The document summarizes labor market trends in Virginia and the Roanoke Valley region from 1999-2014. It finds that while Virginia has experienced a labor shortage, real wages have remained stagnant. The Roanoke Valley specifically has seen real wages fall over time and lag behind the rest of Virginia. Current data shows labor shortages in both Virginia and the Roanoke Valley, which may put upward pressure on wages going forward. The document also projects growing employment in various occupations in the Roanoke region by 2020.

1. Economic Summit XI
THE VIRGINIA AND ROANOKE VALLEY LABOR MARKETS
ALICE LOUISE KASSENS, PHD
JOHN S. SHANNON PROFESSOR OF ECONOMICS
ROANOKE COLLEGE

2. Outline
A look at the Commonwealth’s economy
A look at the local economy
Future labor market in Roanoke

3. The Commonwealth’s Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
0.015
0.025
0.035
0.045
0.055
0.065
0.075
0.58
0.6
0.62
0.64
0.66
0.68
0.7
0.72
January-99
July-99
January-00
July-00
January-01
July-01
January-02
July-02
January-03
July-03
January-04
July-04
January-05
July-05
January-06
July-06
January-07
July-07
January-08
July-08
January-09
July-09
January-10
July-10
January-11
July-11
January-12
July-12
January-13
July-13
January-14
LABOR MARKET MOVEMENTS IN VIRGINIA
1999-2014
lfpr epop urate
Pre-Great Recession
average EPOP: 65.9%
Great Recession +
average EPOP: 63.8%
Pre-Great Recession
average u-rate: 3.3%
Great Recession +
average u-rate: 5.9%
Pre-Great Recession
average LFPR: 68.2%
Great Recession +
average LFPR: 67.8%

4. The Commonwealth’s Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
LFPR
-0.4 ppts.
URATE
+2.6 ppts.
EPOP fell by 2.1
percentage points
over the Great Recession
and recovery
Prolonged job search
Dropped out of the labor force

5. The Commonwealth’s Economy
Source: Virginia Employment Commission
March 2014
Supply and demand
of labor
Shortage of labor in VA
Surplus in the US
0.87 March 2014
269,379 March 2014
233,871 March 2014

6. The Commonwealth’s Economy
400
500
600
700
800
900
1000
1100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
WAGES,$/WEEK
Weekly Wages Over Time, Virginia
Nominal wages Real wages
Source: BLS and author’s calculations
Note: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
Despite labor shortage in VA, real
wages are the same in 2013
as they were in 2007 (~$675/wk.)

7. The Commonwealth’s Economy
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculations
Note: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations
400
450
500
550
600
650
700
750
800
850
#SEPARATIONS,HIRES(`000)
Separations and Hires, Virginia
Separations Hires
RecoveryRecession
Labor flows
Cyclical
Match quality
Productivity

8. The Commonwealth’s Economy
400
450
500
550
600
650
700
750
800
850
#SEPARATIONS,HIRES(`000)
Separations and Hires, Virginia
Separations Hires
RecoveryRecession
Labor flows
Employment grows &
unemployment rate
falls when hires exceed
separations
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculations
Note: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations

9. The Commonwealth’s Economy
Movements along the
Beveridge Curve
Changes in Aggregate Demand
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
y = -0.6056x + 0.0802
R² = 0.8745
0.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.020 0.030 0.040 0.050 0.060 0.070 0.080
Jobvacencyrate(JO/LF)
Unemployment rate
Beveridge Curve during the Great Recession

10. The Commonwealth’s Economy
“Recovery”
“Great
Recession”
Shifts of the
Beveridge Curve
Changes in the matching process
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
y = -0.6056x + 0.0802
R² = 0.8745
y = -0.6891x + 0.0988
R² = 0.4381
0.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.090
Jobvacencyrate(JO/LF)
Unemployment rate
Beveridge Curve during the Recovery

11. The Commonwealth’s Economy
“Recovery”
“Great
Recession”
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
y = -0.6056x + 0.0802
R² = 0.8745
y = -0.6891x + 0.0988
R² = 0.4381
0.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.090
Jobvacencyrate(JO/LF)
Unemployment rate
Beveridge Curve during the RecoveryShifts of the
Beveridge Curve
WHY?
Skills mismatch (structural
unemployment)
Federal EUI

12. The Commonwealth’s Economy
“Recovery”
“Great
Recession”
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
y = -0.6056x + 0.0802
R² = 0.8745
y = -0.6891x + 0.0988
R² = 0.4381
0.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.090
Jobvacencyrate(JO/LF)
Unemployment rate
Beveridge Curve during the Recovery
Long run
unemployment rate
average for Roanoke
MSA = 4.4%
(1999-2014)
Job opening rate at
4.4% unemployment
rate during recession =
5.4%
Job opening rate at
4.4% unemployment
rate during recovery =
6.8%

13. The Commonwealth’s Economy
0
2000
4000
6000
8000
10000
12000
14000
Q199
Q399
Q100
Q300
Q101
Q301
Q102
Q302
Q103
Q303
Q104
Q304
Q105
Q305
Q106
Q306
Q107
Q307
Q108
Q308
Q109
Q309
Q110
Q310
Q111
Q311
Q112
Q312
Q113
Q313
Q114
#CLAIMS
QUARTER/YEAR
INITIAL UNEMPLOYMENT INSURANCE CLAIMS,
VIRGINIA Q1 1999 – Q1 2014
Data sources: US Department of Labor ; Author’s calculations

14. The Commonwealth’s Economy
Data sources: US Department of Labor ; Author’s calculations
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Q199
Q399
Q100
Q300
Q101
Q301
Q102
Q302
Q103
Q303
Q104
Q304
Q105
Q305
Q106
Q306
Q107
Q307
Q108
Q308
Q109
Q309
Q110
Q310
Q111
Q311
Q112
Q312
Q113
Q313
#CLAIMS
CONTINUED UNEMPLOYMENT INSURANCE
CLAIMS, VIRGINIA Q1 1999 – Q1 2014

15. The Commonwealth’s Economy
Elementary
(0.7%)
Some High
School
(7%)
High School
Grad/GED
(38.5%)
Some College
(10.4%)
Associate's
Degree
(16.8%)
Bachelor's
Degree
(15.8%)
Post Graduate
Degree
(6.3%)
Unknown
(4.6%)
EDUCATION STATUS OF MARCH 2013 JOB
APPLICANTSN=10,949
Male = 53.4%
Under 22 = 9.3%
Over 34 = 53.2%
Veterans = 7.6%
Source: Virginia Employment Commission

16. The Local Economy
Unemployment by County
March 2014
Roanoke County 4.9%
Roanoke City 6.2%
Salem City 5.3%
Botetourt County 5.3%
Craig County 6.2%
Franklin County 5.2%
Source: Virginia Employment Commission

17. The Local Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
UNEMPLOYMENTRATE
Unemployment rate - VA & ROA
urate VA urate ROA

18. The Local Economy
Source: Virginia Employment Commission
Note: candidates are those with active resumes in the workforce system
$20,000-$34,999
$5,000-$19,999
Not specified
$35,000-$49,999
$50,000-64,999
$65,000-$79,999
$80,000-$94,999
$95,000 or more
Minimum desired wage of
available candidates
N=33,360

19. The Local Economy
Source: Virginia Employment Commission
March 2014
Job openings
Roanoke City 6,772
Salem 1,935
Roanoke County 556
Franklin County 372
Botetourt County 291
Craig County 18

20. The Local Economy
-500 -400 -300 -200 -100 0 100 200 300 400 500 600
Leisure, hospitality
Private eduction, health services
Misc. services
Local government
State government
Federal government
Mining, lodging
Professional business services
Wholesale trade
Finance, insurance, real estate
Transportation, warehousing, utilities
Retail trade
Manufacturing
ROANOKE EMPLOYMENT, Q412-Q413YOY changes
+600 jobs
+0.4 pp
Wages
Leisure, hospitality
Private educ, health services
Source: Virginia Employment Commission. (2014). Virginia Economic Indicators, Vol. 45, Num. 4.

21. 5
7
9
11
13
15
17
19
21
23
25
#SEPARATIONS,HIRES(`000)
Separations and Hires, Roanoke City
Separations Hires
Recovery
The Local Economy
Recession
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculations
Note: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations
Upward trend in each
since Q1 2010
Hires currently outpacing
separations

22. The Local Economy
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
#Unemployed/#Jobopenings
Unemployed per Job Opening
Roanoke VA
unemployed = job openings
Labor surplus
Labor shortage
Labor shortages until
early 2009
Labor surpluses until
early 2013
More pronounced
surpluses in ROA
Currently shortages in
ROA and VA; upward
pressure on wages

23. The Local Economy
Source: BLS and author’s calculations
Note: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
450
500
550
600
650
700
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
REALWAGES,$/WEEK
Real wages VA and Roanoke City, 2001-2013
Roanoke VA Linear (Roanoke) Linear (VA)
Roanoke average real wage
$512/week
Falling by $0.67/year
Virginia average real wage
$654/week
Rising by $3.44/year
Wage gap = $142/week
Gap grew by ~$4.10 per year
between 2001-2013

24. The Local Economy
Source: BLS and author’s calculations
Note: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
450
500
550
600
650
700
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
REALWAGES,$/WEEK
Real wages VA and Roanoke City, 2001-2013
Roanoke VA Linear (Roanoke) Linear (VA)
Roanoke average real wage
$512/week
Falling by $0.67/year
Virginia average real wage
$654/week
Rising by $3.44/year
Wage gap = $142/week
Gap grew by ~$4.10 per year
between 2001-2013
Upward
movement?

25. The Local Economy
Washington D.C.
$14,362
Richmond
$34,964
Lynchburg
$43,951
Virginia Beach
$32,217
Roanoke
$42,120
Sources: http://www.findthebest.com/ with 2013 data; Author’s calculations

26. y = -0.4837x + 0.0644
R² = 0.8434
y = -1.0279x + 0.116
R² = 0.6314
0.020
0.030
0.040
0.050
0.060
0.070
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.090
Jobopeningrate(JO/LF)
Unemployment rate
Beveridge Curve, Roanoke MSA
Recovery
The Local Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
Recession
Long run
unemployment rate
average for Roanoke
MSA = 4.3%
(1999-2014)
Job opening rate at
4.3% unemployment
rate during recession =
4.4%
Job opening rate at
4.3% unemployment
rate during recovery =
7.2%

27. Future Labor Market
541,884
414,390
294,938
257,351
234,584
254,349
199,506
226,602
197,026
191,430
613,286
472,738
340,905
317,155
290,152
275,909
267,482
257,639
243,212
240,333
OFFICE AND ADMINISTRATIVE SUPPORT OCCUPATIONS
SALES AND RELATED OCCUPATIONS
FOOD PREPARATION AND SERVING RELATED OCCUPATIONS
BUSINESS AND FINANCIAL OPERATIONS OCCUPATIONS
EDUCATION, TRAINING, AND LIBRARY OCCUPATIONS
MANAGEMENT OCCUPATIONS
COMPUTER AND MATHEMATICAL OCCUPATIONS
TRANSPORTATION AND MATERIAL MOVING OCCUPATIONS
CONSTRUCTION AND EXTRACTION OCCUPATIONS
HEALTHCARE PRACTITIONERS AND TECHNICAL OCCUPATIONS
EMPLOYMENT PROJECTIONS (2020), ROANOKE
2010 Estimate 2020 Projection
$37,130
$20,310
$60,190
$49,010
$90,110
$67,570
$31,580
$34,500
$73,960
$32,220
Data sources: Virginia Employment Commission, Bureau of Labor Statistics
Note: salaries are mean annual wage, May 2013, Roanoke

28. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability

29. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability

30. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability

31. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability
Computers strongly complement
non-routine cognitive tasks (high wage)
Abstract reasoning tasks (problem solving,
coordination, or other high management jobs)

32. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability
Computers directly substitute for routine
tasks (middle-class)
Bookkeeping, clerical work, repetitive
production tasks
Automation of routine work

33. Future Labor Market
Labor
demand
Output
Real wage
L and K
substitutability
Computers have little direct impact on
non-routine manual tasks (low income)
Janitors, security guards, truck drivers,
waiters

34. Thank you
Questions?
CONTACT INFO
kassens@roanoke.edu
@RnningEconomist
http://therunningeconomist.blogspot.com