Flood repair work fuels drop in TN jobless rate

July 16, 2010

The Tennessean - Friday, July 16, 2010

Hiring for flood-related construction jobs in June helped bring the state's unemployment rate down to 10.1 percent, but that may not be enough to fuel a lasting turnaround in an industry that has lost 35,600 jobs in Tennessee since the recession started.

"You take the flood out of the picture and nobody has plans to hire anybody in the foreseeable future," said John Finch, president and CEO of PBG Builders.
His Goodlettsville-based company repaired LP Field after the May floods, and some subcontractors did a small amount of temporary hiring to finish that work in a short period of time, Finch said.

Moderate employment growth propelled a drop in the state's unemployment rate from 10.4 percent in May. A year ago, unemployment in Tennessee was 10.9 percent.

About 2,500 jobs were added in construction in June compared with a month earlier, along with 5,000 in the hospitality industry, which is typical for the peak summer travel season.

Growth in construction was a robust 2 percent from May to June, an improvement but not enough to signal a building boom, said economist David Penn, director of the Business and Economic Research Center at Middle Tennessee State University.

"What you're hoping for is sustained activity in the sector," said University of Tennessee economist Bill Fox, adding that sectors such as home construction nationwide remain rocky.

"All those jobs are temporary because of the flood," said John Stites, CEO of J& S Construction in Cookeville, which has done repair work on flooded homes and businesses. "The vast majority of those jobs will disappear by November or December."

Stites blamed a lack of bank financing as the main reason for slow retail, commercial and industrial construction. Finch said he had virtually no projects on the horizon.

"The new work is slow in coming to replace the work we're finishing," Finch said.

For now, though, a handful of large projects around the state appear to be boosting construction employment this summer, which is the prime season for the industry anyway, said Bill Young, executive vice president of the Associated General Contractors of Tennessee.

Work is under way on the Music City Center convention facility downtown in Nashville. In addition, Hemlock Semiconductor in Clarksville ramped up its construction work force from 300 in March to 600 by June, and this month there are more than 650 workers on site, Hemlock spokeswoman Liana Wallace said.

Still, statewide construction jobs are down about 25 percent from a high point of 139,100 workers in November 2007, Penn said. In May, there were 103,500 employed in construction in Tennessee. "It's pretty grim," Penn said.

Overall, employment in Tennessee grew 1.3 percent in June from a year ago, outpacing the growth rate nationwide, which was just seventh-tenths of a percentage point, Fox said.

Many companies, especially those in administrative services, are hiring temporary workers, Fox said, a sign that they're "concerned about the continued strength of the recovery and are being cautious about hiring people back."

Nationwide, initial jobless claims fell by 29,000 to a seasonally adjusted 429,000, the lowest level since August 2008, according to the U.S. Labor Department's latest weekly figures. That data could be somewhat skewed because General Motors and some other auto manufacturers skipped their usual July plant shutdowns, according to The Associated Press. 

View PDF of news article

< Back to News