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Staff photo by C.B. Schmelter / Two 2020 Atlas Cross Sports are driven out at the Volkswagen Assembly Plant. Volkswagen is adding 1,000 jobs at its Chattanooga assembly plant as part of an $800 million expansion to add an electric sports utility vehicle to its product line.

The coronavirus pandemic ended the longest economic expansion in the Chattanooga region this spring and, even after major job gains in the past six months, has left the region with nearly 6,000 fewer jobs than a year ago, according to employment data compiled by the Tennessee Department of Labor and Workforce Development.

But Southeast Tennessee has suffered less than any other region in Tennessee from job losses caused by the virus. Among the 10 metropolitan areas across Tennessee, Cleveland had the lowest share of job losses, followed by neighboring Chattanooga.

Metro Cleveland, which includes Bradley and Polk counties, and metro Chattanooga, which includes Hamilton, Marion and Sequatchie counties in Tennessee and Catoosa, Walker and Dade in Georgia, suffered only about a third of the job losses that hit the rest of Tennessee over the past year.

"With Volkswagen continuing to work on bringing on its electric vehicles in Chattanooga and a range of new businesses in Cleveland, these areas have had the fewest job losses," University of Tennessee Economist Bill Fox said Monday in a report delivered to Tennessee Gov. Bill Lee as the state began its annual budget hearings.

Two of the biggest employers located in Chattanooga's Enterprise South Industrial Park — Volkswagen of America and Amazon — are adding nearly 2,000 jobs to gear up for a new VW electric SUV and for additional holiday related shipments from Amazon's fulfillment center. Amid the pandemic, McKee Foods, Southern Champion Tray, GE Roper appliances and Shaw Industries, among others, also announced plans this year for more than $600 million of expansions that will collectively add more than 750 jobs.

Chattanooga, like the rest of Tennessee, has suffered major job losses in its $1.1 billion-a-year tourism industry and related leisure and hospitality businesses. But as a major logistics center and home of several companies that have grown during the pandemic, Chattanooga also weathered the economic storm better than most.

"We have some sectors that are struggling, but we have a lot of businesses doing quite well in spite of the pandemic or sometimes because of it," said Christy Gillenwater, president of the Chattanooga Area Chamber of Commerce. "The diversity of our economy is certainly useful when you are in a pandemic."

The coronavirus upended one of the state's most powerful economic engines. Metro Nashville, which added the most jobs and posted the lowest jobless rate before the pandemic, has been the hardest hit among the state's four biggest metro areas over the past year with more than one of every 20 jobs lost in the past year.

"Nashville because of tourism and convention-related businesses has had the most job losses," Fox said.

Unemployment across Tennessee, which jumped to a record high of 14.7% in April, dropped to 6.3% by September and is expected to decline further this fall. But Tennessee still has 158,000 fewer people on the job than it did in February before the pandemic shut down or slowed much of the economy.

Metro job losses over the past year

Although employment has fallen in all 10 of Tennessee’s metropolitan areas, job losses have been the fewest in Cleveland and Chattanooga. Statewide, employment fell 4.2%, or 133,633 jobs, from September 2019 to September 2020. Among Tennesssee’s 10 metro areas, job losses in descending order were:

1. Cleveland, down 1.4%

2. Chattanooga, down 1.8%

3. Knoxville, down 2.4%

4. Morristown, down 2.9%

5. Jackson, down 4%

6. Clarksvile, down 4.1%

7. Memphis, down 5.1%

8. Johnson City, down 5.3%

9. Nashville, down 5.5%

10. Kingsport & Bristol, down 5.6%

Source: Boyd Center for Business and Economic Research at the University of Tennessee

Fox said Tennessee as a whole is doing better than the U.S. as a whole with a lower jobless rate and fewer job losses over the past year. Buoyed by record stimulus measures from Uncle Sam, Tennessee sales tax collections have edged up by more than 2% this summer over a year ago even with fewer people on the job and lower wages for many of those still working.

"I have a lot of gray hair and I've been around for a lot of recessions before, but I have never seen anything that plays out like this pandemic," Fox said. "People didn't just reduce their consumption, they changed their consumption and because of all of the stimulus checks and extra unemployment benefits, incomes were not hurt as much as employment."

With the influx of Paycheck Protection Program loans, banks have stayed busy and employment in the financial services sector in Tennessee has actually grown by 0.6% in the past year. But other sectors of the economy have all lost jobs, Fox said.

"Banking has done pretty well with the PPP program and now we're seeing strong housing starts and home sales," he said. "So the financial sector has done acceptably, but in every other sector there are fewer jobs than we had earlier this year."

With federal stimulus funds phasing down, state leaders cautioned that the pace of the recovery is likely to slow in coming months, although overall employment should show gains over the next year.

"There are lot of reasons to feel good about the recovery and where we are so far, but there are also reasons to be cautious about the next year," said David Gerrigano, the state's revenue commissioner.

Jeff McCord, commissioner for the state Department of Labor and Workforce Development, said the federal government has pumped about $6 billion on stimulus funds into Tennessee this year, far outstripping the usual $200 million of annual jobless benefits paid to unemployed Tennesseans. McCord told Gov. Lee Monday that such stimulus levels will not be sustained.

"As we move through the pandemic our effort is to move people to get back to work because a job solves a lot of problems," he said. "We expect the number of claims (filed for unemployment insurance benefits) will continue to go down because we have more jobs available in Tennessee. There are currently a quarter of a million jobs on our web site (jobs4tn.gov) alone and that's not all of them. We're kind of back where we started from where employers are very much looking for workers to fill these jobs."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340

Where the pandemic job losses have been

Among the major economic sectors, only financial service jobs at banks, mortgage companies and other related companies showed a net gain in employment in the past year, The biggest job losses were at hotels, restaurants and entertainment businesses.

* Financial activities, up 0.6%

* Trade, transportation and utilities, down 0.4%

* Education and health services, down 2.3%

* Construction and mining, down 2.8%

* Professional and business services, down 4.8%

* Durable goods manufacturing, 9.8%

* Leisure and hospitality, down 13.8%

Source: Job losses from September 2019 to September 2020 in Tennessee. Boyd Center for Business and Economic Research.

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