NEW ORLEANS REGIONAL COUNCIL FOR BUSINESS ECONOMICS

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1 Monthly Non-Farm Job Additions 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. State Employment Demand Index Table 1 below shows the incremental job change beginning in 2008 and up to December 2015 This report covers the most current statewide employment data series released on January 27, 2016 by the Bureau of Labor Statistics. TABLE 1 60 STATE OF LOUISIANA SEASONALLY ADJUSTED NON-FARM EMPLOYMENT CURRENT MONTH OVER PREVIOUS YEAR MONTH JOB CHANGE Source: Current Employment Survey, January 2016 Louisiana s Seasonally Adjusted Total Employment Picture As the months of 2015 clicked through time, a serious weakness in the state employment began to manifest itself by mid-year. As 2015 ended, the state s employment economy showed a nearly 18,000 job decline in December 2014 to December 2015 seasonally adjusted CES job number. The slowdown is being driven by the collapse of mining employment and by those industries supporting this industry. This slowdown has spread to a wider array of industries, and as we enter 2016, it appears that the state s economy enters a very fragile period. Data shows that six of the nine metropolitan regions in the state has had an annualized year over year decline in CES employment. 1

2 Non-Farm Job Change Table 2 illustrates the growing 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 contraction was the worse since Table 2 shows the quarterly to quarterly change in Louisiana s non-farm employment. 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 Seasonally adjusted U.S. employment estimates show that in December 2015, the economy added 262,000 jobs. This reflects a downward revision of the preliminary December estimate of 292,000 jobs. In November, seasonally adjusted U.S. employment was revised up from 211,000 to 280,000 jobs. For the twelve months of 2015, the U.S economy added a seasonally adjusted average of 212,000 jobs. Over the same period in 2014, the U.S. economy added a seasonally adjusted average of 267,000 jobs, and in the same period in 2013, the U.S. economy averaged 194,000 seasonally adjusted jobs. Between December 2014 and December 2015, seasonally adjusted full-time employment rose by 2.7 million to 122,600,000 individuals. Over same period, part-time seasonally adjusted employment declined by 147,000 individuals. In December 2015, there were 27,400,000 individuals working parttime. The ratio of part-time employment to full-time employment in December 2015 was 22.2%. 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 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 December of Each Year 0.0 Year Source: Bureau of Labor Statistics, Seasonally Adjusted Even though the trend is upward sloping to the right, a simple analysis shows that between 1980 and 2007, longterm unemployment stayed within a range between 10% and 20%. Prior to 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 estimated percentage of longterm unemployed in December 2015 was 26.3%. The pre-recession 1980 to 2007 historical average is 16.2%. Starting in of this year, the percentage of long term employed fell below the monthly re-calculated statistical trend. The fundamental question is, given the structural changes that have been occurring prior to the 2009 national recession and accelerated during and after the recession, has there been a paradigm shift in long-term unemployment in this economy? That is, are skill sets being fundamentally outmoded by technological change? Louisiana Non-Farm Job Change- December 2014 to December 2015 Table 4 shows sector to sector gains and losses of non-seasonally adjusted employment non-farm employment from December 2014 to December Louisiana s economy lost 17,900 jobs. The twelve month average increase in 2015 over 2014 is the slowest since Industries gaining jobs between November 2014 and November 2015 were: Health Care and Social Assistance (7,000 jobs), Construction (6,000 jobs), Educational Services (3,200 jobs) and Professional and Business Services (3,200 jobs). These four sectors accounted for ninety-nine percent (99%) of the total gross job additions over this period. (Note: gross job growth is defined as sum of jobs added by sector over the reviewed period.) Gross job losses were concentrated in mining (10,000 jobs), Retail Trade (8,600 jobs), Government (6,100 jobs), Manufacturing (4,300 jobs) and Financial Services (1,300 jobs). 3

4 In Health Care and Social Assistance, thirty-one percent (31%) was in Nursing and Residential Care Facilities, twentyseven percent (27%) was in Hospitals and forty percent (40%) was in Ambulatory Care Facilities. In Construction, fiftyfive percent (55%) was in Non-Residential Building Construction. Residential Construction showed a decline. Job losses in Mining were concentrated in Support Activities in Mining and Exploration and Drilling. In Retail Trade, losses were concentrated in Clothing, General Merchandise Stores and Department Stores. Government, job losses were concentrated in State Government. In Manufacturing, all of the loses were concentrated in Durable Goods Manufacturing. Table 4 STATE OF LOUISIANA Non-Seasonally Adjusted Job Growth December 2014 to December 2015 Total Non-Farm Employment December 2015 Health Care and Social Assistance 7, ,400 Construction 6, ,800 Educational Services 3,200 50,600 Professional and Business Services 2, ,800 Leisure and Hospitality ,000 Truck Transportation 0 18,300 Support Activities in Transportation ,300 Wholesale Trade ,400 Information -1,000 25,500 Financial Activities -1,300 91,900 Manufacturing -4, ,600 All Others -5, ,800 Government -6, ,800 Retail Trade -8, ,600 Mining -10,000 42,500 Total Change -17,900 1,992,300 Source: Current Employment Survey Data, Bureau of Labor Statistics, January 2016 State Unemployment Rate for December 2015 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 December 2015 was 6.1% for Louisiana. There was an increase of 0.2% between November and December. On a month to month basis, total seasonally adjusted employed residents in the CPS survey fell by 37,400 individuals from the December 2014 to December In December 2015, the employed resident estimate was 2,004,000 individuals. The seasonally adjusted labor force decreased by 67,00 individuals between December 2014 and December In December 2015, the state-wide labor force was estimated at 2,133,600 individuals. The unemployment rate decline was almost totally attributed to the collapse in Labor force growth. 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 2005 =100 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 5.6% to by December Table Louisiana Employment Demand Index August 2005 to December Seasonally Adjusted Non-Farm Employment Revised with new 2015 Benchmark Data 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 December Table New Orleans MSA Employment Demand Index August 2005 to December Source: Seasonally Adjusted Non-Farm Employment, Bureau of Labor Statistics 5

6 Monthly Non-Farm Additions Jan Apr Jul Jan.2009 Jan.2010 Jan.2011 Jan.2012 Jan.2013 Jan.2014 Jan The seasonally adjusted CES New Orleans MSA employment index in December 2015 was (August 2005 =100.0) The index fell by 0.2% between December 2014 and December The statewide index, during the same period, fell by 0.9 % 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, January 2016 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 the first ten months of 2015, the overall New Orleans MSA job economy has shown signs of weakness. For the January thru December period in 2015, the MSA lost jobs. This is the worse job growth picture since the recession. Average seasonally adjusted CES jobs fell by 1,200 jobs over the same twelve-month period in Year over year, nine of the twelve months in 2015 have shown negative job growth. Non-Seasonally Adjusted Non-Farm Job Growth Overview Between December 2014 and December 2015, total non-seasonally adjusted non-farm CES preliminary employment in the New Orleans MSA economy fell by 900 jobs. Between the same periods 2013 and 2014, the MSA economy added 4,800 non-seasonally adjusted non-farm jobs. The top three sectors adding the most jobs during the current December to December period were (a) Educational Services (b) Health Care and Social Assistance and (c) Leisure and Hospitality. These three sectors accounted for seventy-nine percent of the gross job additions. Eight 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 Table 8 New Orleans Metropolitan Statistical Area Non-Seasonally Adjusted Job Growth December 2014 to December 2015 Total Non-Farm Employment December 2015 Total Non- Farm Employment August 2005 Educational Services 2,600 32,300 18,800 Health Care and Social Assistance 2,000 63,300 62,200 Leisure and Hospitality 1,100 84,600 86,000 Wholesale Trade 1,000 25,000 26,300 All Others ,900 23,600 Professional and Business Services ,900 74,300 Information ,200 10,500 Transportation & Utilities ,600 28,000 Financial Activities ,100 33,300 Construction -1,100 28,600 30,100 Mining -1,200 6,800 8,500 Manufacturing -1,300 28,700 41,500 Retail Trade -1,700 64,100 67,500 All Government -1,800 72, ,900 Total Change , ,500 Source: Current Employment Statistics, U.S. Bureau of Labor Statistics, January 2016 Note: 2015 revisions also resulted in changes to August 2005 total by BLS 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 2010 recessionary low point annual average MSA employment and the annual average for 2015, the New Orleans MSA added 42,000 private sector jobs. The annual averge employment growth for Leisure and Hospitality over the same periods accounted for thirtyfour percent (34%) of the private sector job growth. Of the increase in Leisure and Hospitality, eighty-seven percent (87%) 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 2014 in the Leisure and Hospitality industry were only fifty percent of the MSA average. ($24,344 vs. $48,437). 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 is 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 and $48,437 in (Source: Bureau of Labor Statistics; Systems Solutions Consulting). This amounts to a 5.1% growth rate between 2010 and The data for Orleans Parish shows a 0.2% decline in annual average wage and salaries between these periods, going from $49,804 in 2010 to $49,689 in (Source: Quarterly Census of Employment and Wages) The annual average CPI for Southern Urban Consumers rose by 9.1% over this period. 7

8 Annual Average Pay Chart 9 Annual Average Pay in Current $ $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 Year Year 2014 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 2014, BLS reported the annual average pay in that industry at $46,221 or a decline of 2.9%, with the MSA average pay reported at $48,437. 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 fifty-four percent (54%) of the job growth between 2010 annual average private sector jobs and the private sector average for the January thru November period in 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 2014, that average increased to $56,917 or a 10.4% increase over five years. However, data revisions of the number of jobs added in Professional and Business Services shows minimal job additions between 2013 and 2014 in this sector. For example previous to the 2015 benchmark revisions, Professional and Business Services was showing a net gain of about 7,200 jobs between these periods. The revised job addition showed that this sector added only 1,800 jobs. This is a substantial downward revision which would affect the calculations of the average pay in the MSA. Data for the first eleven months of 2015 over the same period in 2014 shows that Professional and Business Services employment in the MSA fell by an average of 1,100 jobs. Month over month data shows a loss of 500 jobs between November 2015 and November 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. Analysis of Key Growth Sectors 8

9 Professional and Business Services is a critical sector in the New Orleans MSA economy. Table 8 shows a gain of 500 jobs in the sector over the current December to December period. Job growth strength is found in Architectural and Engineering Services. Weakness is concentrated in the Administrative and Support Services sub-sector in Professional and Business Services. Measured on an annual average basis, Administrative and Support Services showed a drop of 1,900 jobs between 2014 and New Orleans MSA Health Care and Social Assistance employment continues to move toward surpassing pre-katrina employment levels. In August 2005, employment in Health Care and Social Assistance was 62,200 jobs. The 2015 benchmark revisions, going back to 2007, showed higher employment in this sector than previously estimated. In December 2015, employment was 63,300 jobs, adding 2,000 jobs between December 2014 and December The problem we face is whether the increased employment can be financially sustained in a region with 134,000 fewer residents today than in August Today, we have 50.0 employees per 1,000 MSA population in Health and Social Assistance. In August 2005, that figure was 44.9 employees per 1,000 population. Ambulatory Health Care employment remained relatively static between 2010 and Annnual average employment was 21,300 in In 2013, employment was 21,900. In late 2013, employment began to grow again with the sector adding 1,300 jobs between the 3 rd and 4 th quarters of The sector remained in the 23,100 to 23,900 range throughout However, data reported for the twelve months of 2015 shows average employment for the period falling back to 23,000 jobs. There isn t any clear indication as to why the decline occurred. Post-Katrina Hospital employment showed good recovery between 2006 and Starting in 2010 and into 2012, hospital employment plateaued and stayed in the 17,000 or so range. Starting in mid-2012 and extending into 2014, hospital employment began to show signs of recovery and expansion. Hospital employment added on an annual average basis an average 1,000 jobs in 2013 over the same period in The sector continued to add jobs in 2014 over 2013, adding 1,200 jobs on an annualized basis between 2013 and Annual average employment in this sector in 2015 over average for 2014 showed an increase of 900 jobs. In August 2005, there were 15.0 employees in the Hospital sector per 1,000 residents. In December 2015, there were 17.0 employees per 1000 residents. Annual average Retail Trade employment increased by 1,200 jobs in 2015 over the annual average for Much of the increase was attributed to job growth in the 1 st quarter of 2015 over the same quarter in However this early trend was reversed in the Christmas Season quarter when retail showed a contraction of 1,100 jobs. Measured monthly, Retail trade job demand began to stagnate by February 2015, indicating most of the gains between 2014 and 2015 were made in the last several months of Orleans Parish gained 1,505 retail jobs between the 3 rd quarter 2013 to the 4 th quarter 2014, due to the opening of the River Walk Mall and Costco in the Parish. However, retail employment in New Orleans still remains an estimated 3,600 fewer jobs in December 2015 than August At the MSA level, Retail Trade employment still remains 4,300 jobs in December 2015 lower than in the 2 nd quarter Jefferson Parish still remains the Retail Center of the MSA with nearly 29,000 retail jobs. Total Construction employment, as measured on an annualized average basis, peaked in 2008 at 33,200 jobs in the New Orleans MSA. Total Construction employment began a downward slide after 2008 and bottomed out in 2010 at 31,100. In 2011, construction employment added 700 jobs, with the annual average in 2011 showing 31,800 jobs. Employment remained at that level throughout 2012 and declined slightly in The annual average loss in employment between 2012 and 2013 was 300 jobs. The annual average for 2015 still yields an employment level of 4,500 fewer jobs than the annual average of The annual average for 2015 was 28,700 jobs. 9

10 With many of the major Heavy Construction projects beginning to finish, Heavy Construction employment in December 2015 was down to 6,800 jobs. This is 3,000 fewer jobs than in ober 2010 which was the peak employment for heavy construction. Annual average employment in Heavy Construction was 6,700 jobs in At it s height in 2011, 9,100 people were employed in Heavy Construction. Given no significant Heavy Construction projects on the horizon, employment is likely to either flatten or continue to slightly fall. 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 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. It appears that most of this growth in construction has peaked and should expect a gradual decline in construction employment. The November 2015 estimate of Specialty Trades was 16,500 jobs. Annual average employment in 2015 was down by 1,300 over the same period in Manufacturing employment in the New Orleans MSA is down by 1,600 jobs as measured on an annual average basis in 2015 over Annual average employment in non-durable (chemicals, etc.) manufacturing has not changed much since 2010, with employment remaining in a narrow band of between 17,400 and 17,800 over this period.; durable manufacturing (transportation equipment metals, etc.) is in a freefall. As measured on an annual average basis in 2015, durable manufacturing is down by 1,200 jobs over This sector is just a skeleton of its historical pass and is currently (December 2015) only 52% of the pre-katrina August employment of 22,000. Annual average employment peaked in 2008 at 20,500 jobs. This decline is the result of the loss of major of ship building activity in the New Orleans MSA. Ship building employment in the New Orleans MSA is just a shadow of its pre-katrina level, with employment in December 2015 only 12% of the August 2005 level of 9,700 jobs, influencing much of the weakness in Jefferson Parish s employment. The collapse of the Avondale operations has seriously weakened the WestBank economy of Jefferson Parish, with a corresponding loss in about a half billion dollars in wage and salary income in the New Orleans MSA. This problem is only being exasperated by the collapse of oil prices because of the reduced demand for specialized vessals associated with oil exploration. Annual average employment in Wholesale Trade edged up by 500 jobs in 2015 over The industry has been weak in terms of employment growth since This number would be obviously lower without the Port of New Orleans. The industry has been in an employment range since The CES employment low point, as measured on an annual average basis, was in 2012 with 22,600 jobs. The high point was in 2007 at 24,500 jobs. The annual average for 2015 was 24,100 jobs. In the current period, Financial Services Activities peaked in August 2014 and has been, more or less in decline, since that month into Starting in 2008 and continuing through 2012, annual average employment in Financial Activities more or less stagnated. In 2008, annual average employment was 26,900 jobs. In 2012, employment was still at the same level. In 2013, the sector started to show employment expansion adding 600 jobs between 2012 and Between 2013 and 2014, the sector added, on an annual average basis, another 600 jobs. Between December 2014 and December 2015, the sector decreased by 900 jobs. December 2015 employment in Financial Services in the New Orleans MSA was 27,100 jobs and still remains 6,300 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- 10

11 Aug Mar Jun Sep Dec Sep Dec Sep Dec Dec Dec.2010 Dec.2011 Dec.2012 Dec.2013 Dec.2014 August 2005 =100 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. Analysis of data trends suggest that the employment, in the near term, will probably bounce around between 26,900 and 27,500 jobs. Information employment remained relative static between the annual average employment in 2015 over Annual average employment employment peaked in 2013 at 9,300 jobs. Motion Picture and Sounding Recording Industries employment was up between the 2 nd quarter 2014 and the 2 nd quarter 2015 by 772 jobs. Employment in the 2 nd quarter 2015 was 4,275 jobs in the New Orleans MSA. Unfortuntely, employment in this industries varies substantially from quarter to quarter, and therefore, quarterly data are a poor predictive variable for annual estimates. The MSA Unemployment Picture The November non-seasonally adjusted unemployment rate, as reported by the Bureau of Labor Statistics, showed a decline in unemployment by 0.9% between November and December The unemployment rate in December 2015 was 4.76%. In December 2014, the non-seasonally adjusted New Orleans MSA unemployment rate was 6.5%. Total labor force declined by 7,300 individuals over this period. Total non-seasonally employed residents incrrese by 3,400. This shrinkage of the Labor force v-a-vis the small increase employed resident is the primary reason for the drop in the unemployment rate. New Orleans Metropolitan Statistical Area Key Employment Sectors Indices: Education and Health Services, Leisure and Hospitality and Business and Professional Services 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 December These industry clusters account for 51% of the total private sector employment in the MSA. 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 for Business Economics 11

12 The non-seasonally adjusted Education, Health and Social Services Index declined by 1.02% between November and December The index stood at (August 2005 =100) in December The sub-sector, Educational Services, added 2,000 jobs measured on an annual average basis between 2014 and Total annual average CES employment in 2015 was estimated at 30,500 jobs. Annual average employment between 2014 and 2015 in Hospitals increased by 900 jobs. Annual average CES employment in the Hospitals sector in 2015 was 21,200 jobs. Annual average CES employment in2015 fell by 300 jobs between 2014 and The Leisure and Hospitality Index was measured at 98.4 (August 2005 =100) in December The index fell by 0.6% between November and December. Annually, however, the non-seasonally adjusted index increased by 1.3% between December 2014 and December Annual average employment in this industry sector increased by 1,300 between 2014 and Virtually all of the job growth occurred in Food and Drtinking Places. Gaming employment showed 100 new jobs over this period and Arts, Entertainment and Recreation employment showed an 200 job decrease measured on a annual average basis between 2014 and The Professional and Business Services Index increased by 0.8% between November and December The index was measured at in December (August 2005 = 100) Between December 2014 and December 2015, the index increased by 0.7%. Measured on an annual average basis, Professional and Business Services declined by 1,000 CES jobs between 2014 and December 2015 employment level was estimated at 74,900 jobs. Most of the weakness in this sector is concentrated in Administrative and Support Services and Waste Management and Remediation Services. This sector lost 1,900 jobs between 2014 and 2015, as measured on an annual average basis. Professional, Scientific and Technical Services showed an increase of 900 jobs over this period. 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 through December 2015 data are estimates (see methodology on model accuracy). The models were updated in December This document contains an evaluation of the previous model performance. ORLEANS PARISH City of New Orleans QCEW non-seasonally adjusted employment increased by 2,700 jobs between December 2014 and December The revised index (based upon 2015 benchmark revisions) stood at 80.6 in December 2015 (August 2005 = 100). Measured on an annual average basis, QCEW employment increased by an average of 3,100 jobs over Annual average job gains between 2013 and 2014 averaged 7,200 jobs. December 2015 QCEW employment was estimated at 194,100 jobs. The index increased by 1.4% between December 2014 and December

13 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jobs in Thousands TABLE Current Covered Orleans Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January Model Estimates, 2015 to December 2015, Dr. Raymond J. Brady, Systems Solutions Consulting Historical data does show that the city s economy is making headway at developing professional and technical services jobs. However, the loss of higher paying jobs in mining and manufacturing, and substantial job gains in Leisure and Hospitality, where average incomes are well below the average for the city, are having a depression impact on the citywide average wage statistic. Data analysis suggest that nearly sixty-four percent (64%) is occurring in three sectors: accommodations and food services, information and retail trade. Unweighted average pay for all three sectors is approximately 75% of the parish-wide average. Table 12 below identifies employment in broad industry sectors between pre-katrina 2 nd quarter 2005 and 2 nd quarter of Of the nineteen broad industry sectors, Professional and Technical Services and Accommodations and Food 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 4,984 jobs from the 2 nd quarter 2014 to the 2 nd quarter Total net job gains between the 2 nd quarter 2013 and the 2 nd quarter 2014 were 8,032 jobs. With respect to the 2 nd quarter 2015 over the 2 nd quarter 2014 job change, total gross gains were 6,571 jobs, gains were concentrated in Accommodations and Food Services (1,672 jobs), Information (1,262 jobs), Retail Trade (1,240 jobs) and Health Care and Social Assistance (921 jobs). Total gross job losses were 1,520 jobs. Greatest job losses, year-over-year were in the following sectors: Construction (494 jobs), Mining (278 jobs), Manufacturing (244 jobs) and Arts, Entertainment and Recreational Services (229 jobs). 13

14 Table 12 NAICS Year 2005 Year nd Quarter Quarterly Employment 2nd Quarter Quarterly Employment Change 2nd Quarter 2005 to 2nd Quarter 2015 ORLEANS 244, ,990-52,161 Professional and technical services 54 14,554 16,139 1,585 Accommodation and food services 72 36,782 37, Agriculture, forestry, fishing and hunting Information 51 4,896 4, Construction 23 6,128 5, Utilities 22 1, Real estate and rental and leasing 53 4,070 3,020-1,050 Other services, except public administration 81 7,227 5,718-1,509 Mining 21 4,181 2,269-1,912 Management of companies and enterprises 55 4,631 2,633-1,998 Wholesale trade 42 5,999 3,757-2,242 Finance and insurance 52 8,384 5,583-2,801 Arts, entertainment, and recreation 71 8,641 5,648-2,993 Retail trade ,195 15,634-3,561 Manufacturing ,573 3,994-4,579 Public administration 92 17,186 12,540-4,646 Transportation and warehousing ,687 8,815-4,872 Educational services 61 28,578 23,203-5,375 Administrative and waste services 56 16,682 10,892-5,790 Health care and social assistance 62 32,291 23,443-8,848 Source: Quarterly Census of Employment and Wages, Louisiana Workforce Commission 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 2014, (see Chart 9) average yearly wages in Orleans Parish have stagnated. Actual data shows average pay actual remained stagnant in current dollars from $49,514 in 2009 to $49,689 in 2014 (source: Bureau of Labor Statistics). The 2014 average pay level over all QCEW jobs only reflects a stand-still wage level compared to the 2009 average. In Orleans Parish, average yearly wages in private sector Leisure and Hospitality was $26,560 in 2009 and an estimated $25,400 in 2015 (based upon 2 nd quarter data). 14

15 Jan-08 Sep Jan-09 Sep Jan-10 Sep Jan-11 Jan-12 ember Jan-13 ember Jan-14 ember Jan-15 ember 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. Average private sector yearly pay increase for the top three industries adding jobs were as follows between the 2014 and 2015 (based upon two quarters expolated using ratios for the 3 rd and 4 th quarters 2014): Accommodations and Food Services (from $ 25,400 to $25,300), Information (from $52,762 to $54,886) and Retail Trade (from $26,100 to $26,400). The non-seasonally adjusted (revised as of 2015 by BLS) unemployment rate in Orleans Parish was 5.1% in December 2015, an 0.9% decrease from the November estimate. December 2014 unemployment rate was 7.5%. Between December 2014 and December 2015, the BLS model estimate suggests that Orleans Parish s labor force increased by 10,800 individuals and was estimated at 173,200 in December Employed residents increased by about 14,200 individuals between December 2014 and December BLS estimated that the number of employed residents were 164,400 in December TABLE Orleans Parish, Louisiana and United States Unemployment Rates Non-Seasonally Adjusted Orleans Lousiana United States Source: Bureau of Labor Statistics (January 2016) 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 December 2014 and December 2015, Jefferson Parish s non-seasonally adjusted employment index increased by 0.2%. As of December 2015, QCEW employment estimate was 195,200 jobs. In December 2014, the parish had 194,900 QCEW jobs. (This reflects revisions made by BLS back to 2007.) Average annual employment for 2015 over the same period in 2014 saw Jefferson s Parish QCEW employment increase by 1,300 jobs. Average annual QCEW employment in 2015 was 194,100. 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 15

16 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jobs in Thousands 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 practical terms, the continued decline of more than 6,000 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 2 nd quarter of 2015, manufacturing employment had shrunk to 9,300 QCEW jobs. TABLE 14 Current Covered Jefferson Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January Model Estimates, 2015 to December 2015, Dr. Raymond J. Brady, Systems Solutions Consulting Table 15 below shows that as of the 2 nd quarter 2015, four of nineteen broad industry sectors have recovered to or above pre-katrina employment levels. From the 2 nd quarter 2014 to the 2 nd quarter 2015, Jefferson Parish had a net gain of 519 QCEW jobs. Between the 2 nd quarter 2014 and the 2 nd quarter 2015, twelve employment industries gained jobs and seven six lost jobsor had zero gains. Gross job gains were 3,646 jobs. The gross job gains are in rank order in the following industries: Health Care and Social Services (1,160 jobs), Accommodations and Food Services (640 jobs), Transportation and Warehousing (455 jobs), Retail Trade (343 jobs) and all other (1,048 jobs). Over the same period the parish s gross job losses amounted to 3,258 jobs. Job losses were concentrated in Manufacturing, (901 jobs) and Information (854 jobs), Administrative and Waster Service and Construction (528 jobs). 16

17 Table 15 NAICS Year 2005 Year nd Quarter Quarterly Employment 2nd Quarter Quarterly Employment Change 2nd Quarter 2005 to 2nd Quarter 2015 JEFFERSON 216, ,368-22,033 Health care and social assistance 62 28,672 30,853 2,181 Professional and technical services 54 10,212 10, Management of companies and enterprises 55 2,602 3, Transportation and warehousing ,920 9, Agriculture, forestry, fishing and hunting Utilities 22 1,366 1, Arts, entertainment, and recreation 71 5,065 4, Information 51 3,462 3, Finance and insurance 52 9,315 8, Public administration 92 6,619 6, Other services, except public administration 81 6,432 5, Mining 21 1,980 1, Real estate and rental and leasing 53 4,919 3,807-1,112 Construction 23 13,960 12,845-1,115 Administrative and waste services 56 16, ,604 Accommodation and food services 72 23,126 21,291-1,835 Retail trade ,902 28,452-2,450 Wholesale trade 42 13,056 10,405-2,651 Manufacturing ,338 9,343-7,995 Note: Education employment is suppressed; total includes all data suppressed sectors. Source: Quarterly Census of Employment and Wages, Louisiana Workforce Commission Table 16 shows Jefferson Parish s resident unemployment rate at 4.5% in December The rate declined by 0.8% from the November reading. In December 2014, it was estimated at 6.1%. (Revised as of 2015 by BLS) Nonseasonally adjusted resident labor force fell by 7,000 individuals between December 2014 and December Employed residents fell by 3,200 individuals over this period. The parish resident labor force was estimated at 224,600 individuals in December Employed residents were estimated at about 205,000 individuals. 17

18 Jan Jan Jan.2009 Jan Jan Jan Jan Jan Jan Jobs in Thousands Jan-08 Apr Jul Jan-09 Apr Jan-10 Jan-11 ober Jan-12 Jan-13 Jan-14 ober Jan-15 ober Table Jefferson Parish, Louisiana and United States Unemployment Rates Non-Seasonally Adjusted Source: Bureau of Labor Statistics, (January 2016) Jefferson Parish Lousiana United States St. Tammany Parish St. Tammany Parish non-seasonally employment increased by 0.5% between November and December Over the period December 2014 and December 2015, the QCEW employment index increased by 2.2%. Table Current Covered St.Tammany Parish Employment Picture Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Actual Data, January Model Estimates, 2015 to December 2015, Dr. Raymond J. Brady, Systems Solutions Consulting 18

19 Aug Mar Jun Sep Dec Sep Dec Sep Dec Dec Dec.2010 Dec.2011 Dec.2012 Dec.2013 Dec.2014 August 2005 =100 The index stood at a revised in December (August 2005 =100) Between December 2014 and December 2015, total QCEW employment increased by 1,800 jobs. Measured on an annual average basis between 2014 and 2015, total QCEW increased by 3,200 jobs. In December 2015, total QCEW employment was estimated in the parish at 87,400 jobs. The key job growth sectors in St. Tammany Parish between December 2014 and December 2015 were Transportation and Warehousing, Health Care and Social Assistance and Construction. Manufacturing and Mining Services lost about 300 jobs during this period. In the coming months, continued losses in mining services should begin to depress overall job demand. 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 2015 with model estimates to December 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 weakened of job demand in 2015 in the New Orleans MSA has occurred. Month over month seasonally adjusted job growth has been negative for nine of the twelve months of data in the New Orleans MSA. This number of negative job growth months has not happened since Major job losses are concentrated in government, manufacturing, construction, mining and financial activities. Moderate losses have occurred in Professional and Business Services. Moderate growth has occurred in 2015 Wholesale Trade, Retail Trade in Professional and Technical Services. The fundamental problem is that the vast majority of the industry sectors are showing slight or stable employment. Three sectors: Educational Services, Food and Drinking Places and Hospitals are preventing the overall job weakness from worsening. 19

20 Measured on annual average basis, total CES employment fell by 900 jobs between 2014 and This decline might be considered insignificant. However, coming off the annual average job growth between 2013 and 2014 of 8,900 jobs, it becomes obvious that the MSA job growth economy has weakened substantially. This decline in 2015 in employment is similar to the decline in 2009 and Data for 2016 suggest further weakening of the MSA economy. Looking at the December 2014 to December 2015 CES employment change, the top MSA industries adding jobs were: Educational Services, Health Care and Social Assistance and Leisure and Hospitality. These industries combined added 5,700 jobs between December 2014 and December At the same time, major job losse were recorded in Government, Retail Trade, Manufacturing, Mining and Construction. These sectors recorded a loss of 7,100 jobs. Looking at a longer employment period, annual average non-seasonally adjusted private sector employment low point (in response to the national recession) in New Orleans MSA was 449,000 jobs in The annual average for private sector jobs for 2015 in the New Orleans MSA was 491,400 jobs or 42,400 jobs increase over this period. (Source: CES data from the Bureau of Labor Statistics) Based upon the annual average for 2015 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-four percent (34%) of the growth over this period. Eighty-seven percent (87%) of the overall growth in Leisure and Hospitality was in Food and Drinking Places. This was followed by Educational Services private sector employment which accounted for twenty percent (20%) of the overall private sector growth. Health Care and Social Assistance accounted for sixteen percent (16%), and Retail Trade accounted for fifteen percent (15%) of the growth and of the private sector job growth. Of these four sectors that produced eighty-five percent (85%) of the non-farm total private 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 $24,344; Educational Services was $46,221: Retail trade average pay was $27,180, and Health and Social Assistance average pay was $45,900. The average New Orleans MSA pay in 2014 was $48,437. 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 50% of the 2014 MSA average. Retail Trade produced an average pay over this period which was 56% of the 2014 regional average. Combining the growth in Leisure and Hospitality and Retail Trade job growth suggests that 49% of the job growth was in jobs that were well below the 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 ($24,344, 2014 reported annual average) relative to the MSA estimated annual average of $48,437 in New Orleans MSA average wage level was $46,108 in 2010, $46,827 in 2011, $47,083 in 2012, $47,509 in 2013 and $48,437 in 2014 (Source: Bureau of Labor Statistics). This amounts to a 5.1% growth rate between 2010 and The data for Orleans Parish shows a 0.2% (in current $) decline in annual average wage and salaries between these periods, going from $49,804 in 2010 to an estimated $49,689 in The annual average CPI for Southern Urban Consumers rose by 9.1% over this period. Further, Leisure and Hospitality generated a Gross Domestic Product (GDP) $4.5 billion 20