employment, and 12, 290 and 216 for wages.
The Metro Nashville region, which includes Murfreesboro and Franklin, ranks No. 1 in private sector job growth among the largest metropolitan areas in the United States with a growth rate of four-and-a-half percent, according to BLS statistics. Private sector job growth rates for most of the counties in the Nashville area are much higher than the Tennessee state average of about two percent, with Rutherford County’s growth rate at almost eight percent, while Williamson County’s is about five percent and Davidson is at three-and-a-half percent.
“Job creation is booming for the Nashville Metro [area],” Penn said.