Bill Fox

Unemployment in Tennessee and Georgia rose to the highest level in more than 15 years last month as employers trimmed staffs in response to the slowing economy.

Tennessee’s jobless rate jumped by its biggest monthly amount ever in May, rising a full percentage point to 6.4 percent, according to the state Department of Labor and Workforce Development. In neighboring Georgia, the state Department of Labor said unemployment rose one-half percent during the month to 5.8 percent, exceeding the national jobless rate for the fourth consecutive month.

“I don’t think the slowdown is over and I suspect we’ll see further declines in manufacturing, and construction will probably get worse before it gets better,” said Dr. William Fox, the state’s chief economic forecaster in Tennessee. “Even if you don’t yet call this a recession, employment is falling and, with the labor market still adding people, unemployment is going up.”

But unlike some previous recessions, Chattanooga appears to be weathering the current economic storm better than it has in the past. Local Realtors said home prices didn’t unduly inflate the local economy as they did in many other markets, and Chattanooga is less dependent upon cyclical and hard-hit industries than in the past.

J.Ed. Marston, vice president of the Chattanooga Area Chamber of Commerce, said the local economy “is continuing to see positive economic momentum” from new investments despite business closings and cutbacks.

Since the Chamber began its “Chattanooga Can Do” campaign last July, nine major business expansions or locations have been announced, with a collective investment of nearly $335.5 million and plans to add 707 new jobs, Mr. Marston said.

“Both the construction and the preparation to hire hundreds of new workers for these projects are helpful in keeping our economy headed in the right direction,” he said.

During May, unemployment in the six-county Chattanooga metropolitan area averaged 5.2 percent, matching the U.S. rate but staying 0.7 percent below Tennessee’s statewide rate, according to the state labor department. Chattanooga’s jobless rate last month was below six other metro areas in Tennessee, although it was still slightly higher than the May unemployment rates in metro Nashville and Knoxville, the labor department said.

Mark Campbell, owner of the Manpower temporary staffing franchise in Chattanooga, said he expects this year to be his best in the 15 years he has owned the business.

“We’re certainly seeing less activity in Dalton (Ga.), where the carpet industry is being hit hard, but across the board elsewhere we’re still seeing growth,” he said. “I know overall our industry is flat or even down. But thankfully, I’m keeping busy in Chattanooga.”

A survey of Chattanooga area employers by Manpower showed 23 percent plan to add staff in the third quarter of 2008, down slightly from the 27 percent who had such hiring plans at the same time a year ago.

LOSING jobs

Nonetheless, employment in metropolitan Chattanooga last month still was below year-ago levels. In May, 249,990 Chattanoogans were on the job in the six-county metro area, or 0.5 percent less than in the same month a year ago, state records show.

Chattanooga and the rest of Tennessee continue to shed manufacturing jobs. Statewide, the number of manufacturing jobs in Tennessee was down by 8,500 from a year ago, and Tennessee has suffered a net loss of more than 100,000 manufacturing jobs over the past decade, according to the U.S. Bureau of Labor Statistics.

Patrick Trotter, a 37-year-old diesel mechanic in Chattanooga, is one of those casualties. He said he has been looking for work since last December and even traveled to Memphis and Mississippi hoping to land a job.

“It’s a lot harder to find a job these days,” he said Friday after looking for job listings at the Southeast Tennessee Career Center. “It seems like most manufacturers have closed down and left us, and that’s killing people like me.”

Even traditionally stable job providers sometimes are having to cut back. State government in Tennessee plans to cut more than about 2,300 jobs this summer because of a drop in tax collections this year. Erlanger hospital officials said this week they will trim 200 jobs in the next year.

Unemployment was worse last month in Chattanooga’s neighboring metropolitan communities, some of which are even more dependent than Chattanooga upon manufacturing.

The jobless rate in metropolitan Dalton — the self-described “carpet capital of the world” — rose to a preliminary 6.5 percent in May, the highest level since March 1993. The carpet industry has shed more than 1,000 jobs in the past year, according to the Carpet and Rug Institute in Dalton.

In metropolitan Cleveland, Tenn., unemployment last month topped 6 percent for the first time since the early 1990s.

In outlying Tennessee counties such as McMinn and Meigs, the jobless rate is even higher. In McMinn County, where the jobless rate rose a full percent in May to 7.7 percent, county Mayor John Gentry said Athens has been hard-hit by cutbacks in automotive manufacturing. Collins & Aikman, one of the county’s biggest employers, closed its plant last year “and unfortunately there are still people who worked there trying to find other jobs,” he said.

“Many of those who did find other jobs are making less money than they used to make,” Mr. Gentry said.

consumer anxiety

The U.S. economy is continuing to benefit from a surge in exports, and consumer spending this spring is getting a lift from $158 billion in tax rebates that Congress authorized earlier this year to moderate the economic slowdown.

But employment nationally still has declined in each of the past five years, although U.S. employment still remains above that of a year ago. On Wall Street, this month is shaping up as the worst stock market for June since the Great Depression.

Even if the overall economy isn’t yet classified as being in a recession, consumer angst is up. Earlier this week, the University of Michigan’s Consumer Sentiment Index fell to its lowest level in 28 years.

“With all of the transitions in the economy, the risks for individuals are greater than ever before,” Dr. Fox said.

Robert Taylor, a 39-year-old poultry worker at one of Chattanooga's poultry plants, said his overtime hours have been cut in the past year, reducing his take-home pay at a time when he is having to pay more for gas, food and electricity.

“Everything is costing more money these days, but finding a better job is real tough in this market,” he said. “I’m worried, and a lot of other people I know are, too.”

Mr. Taylor said he may get another job to supplement his pay and to learn job skills for a better-paying position such as driving a truck.

State labor commissioners in both Tennessee and Georgia warned that the job market could get worse before the end of the year.

“We are facing an increasingly difficult economic period,” Georgia Labor Commissioner Michael Thurmond said.

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