NEW ORLEANS REGIONAL COUNCIL FOR BUSINESS ECONOMICS

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1 Monthly Non-Farm Employment Jan Apr Jul Jan.2009 Jan Jan.2011 Jan.2012 Jan.2013 Jan.2014 Jan Jan Jan THE NEW ORLEANS REGIONAL ECONOMIC INDEX NEW ORLEANS REGIONAL COUNCIL FOR BUSINESS ECONOMICS This report is the property of the New Orleans Regional Council for Business Economics and may be reproduced and/or distributed only with permission of the Council. Why Employment Indices? This report has two objectives. The first is to provide members of the New Orleans Regional Council of Business Economics and the community, in general, monthly updates on economic activity in Louisiana and the New Orleans Metropolitan Statistical Area. The second objective is to use this data to facilitate discussion among members and the community on the state of region s economy, and by doing so to influence public policy in a positive and pro-active way. A series of indices are used to track job demand among select industries, parishes and the state using a comparative scale. This report reflect the March 2017 annual revision of CES employment estimates for the State and the New Orleans MSA. Measured on an annual average basis, Louisiana s estimated employment was revised down from 1,976,000 to 1,971,300 or a 0.2% decrease. The New Orleans MSA revision showed an increase of 1,400 jobs above the previous annual average estimate going from 574,500 jobs to 575,900 jobs or a 0.2% increase. State Employment Demand Index Table 1 below shows the incremental job change beginning in 2008 and up to February This report covers the most current statewide employment data series released on March 24, 2017 by the Bureau of Labor Statistics. TABLE State of Louisiana Seasonally Adjusted Non-Farm Employment Current Month over Previous Month Job Change Source: Bureau of Labor Statistics, Revised back to January 2013 Source: Current Employment Survey, March 2017 Louisiana s Seasonally Adjusted Total Employment Picture As the year 2016 ended, Louisiana s economy brought in the worse job creation performance since the recession. Measured on an annual average basis, the state s job economy shrunk by over 23,000 non-seasonally jobs over the same period in

2 Non-Farm Job Change 2017 February 2017 showed the first positive CES seasonally adjusted employment growth in eighteen months. Although the growth was meager, month (February 2016 to February 2017) over month, the state added 300 jobs. It is too early to assess whether this is the beginning of a positive trend in employment growth or simply a statistical fluke. The job growth slowdown began in late 2015 with the collapse of mining employment followed by those industries supporting this industry, and finally spreading throughout the economy. This widespread impact still points to the importance of the oil and gas industry to Louisiana s economy. Data shows that four of the nine metropolitan regions in the state have had declines in non-seasonally adjusted employment based upon the February to February period. Table 2 illustrates the weakness in the state s job economy. The table looks at total non-farm seasonally adjusted employment from 2008 to The state s job economy began the year 2015 with a modest (the weakest since 2011) growth of 3,600 jobs from the 1 st to the 2 nd quarter of However, CES job growth began to show weakness the 2 nd to 3 rd quarters contracting by 600 jobs, and ended the year from the 3 rd to 4 th quarter by a loss of 7,400 seasonally adjusted jobs. The 3 rd to 4 th quarter 2015 contraction was the worse since Contraction from the 2 nd quarter 2016 to the 3 rd quarter 2016 was 6,000 seasonally jobs. What we have is five quarters of seasonally adjusted job growth contraction. Table Quarterly Change in Louisiana's Non-Farm Employment Source: CES seasonally adjusted data 1st to 2nd Quarter 2nd to 3rd Quarter 3rd to 4th Quarter U.S. Employment Picture There were 235,000 seasonally adjusted U.S. jobs created in February January s estimate was revised up from 227,000 to 235,000 jobs. For all of 2016, the U.S. economy added 2.0 million non-seasonally adjusted jobs. jobs. In 2015 and over the same period, the U.S. economy added, the average for the same period was 2.5 million CES jobs. Between February 2016 and February 2017, seasonally adjusted full-time employment rose by 1.8 million to 125,031,000 individuals. Over same period, part-time seasonally adjusted employment decreased by 299,000 individuals. In February 2017, there were 27,554,000 individuals working part-time. The ratio of part-time employment to full-time employment in February 2017 was 22.0%. The highest level of this ratio was in February At that time, the ratio was 25.1%. The average ratio for the period January 1999 to 2008 was 20.9%. 2

3 Perccent of Total Unemployed 2017 The Problem of Long-Term Unemployment Table 3 shows the percent of long-term unemployed from 1980 to Table U.S. Long Term Unemployment Unemployed 27 weeks and over February of Each Year 0 Year Source: Bureau of Labor Statistics, Seasonally Adjusted The estimated percentage of long-term unemployed ( age 16 and older) in February 2017 was 23.8%. Even though the trend is upward sloping to the right, a simple analysis shows that between 1980 and 2007, long-term unemployment stayed within a range between 10% and 20%. Prior to March 2015 and starting in 2009, the percentage remained above the monthly recalculated statistical trend line. The high level of this percentage was 2010 when 45.3% of the unemployed were unemployed 27 weeks or over. The pre-recession 1980 to 2007 historical average is 16.2%. Starting in March of last year (2016), the percentage of long term employed fell below the monthly re-calculated statistical trend. If this downward trend continues, it would be a clear indicator that the long-term unemployed are being absorbed into the national economy. At the same time, the current percentage of long-term unemployed remains above the historical range. Thus, suggesting a fundamental question: given the structural changes that occurred prior to the 2009 national recession and appeared to have accelerated during and after the recession are we looking at a paradigm shift in long-term unemployment? And is this affecting a return to the long-term trend range? That is, are skill sets being fundamentally weakened by technological change? What is the implications of this change? Louisiana Non-Farm Job Change- February 2016 to February 2017 Table 4 shows sector to sector gains and losses of non-seasonally adjusted employment non-farm employment from February 2016 to February Louisiana s economy added 200 jobs. Although the positive job growth was insignificant in and of itself, it represent the first positive job growth over the last eighteen moinths of data. And it might indicate that the state s economy is pulling out of this very long period of job demand stagnation brought on by the mining industry. 3

4 2017 Industries gaining non-seasonally adjusted jobs between February 2016 and February 2017 were: Construction (11,800 jobs), Health Care and Social Assistance (4,700 jobs), Business and Professional Services (2,400 jobs), Educational Services (1,900 jobs) and Financial Activities (300 jobs). Eighty-four percent (84%) of the total gross job additions were in the first three sectors. (Note: gross job growth is defined as sum of jobs added by sector over the reviewed period.) Gross job losses were concentrated in Mining (6,800 jobs), Manufacturing (3,400 jobs), Government (2,900 jobs), Leisure and Hospitality (5,300 jobs), Information (2,100 jobs), Support Activities in Transportation (1,300 jobs) Retail Trade (1,300 jobs), Wholesale Trade (1,000 jobs) and Truck Transportation (900 jobs) Gross job losses over this period were 22,400 jobs. Gross job gains were 22,600 jobs. Job losses were very broad base; whereas, gains were concentrated in three sectors. Table 4 STATE OF LOUISIANA Non-Seasonally Adjusted Job Growth February 2016 to February 2017 Total Non-Farm Employment February 2017 Construction 11, ,900 Health Care and Social Assistance 4, ,100 Professional and Business Services 2, ,800 Educational Services 1,900 48,100 All Others 1, ,000 Financial Activities ,300 Truck Transportation ,500 Wholesale Trade -1,000 70,000 Retail Trade -1, ,800 Support Activities in Transportation -1,300 18,500 Information -2,100 22,500 Leisure and Hospitality -2, ,700 Government -2, ,000 Manufacturing -3, ,300 Mining -6,800 34,300 Total Change 200 1,968,800 Source: Current Employment Survey Data, Bureau of Labor Statistics, March 2017 State Unemployment Rate for February 2017 Total employment and labor force data are collected through a household (sample) survey known as the Current Population Survey (CPS). Current Employment Survey (CES) data are collected by a sample survey of employers. The CPS sample is collected by the Census Bureau and the CES data is collected by the Bureau of Labor Statistics. The seasonally adjusted unemployment rate for February 2017 was 5.8% for Louisiana. It declined by 0.01% between January and February. On a month to month basis, total seasonally adjusted employed residents in the CPS survey fell by 21,500 individuals from the February 2016 and February In February 2017, the employed resident estimate was 1,985,000 individuals. The seasonally adjusted labor force fell by 32,800 individuals between February 2016 and February Thus, the decline in the unemployment rate can be attributed totally to a greater decline in the labor force than the decline in the employed residents. In February 2017, the state-wide labor force was estimated at 2,107,000 individuals. 4

5 August 2005 =100 Aug.2005 Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug. Dec.2009 August Dec August Dec-11 August Dec-12 August Dec-13 August Dec-14 August Dec-15 August Dec-16 August 2005 = Statewide Job Seasonally Index for Non-Farm Employment Table 5 below shows month-to-month change in the statewide job index trend in seasonal adjusted non-farm employment within each year. The seasonally adjusted job index fell to its lowest level in February 2009 to 96.1 (August 2005 = 100). Since February 2009, the index increased by 5.8% to as of February Table Louisiana Employment Demand Index August 2005 to February 2017 Seasonally Adjusted Non-Farm Employment, Revised March 2017 with new benchmark. Source: Dr.Raymond Brady, Systems Solutions Consulting for New Orleans Regional Council for Business Economics; Index is based upon monthly CES data released by the Louisiana Workforce Commission and BLS. NOTE: Please check footnote under table as to whether data are seasonal or non-seasonally adjusted. The entire index series, including the New Orleans MSA, is found in the appendix. The New Orleans Metropolitan Statistical Area (MSA) Non-Farm Employment Demand Index Table 6 shows the seasonally adjusted non-farm employment demand index for the New Orleans MSA through February Table New Orleans MSA Employment Demand Index August 2005 to February Source: Seasonally Adjusted Non-Farm Employment, Bureau of Labor Statistics 5

6 Monthly Non-Farm Additions Jan Sep Jan.2009 Jan.2010 Jan.2011 Jan.2012 Jan.2013 Jan.2014 Jan Jan Jan The seasonally adjusted CES New Orleans MSA employment index in February 2017 was (August 2005 =100.0) The index increased by 0.2% between February 2016 and February The statewide index, during the same period, fell by 0.3% over the same period. Table NEW ORLEANS MSA SEASONALLY ADJUSTED NON-FARM EMPLOYMENT CURRENT MONTH OVER PREVIOUS YEAR MONTH JOB CHANGE Source: Current Employment Survey, Bureau of Labor Statistics, March 2017 Table 7 looks at year over year seasonally adjusted employment growth in the New Orleans MSA. The MSA was bleeding jobs throughout 2009 and well into However by the last quarter of 2010, the job market began to stabilize. Seasonally adjusted non-farm job growth continued to show strength for the first three quarters of 2014, as Table 7 points out. However, starting in the 4 th quarter of 2014 and into 2015 and the entire period of 2016, the overall New Orleans MSA job economy has shown signs of job growth stagnation. For the 2017 period, the first two months have shown mixed results, with January showing job losses and February indicating gains. Non-Seasonally Adjusted Non-Farm Job Growth Overview Between February 2016 and February 2017, total non-seasonally adjusted non-farm CES preliminary employment in the New Orleans MSA economy increased by 700 jobs. Between the same periods 2015 and 2016, the MSA economy added 1,100 non-seasonally adjusted non-farm jobs. The top three sectors adding the most jobs during the current ober to ober period were (a) Health Care and Social Assistance (b) Financial Activities and (c) Professional and Business Services. These three sectors accounted for seventy-six percent of the gross job additions. Six of the fourteen industry sectors lost jobs. Table 8 provides a disaggregation of MSA non-seasonally adjusted non-farm employment by major sector. 6

7 2017 New Orleans Metropolitan Statistical Area Non-Seasonally Adjusted Job Growth February 2016 to February 2017 Table 8 Total Non-Farm Employment February 2017 Total Non-Farm Employment August 2005 Health Care and Social Assistance 1,800 69,600 62,200 Educational Services 1,000 30,600 18,800 Financial Activities ,400 33,300 Retail Trade ,300 67,500 Professional and Business Services ,800 74,300 Construction ,400 30,100 All Others ,100 23,600 Manufacturing ,300 41,500 Wholesale Trade 0 23,300 26,300 Leisure and Hospitality 0 86,400 86,000 Mining ,100 8,500 Transportation, Warehousing & Utilities ,900 28,000 Information -1,300 6,800 10,500 All Government -2,800 69, ,900 Total Change , ,500 Source: Current Employment Statistics, U.S. Bureau of Labor Statistics, March 2017 Note: March 2016 revisions also resulted in changes back to 2013 Average Wage Stagnation in the New Orleans MSA and Particularly the City of New Orleans Chart 9 looks at average wages from 2004 to Of particular concern is the relative wage stagnation in the New Orleans MSA and particularly Orleans Parish. When viewing this data, it is important to use the word, average, when trying to understand what has happened over this period. A potential cause for the stagnation in the average comes from the changing distribution of employment. A potential cause of this stagnation is the loss of high paying manufacturing jobs as Table 8 points out, and the growth of lower paying jobs. Between recessionary low point annual average MSA employment and the average for 2016, the New Orleans MSA added 51,300 private sector jobs. The annual average employment growth for Leisure and Hospitality over the same periods accounted for thirtyone percent (31%) of the private sector job growth. Of the increase in Leisure and Hospitality, eighty-five percent (85%) was in Food and Drinking Places. While Leisure and Hospitality industries are critical assets in the MSA economy, the dominancy of Leisure and Hospitality raises questions about the lack of diversity among employment sectors in the private sector of the economy. This issue is relevant because, as reported by the Quarterly Census of Employment and Wages, wages in 2015 in the Leisure and Hospitality industry were only fifty-one percent of the MSA average. ($25,339 vs. $49,492). This relationship between wage levels has pretty much remained constant since Since Leisure and Hospitality relatively dominates job creation with an average pay being low for the industry, the net consequences are that the industry depresses the growth in MSA average pay. New Orleans MSA average wage level was $46,108 in 2010, $46,827 in 2011, $47,083 in 2012, $47,509 in 2013, $48,437 in 2014 and $49,492 in (Source: Bureau of Labor Statistics; Systems Solutions Consulting). This amounts to a 7.3% growth rate between 2010 and The data for Orleans Parish shows a 0.7% increase in annual average wage and salaries between these periods, going from 7

8 Annual Average Pay 2017 $49,804 in 2010 to $50,157 in (Source: Quarterly Census of Employment and Wages) The annual average CPI for Southern Urban Consumers rose by 8.9% over this period. Chart Annual Average Pay in Current $ Year Year 2015 Source: Quarterly Census of Employment and Wages Bureau of Labor Statistics U.S Louisiana New Orleans MSA New Orleans Jefferson Further, demographic changes (retirement of teachers, etc.) within the Educational Services employment population has resulted in a dramatic decline in the reported average pay in that industry. In 2009, average pay in Educational Services was reported (source: Quarterly Census of Employment and Wages, BLS) at $47,620 and the MSA average was $45,121. In 2015, BLS reported the annual average pay in that industry at $46,046 or a decline of 3.3%, with the MSA average pay reported at $49,492. All these values are in current $. The combination of substantial job growth in low pay jobs in Leisure and Hospitality (as reported by the Census of Employment and Wages), with the stagnation of pay growth in sectors such as Educational Services weights down the regional average. These two industries accounted for forty percent (40%) of the job growth between 2010 annual average private sector jobs and the private sector annual average for MSA Professional and Business Services fared better in terms of annual average pay changes. In 2009, average pay in Professional and Business Services was reported at $51,564. In 2015, that average increased to $58,898 or a 14.2% increase over five years. Any stagnation in the growth of higher income jobs in Professional and Business Services will clearly have a negative impact on the MSA regional average pay data. Unless greater balance (higher wage paying jobs) in job growth can be obtained, the economic structure will continue to shift to a low wage paying structure, affecting consumption and poverty. 8

9 2017 Analysis of Key Growth Sectors Professional and Business Services is a critical sector in the New Orleans MSA economy. Table 8 shows a gain of 600 jobs in the sector over the current February to February period. However, when viewed as an average of 2016 over the same period in 2015, the picture shows a meager 100 jobs added. Over the period 2010 to 2016, this represents the second worse job additions in this sector since Professional, Scientific and Technical Services, which showed job growth strength in the past, contracted by 1,600 jobs between February 2016 and February The sector appears to have peaked in Professional and Business Services appears now to be driven by the Administrative and Support Services sub-sector. This sub-sector added 2,300 jobs between February 2016 and February New Orleans MSA Health Care and Social Assistance employment continues to move pass pre-katrina employment levels. In August 2005, employment in Health Care and Social Assistance was 62,200 jobs. The March 2017 benchmark revisions, going back to 2013, showed higher employment in this sector than previously estimated. The revision showed an increase of 2,100 more jobs in this sector than previously estimated. In February 2017, employment was 69,600 jobs.. Ambulatory Health Care employment added 800 jobs between February 2016 and February In February 2017, there were 26,700 jobs in this industry. Hospital employment grew by 2,100 jobs between February 2016 and February The problem facing this sector with respect to job growth is the number of jobs needed to support the region s population in health care. One measure of sustainability is a simple ratio of the number of jobs in these sectors per 1000 MSA population. So in August 2005, in Ambulatory Care there were 16.0 jobs per 1000 population. In February 2017, there were 21.0 jobs per MSA 1000 population. In Hospitals in August 2015, there were 15.0 jobs per 1000 population. In February 2017, there were 19.5 jobs per 1000 MSA population. While ratios oversimplify the sustainability of employment levels, they are useful tools to ask questions about the number of jobs per population can be sustained in an increasingly cost conscious environment. On an annual basis, Retail Trade employment growthg has been relatively stagnant since Between 2015 and 2016, CES retail employment at the MSA level increased by only 300 jobs. Looking at a two month average (January - February) suggest a more positive picture of a 1,300 job increase between 2016 and At the MSA level, Retail Trade employment still remains 3,200 jobs less in February 2017 than August Total Construction employment, as measured on an annualized average basis, peaked in 2008 at 33,700 jobs in the New Orleans MSA. Total Construction employment began a downward slide after 2008 and bottomed out in 2010 at 31,100. Between 2011 and 2014, construction employment remained relatively stable with the 31,000 to 32,000 range. An uptick occurred in 2015, with the annual average coming in at 32,300 level. Between 2015 and 2016, Construction employment fell by 2,000 jobs as measured on an annual average basis. Between February 2016 and February 2017, Total Construction employment showed an uptick of 600 jobs, concentrated in construction of buildings. With many of the major Heavy Construction projects beginning to finish, Heavy Construction employment in February 2017 was estimated at 7,000 jobs. This is 2,900 fewer jobs than in 2011 which was the peak employment for heavy construction. Annual average employment in Heavy Construction was 7,400 jobs in At it s height in 2011, 9,900 people were employed in Heavy Construction. Employment in Specialty Trades peaked in 2006, as part of the post-katrina re-building effort at 18,000 jobs as measured on an annual average basis. The annual average for Specialty Trades was 16,600 jobs in Annual average 9

10 2017 employment in 2013 was 17,200 jobs. The annual average employment for 2014 was 17,700 jobs. The annual average employment for 2014 over the same period in 2013 increased by 600 jobs. Annual average employment increased by 1000 jobs between 2013 and The annual average between 2014 and 2015 increased by 300 jobs. The annual average for 2016 shows a drop of 2,000 jobs between 2015 and The February 2016 to February 2017 estimate shows a 700 drop in jobs in this sector. Manufacturing employment in the New Orleans MSA has ben a steady decline since The decline has slowed since 2014, but the sector is in a long-term steady decline, primarily because the mix of industries. Post-Katrina Manufacturing employment peaked in December 2007 at 39,400 jobs. Between 2007 and 2011, employment in this industry showed a steady contraction, primarily because the collapse of ship building in the New Orleans MSA. Nondurable manufacturing has shown some growth since 2014 adding, as measured on an annual average basis, about 700 jobs between 2014 and The free fall in durable manufacturing employment has slowed, and has stabilized around 11,400 jobs as of February The post-katrina peak in durable manufacturing was 20,900 jobs. Ship building is just a skeleton of its historical pass and is currently (February 2017) only 14% of the pre-katrina August employment of 9,700. Wholesale Trade employment growth has been weak for almost a decade. Employment in this sector peaked in 2007 at 24,500. Since 2007, the industry has added or lost a few hundred jobs, depending upon the month and year. The February 2017 CES MSA employment estimate showed 23,300 in this industry. Job growth in Financial Services Activities has been concentrated in the Finance and Insurance sub-sector of this industry. Credit Intermediation and Related Activities have shown little or no job growth for the last several years along with Banks. Annual average employment for the overall sector (Financial Services Activities) in 2014 was 28,900 jobs. In 2015, the annual average was 29,500 jobs. The annual average for 2016 was 30,000 jobs. February 2017 employment still is 2,900 fewer jobs than in pre-katrina August 2005.The post-katrina Financial Services sector employment simply reflects the fact that the pre-katrina financial sector in the New Orleans MSA was already weak, with employment stagnating starting in the late The sector is confronted with a post-katrina reality of a smaller consumer and business market, and cautious re-building of financial services after the national financial crisis of the last several years. The New Orleans MSA is no longer a major player in finance. Information CES employment at the New Orleans MSA level peaked in 2013 at 9,300 jobs. Motion Picture and Sounding Recording Industries employment saw an increase and was up between the annual average for 2014 and the annual average for 2015 by 600 jobs. The annual average for 2016 shows a drop of 1,500 jobs over the same period in CES annual average employment in 2016 was 7,500 jobs. February 2017 shows a drop to 6,800 jobs. The MSA Unemployment Picture The January non-seasonally adjusted unemployment rate, as reported by the Bureau of Labor Statistics, showed a jump in unemployment by 0.6% between December 2016 and January The unemployment rate in January 2017 was 5.4%. In January 2016, the non-seasonally adjusted New Orleans MSA unemployment rate was 5.8%. Total labor force declined by 6,300 individuals between January 2016 and January Total non-seasonally employed residents decreased by 3,700 individuals. 10

11 August 2005 = New Orleans Metropolitan Statistical Area Key Employment Sectors Indices: Education and Health Services, Leisure and Hospitality and Business and Professional Services These industry clusters account for 51% of the total private sector employment in the MSA. Table 10 below shows the three indices used to measure the employment strength of these sectors in the metropolitan area economy. The table covers the period of August 2005 to February TABLE Key New Orleans MSA Industry Indices Non-Seasonally Adjusted Leisure and Hospitality Index Education and Health Services Index Professional and Business Services Index Source: Prepared by Dr. Raymond Brady, Systems Solutions Consulting for New Orleans Regional Council for Business Economics The non-seasonally adjusted Education, Health and Social Services Index decreased by 0.4% between January and February The index stood at (August 2005 =100) in February The sub-sector, Educational Services, increased 1,000 jobs between February 2016 and February Total CES Educational Services employment in February 2017 was estimated at 30,600 jobs. Between February 2016 and February 2017 CES employment in Hospitals increased by 2,100 jobs. February 2017 CES employment in the Hospitals sector was 24,800 jobs. Ambulatory Care Services employment increased by 800 jobs between February 2016 and February In February 2017, Ambulatory Care Employment was 26,700 jobs. The Leisure and Hospitality Index was measured at (August 2005 =100) in February The index increased by 1.8% between January and February. Between February 2016 and February 2017, the industry showed no increase in employment. With the exception of Accommodations, weakness in employment growth appears apparent over all other sectors in the industry. Food and Drinking Places employment appears to have peaked at the end of 2015 and has remained in the 60,000 plus range throughout 2016 and into Does this indicate that the industry has now become oversaturated and a shake-out may be occurring? The Professional and Business Services Index increased by 1.0% between January and February The index was measured at in February 2017 (August 2005 = 100) Between February 2016 and February 2017, the index increased by 0.4%. Professional and Business Services increased by 600 CES jobs between February 2016 and February February 2017 employment level was estimated at 74,800 jobs. Most of the weakness in this sector is 11

12 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jan Jan.2017 Jobs in Thousands 2017 concentrated in Professional and Technical Services. This sector lost 1,600 jobs between February 2016 and February All of the gains were in Administrative and Support Services, adding 2,300 CES jobs. NEW ORLEANS-JEFFERSON- ST. TAMMANY EMPLOYMENT INDICES These employment indices differ from those of the state and MSA. The state and MSA indices are derived from the monthly reported Current Employment Survey (CES) published by the Bureau of Labor Statistics (BLS) and the Louisiana Workforce Commission. The New Orleans, Jefferson and St. Tammany indices are built around Quarterly Census Employment and Wages (QCEW) data which is a census of employment produced by the Louisiana Workforce Commission and BLS. Several statistical models are used to estimate current QCEW data using CES data as the independent variable. The models reflect the most current historical data through ember Data for ober 2016 to February 2017 are estimates (see methodology on model accuracy). The models were updated in March This document contains an evaluation of the previous model performance. ORLEANS PARISH City of New Orleans QCEW non-seasonally adjusted jobs fell by 2,000 jobs between February 2016 and February The revised index (based upon March 2016 benchmark revisions) stood at 79.7 in February 2017 (August 2005 = 100). The index declined by 1.2% between February 2016 and February Measured as an annual average of total QCEW jobs in 2016 over the same period in 2015, Orleans Parish gained 2,000 jobs. This is the smallest increase in several years. Gains using the same measure between 2014 and 2015 averaged 4,100 jobs. February 2017QCEW employment was estimated at 191,900 jobs. TABLE Current Covered Orleans Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January ember 2016 Model Estimates, ober 2016 to February 2017, Dr. Raymond J. Brady, Systems Solutions Consulting 12

13 2017 Historical data does show that the city s economy has made headway at developing professional and technical services jobs. However, the loss of higher paying jobs in mining and manufacturing, with substantial job gains in Leisure and Hospitality, has had a depressing inpact on the overall average wage level in the city (see Chart 9 above). Table 12 below identifies employment in broad industry sectors between pre-katrina 2 nd quarter 2005 and 3 rd quarter of Table 12 NAICS Year 2005 Year nd Quarter Quarterly Employment 3rd Quarter Quarterly Employment Change 2nd Quarter 2005 to 3rd quarter 2016 ORLEANS 244, ,128-53,023 Accommodation and food services 72 36,782 38,391 1,609 Professional and technical services 54 14,554 15, Information 51 4,896 4, Real estate and rental and leasing 53 4,070 3, Utilities 22 1, Construction 23 6,128 4,616-1,512 Other services, except public admin. 81 7,227 5,542-1,685 Management of companies and enterprises 55 4,631 2,835-1,796 Wholesale trade 42 5,999 3,735-2,264 Finance and insurance 52 8,384 5,828-2,556 Mining 21 4,181 1,603-2,578 Arts, entertainment, and recreation 71 8,641 5,745-2,896 Retail trade ,195 15,397-3,798 Administrative and waste services 56 16,682 12,241-4,441 Manufacturing ,573 4,101-4,472 Public administration 92 17,186 12,168-5,018 Transportation and warehousing ,687 8,501-5,186 Educational services 61 28,578 22,232-6,346 Health care and social assistance 62 32,291 23,963-8,328 Agriculture, forestry, fishing and hunting * * = suppressed Source: Quarterly Census of Employment and Wages, Louisiana Workforce Commission 13

14 Jan-08 Sep Jan-09 Sep Jan-10 Sep Jan-11 Jan-12 ember Jan-13 ember Jan-14 ember Jan-15 ember Jan-16 ember Jan Of the nineteen broad industry sectors, Accommodations and Food Services and Professional and Technical Services have recovered and expanded pass the pre-katrina 2 nd quarter 2005 Quarterly Census of Employment and Wages level. Quarterly Census of Employment and Wages (QCEW) data shows a gain in net employment of 864 jobs from the 3 rd quarter 2015 to the 3 rd quarter 2016 Total net job gains between the 3 rd quarter 2014 and the 3 rd quarter 2015 were 3,775 jobs. With respect to the 3 rd quarter 2016 over the 3 rd quarter 2015 job change, total gross gains were jobs, gains were concentrated in Accommodations and Food Services (1,693 jobs), Information (702 jobs), Administrative and Waster Services (678 jobs), Arts, Entertainment and Recreation (566 jobs) and all Other (571 jobs). Total gross job losses were 3,488 jobs. Greatest job losses, year-over-year were in the following sectors: Professional and Technical Services (826 jobs), Mining (650 jobs), Construction (644 jobs), Educational Services (486 jobs) and all Other (882 jobs). City-wide average wage stagnation appears to be occurring in reported wage and salary statistics for Orleans Parish. Most current actual and estimates QCEW data shows that between 2007 and 2015, (see Chart 9) average yearly wages in Orleans Parish have stagnated. Actual data shows average pay actual remained relatively stagnant in current dollars from $49,804 in 2010 to $50,157 in 2015 (Source: Bureau of Labor Statistics). The 2015 average pay level over all QCEW jobs reflects only a 0.7% wage level increase compared to the 2010 average. In Orleans Parish, average yearly wages in private sector Leisure and Hospitality was $26,919 in 2010 and an estimated $25,339 in 2015 (based upon the annual average for that year, Source. BLS QCEW data). Given the share of total job growth, Leisure and Hospitality industry has had to have a depressing impact on total average yearly wages over time. The non-seasonally adjusted (revised as of March 2016 by BLS) unemployment rate in Orleans Parish was 6.1% in February 2017, unchanged from January rate. February 2016 unemployment rate was 5.5%. Between February 2016 and February 2017, the BLS model estimate suggests that Orleans Parish s labor force fell by 300 individuals and was estimated at 177,400 in February Employed residents increased by about 500 individuals between February 2016 and February BLS estimated that the number of employed residents were 168,400 in February TABLE Orleans Parish, Louisiana and United States Unemployment Rates Non-Seasonally Adjusted Orleans Lousiana United States 14

15 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jan.2016 Jan.2017 Jobs in Thousands 2017 Source: Bureau of Labor Statistics ( 2017) Jefferson Parish Table 14 below looks at the current Jefferson Parish employment picture starting in January The solid line is a 4- week moving average of QCEW employment estimate. Between February 2016 and February 2016, Jefferson Parish s non-seasonally adjusted employment index increased by 1.0%. As of February 2017, QCEW employment estimate was 193,900 jobs. In February 2016, the parish had 190,900 QCEW jobs. (This reflects revisions made by BLS back to 2007.) Average annual employment for 2016 over the same period in 2015 saw Jefferson s Parish QCEW employment fall by 400 jobs. Average annual QCEW employment in 2016 was 193,300. QCEW averaged jobs in 2015 was 193,700 jobs. As Table 14 points out, Jefferson s job picture had been stagnant for several years, starting in This weakness in Jefferson s job data began to moderate in early 2012, and the parish began adding employment starting in ober The highest post-katrina employment level was in December 2007 at 203,200. On an annual average basis, covered employment in Jefferson Parish remained constant between 2011 and In 2011, the annual average covered employment was 192,100. In 2012, the annual average covered employment was estimated at 192,400. This weakness in job growth, as noted earlier, slightly diminished in In 2013, the annual average QCEW employment was 192,500 jobs. In 2014, average annual QCEW employment in the parish was 192,800. In 2015, annual average employment was 193,700. Employment in 2016 has seen slight decline in QCEW employment. The annual average for 2016 was 193,300. Table 14 shows a relative stagnant job growth economy. The loss of more than 7,000 high paying ship building and related manufacturing jobs since 2006 has had a crippling impact on overall parish-wide employment growth. Manufacturing in 2004 in Jefferson Parish employed 18,200 people. In the 3 rd quarter of 2016, manufacturing employment had shrunk to 8,722 QCEW jobs. TABLE Current Covered Jefferson Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January 2007-ember 2016 Model Estimates, ober 2016 to February 2017, Dr. Raymond J. Brady, Systems Solutions Consulting 15

16 2017 Table 15 below shows that as of the 3 rd quarter 2016, three of nineteen broad industry sectors have recovered to or above pre-katrina employment levels. From the 3 rd quarter 2015 to the 3 rd quarter 2016, Jefferson Parish had a net gain of 1,.512 QCEW jobs. Between the 3 rd quarter 2015 and the 3 rd quarter 2016, seven employment industries gained jobs and twelve lost jobs. Gross job gains were 3,131 jobs. The gross job gains are in rank order in the following industries: Health Care and Social Services (2,569 jobs), Finance and Insurance (250 jobs) and all other (312 jobs). Over the same period the parish s gross job losses amounted to 1,918 jobs. Job losses were concentrated in Manufacturing (442 jobs), Professional and Technical Services (325 jobs), Mining (207 jobs), Accommodation and food services (189 jobs) and all others (755 jobs). Note: Because of data suppression gross totals will not add to net total. Table 15 NAICS Year 2005 Year nd Quarter Quarterly Employment 3rd Quarter Quarterly Employment Change 2nd Quarter 2005 to 3rd Quarter 2016 JEFFERSON 216, ,320-23,081 Health care and social assistance 62 28,672 33,702 5,030 Management of companies and enterprises 55 2,602 3, Transportation and warehousing ,920 9, Agriculture, forestry, fishing and hunting Professional and technical services 54 10,212 10, Utilities 22 1,366 1, Arts, entertainment, and recreation 71 5,065 4, Finance and insurance 52 9,315 8, Public administration 92 6,619 6, Other services, except public administration 81 6,432 6, Real estate and rental and leasing 53 4,919 3,776-1,143 Mining 21 1, ,194 Construction 23 13,960 12,738-1,222 Information 51 3,462 2,028-1,434 Administrative and waste services 56 16,951 14,980-1,971 Accommodation and food services 72 23,126 20,695-2,431 Retail trade ,902 28,380-2,522 Wholesale trade 42 13,056 10,178-2,878 Manufacturing ,338 8,722-8,616 Note: Education employment is suppressed; total includes all data suppressed sectors. Source: Quarterly Census of Employment and Wages, Louisiana Workforce Commission 16

17 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jan Jan.2017 Jobs in Thousands Feb Jun Feb Jun Feb June February June ober Feb June Feb June Feb June ober Feb June ober Feb June ober Feb 2017 Table 16 shows Jefferson Parish s resident unemployment rate at 4.6% in February The rate declined by 0.6% from the January 2017 reading. In February 2016, it was estimated at 5.0%. (Revised as of March 2017 by BLS) Nonseasonally adjusted resident labor force fell by 2,900 individuals between February 2016 and February Employed residents increased by 550 individuals over this period. The parish resident labor force was estimated at 214,700 individuals in February Employed residents were estimated at about 204,700 individuals. Table Jefferson Parish, Louisiana and United States Unemployment Rates Non-Seasonally Adjusted Jefferson Parish Lousiana United States Source: Bureau of Labor Statistics, ( 2017) St. Tammany Parish St. Tammany Parish non-seasonally employment increased by 0.2% between January 2017 and February Over the period February 2016 and February 2017, the QCEW employment index increased by 2.6%. Table 15 shows a leveling off of QCEW jobs starting February Table Current Covered St.Tammany Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January 2007-ember 2016 Model Estimates, ober 2016 to February 2017, Dr. Raymond J. Brady, Systems Solutions Consulting 17

18 Aug Apr Aug Dec Aug Dec Aug Dec Aug Dec August Dec.2010 August Dec.2011 August Dec.2012 August Dec.2013 August Dec.2014 August Dec.2015 August Dec.2016 August 2005 = The index stood at a revised in February (August 2005 =100) Between February 2016 and February 2017, total QCEW employment increased by 2,200 jobs. Measured on an annual average basis between 2014 and 2015, total QCEW increased by 3,000 jobs. Comparing the annual average of the level of QCEW jobs in 2016 over the same period in 2015 shows an increase of 2,000 jobs. In February 2017, total QCEW employment was estimated in the parish at 89,100 jobs. The key job growth sectors in St. Tammany Parish between February 2016 and February 2017 were Transportation and Warehousing, Retail trade, Health Care and Social Assistance and Accommodations and Food Services. These sectors accounted for 69% of the job growth during this period. Mining and Manufacturing shrunk by 647 QCEW jobs during this period. Jefferson-Orleans-St. Tammany Job Demand Indices Table 18 shows the indices for Jefferson, Orleans and St. Tammany based upon actual QCEW job data up to June 2016 with model estimates to February Table Jefferson, Orleans, St. Tammany Job Demand Indices Indices Measure Non-Seasonally Adjusted Covered Employment Demand Orleans Jefferson St. Tammany Source: Prepared by Dr. Raymond Brady, Systems Solutions Consulting for New Orleans Regional Council of Business Economics Regional Conclusion A general trend of a weak or declining job demand hallmarks the 2016 economic picture in the New Orleans MSA and has continued into the first two months of Job demand in 2016 had been the weakest since For the first two month of 2017, non-seasonally adjusted CES jobs fell by 1,300 jobs over the same period in Health Care and Social Assistance along with Educational Services were the leaders ion job demand between February 2016 and February 2017, adding a combined growth of 2,800 jobs to the MSA economy. Jobs losses in the private sector were concentrated in Information and mining which shed 2,000 jobs over this period. 18

19 2017 As Table 6 points out, MSA seasonally adjusted job demand peaked sometime in late 2014 and has been more or less treading water since that period. In the March 2017 report, Metro Monitor: An index of Inclusive Economic Growth in the 100 Largest U.S. Metropolitan Areas, by the Brookings Institute Table 2, page 14 points out that the New Orleans MSA ranked dead last out of 100 as measured in growth in productivity, average median wage and standard of living. Based upon the average for 2016 and measured against the annual average low point employment in 2010, Leisure and Hospitality led non-farm private sector gross job growth (actual jobs added) with thirty percent (30%) of the growth over this period. Eighty percent (80%) of the overall growth in Leisure and Hospitality was in Food and Drinking Places. This was followed by Health Care and Social Assistance accounted for twenty-five percent (25%) of the overall private sector job growth and by Educational Services private sector employment which accounted for twelve percent (12%) of the overall private sector growth. Retail Trade accounted for twelve percent (12%) of the growth and of the private sector job growth. These four sectors accounted for seventy-nine percent (79%) of the non-farm total job growth in the New Orleans MSA. None produced jobs that were at or above the regional average pay in (Leisure and Hospitality average pay was $25,339; Health Care and Social Assistance average pay was $47,995; Educational Services was $46,046: Retail trade average pay was $27,180. The average New Orleans MSA pay in 2015 was $49,492. Source: Quarterly Census of Employment and Earning, BLS) Increasingly, educational services employment is dominated by non-public educational K-12 institutions that pay less than the public. Leisure and Hospitality generated an annual average pay which was only 51% of the 2015 MSA average. Retail Trade produced an average pay over this period which was 55% of the 2015 regional average. Combining the growth in Leisure and Hospitality and Retail Trade job growth suggests that 51% of the job growth was in jobs that were well below the latest regional average. This fraction of overall private sector job growth coming from these low wage job sectors raises questions about the lack of job diversity in the MSA leading to income growth and social stability issues. The Leisure and Hospitality sector is critical to the mix of job demand sectors in this economy. However, its increasing dominance will pose long-term problems associated with wealth creation and distribution for the resident population. Data suggest that gains in Leisure and Hospitality employment growth are having a depressing effect on average wage and salary growth in the New Orleans MSA. The average wage level in Leisure and Hospitality is quite low ($25,339, 2015 reported annual average) relative to the MSA estimated annual average of $49,492 in New Orleans MSA average wage level was $46,108 in 2010, $46,827 in 2011, $47,083 in 2012, $47,509 in 2013, $48,437 in 2014 and $ 49,492 in 2015 (Source: Bureau of Labor Statistics). This amounts to a 5.7% growth rate between 2010 and The data for Orleans Parish shows a 0.7% (in current $) increase in annual average wage and salaries between these periods, going from $49,804 in 2010 to an estimated $50,157 in The annual average CPI for Southern Urban Consumers rose by 8.9% over this period. GROSS DOMESTIC PRODUCT WEAKNESS New Orleans MSA Leisure and Hospitality generated a Gross Domestic Product (GDP) $4.7 billion in 2015 with a QCEW employment level of 85,800 workers in the same year. Business and Professional Services generated a GDP of $7.9 billion with 75,362 workers. Hence, the wealth created in Business and Professional Services sector was nearly twice that of Leisure and Hospitality. The picture even worsens when Accommodations and Food and Drinking Places employment is broken out of the Leisure and Hospitality industry. Eighty-six percent (86%) of Leisure and Hospitality QCEW employment is in Accommodations and Food and Drinking Place. In 2015, New Orleans MSA Accommodation and Food and Drinking Places generated a GDP of $3.4 billion (source: BEA) or about $46,900 per worker. In 2015, the New Orleans MSA GDP was estimated at $78.5 billion in current dollars. New Orleans MSA total output per worker in 2015 (as measured by total QCEW employment divided into GDP) yields a value of $136,900 per worker. 19

20 Chained Per Capita GDP 2017 Conclusion: an industry that accounted for about a third of the job growth in recent history produces direct wealth that is only 29% of the current MSA GDP (Source: Bureau of Economic Analysis; Systems Solutions Consulting). The New Orleans MSA economy is increasingly becoming a low value added economy which ultimately affects poverty, income inequality and potentially social mobility. Table 19 points to this problem. Table 19 GDP Per Capita (chained 2009$) New Orleans Metropolitan Statistical Area $70,000 $65,000 $60,000 $51,704 $54,215 $55,000 $50,000 $45,000 Year 2001 Annual compound change between 2001 and 2015 = 0.3% Year 2015 Source: Bureau of Economic Analysis; Systems Solutions Consulting In 2001, the New Orleans MSA s GDP was $69.4 billion (chained 2009$). In 2015, the MSA s GDP was $68.5 billion (chained 2009$). In short, have we created a low valued added economy, with all the implications stated above? New Orleans, the job leader for the last several years, basically showed slow job growth in The average for 2016 over the same period in 2015 suggests that 2,000 QCEW jobs were added to the city s economy. Measured by averaging the twelve months of 2015 against the same period in 2014 shows an increase of 4,000 jobs. Over the same period between 2013 and 2014, the averaged increase was 7,200 jobs. February 2017 QCEW non-seasonally adjusted employment was estimated at 191,900 jobs. This is 2,000 fewer QCEW jobs than in February Most of the QCEW employment growth (78%) in Orleans Parish between the 3 rd quarter 2015 and the 3 rd quarter 2016 was concentrated in three board sectors: Accommodations and Food Services (40% of the gross job gains), Information (17% of the gross job gains), Administrative and Waster Services (16% of the gross job gains). These three industries accounted for 73% of gross job gains.) The greatest job losses were in Professional and Technical Services, Mining and Construction. These three industries accounted for 61% of the gross job losses. In Jefferson Parish, measured on a month-to-month basis, QCEW jobs increased by 2,000 between February 2016 and February The February QCEW 2017 employment level was 192,900. Looking at the data on an annualized average basis, instead of a month-to-month comparison shows that job growth remained relatively stagnant between the two periods, February 2015 to February 2016 and February 2016 to February The increase between the two period was a meager increase of 300 QCEW jobs. Net job gains for the past several years has been heavily influence by the loss of thousands of jobs in ship building. Ship building jobs in the 3 rd quarter 2016 was 827 jobs compared to 7,623 in The loss in direct income associated with these specific jobs to the parish is more than $500 million over this period. 20