The new year brings new political leadership on the federal level in the U.S. House and in state capitals in the region in both Nashville and Atlanta.
The outgoing governors in Tennessee and Georgia were blessed with eight years of sustained economic growth in both states — an economic trend unlikely to be sustained for so long for the new governors.
But as the current economic recovery approaches its longest post-World War II run this year, both Tennessee and Georgia continue to boast favorable climates for business to weather any economic storm.
For six consecutive years, Site Selection magazine has named Georgia as the top state in the nation to do business. Georgia's unemployment rate fell at the end of 2018 to its lowest level since 2001. Outgoing Gov. Nathan Deal said over 750,000 private-sector jobs were created during his 8-year term and exports going out of Georgia jumped by 28.8 percent from 2010 to 2018.
In Tennessee, Business Facilities magazine three times named Tennessee its "State of the Year" for economic growth during Bill Haslam's term as governor. Since he took office in 2011, Haslam counts more than 400,000 net new private sector jobs that have been created in Tennessee and Tennessee's unemployment rate has remained below 4 percent for more than a year. The Volunteer State also has ranked No. 1 for per capita foreign direct investment in the past decade.
More than eight years of sustained economic growth, combined with the retirement of many Baby boomers from the workforce, has created a far different challenge for business growth in the South for incoming Governors Bill Lee in Tennessee and Brian Kemp in Georgia. Employers report their biggest problem — and perhaps the biggest barrier to faster economic growth — is the lack of enough skilled and dependable workers to fill all of the available jobs.
While the strong economy accounts for much of the reason for the labor shortage, the shortfall in qualified workers is worsened by a number of factors the new governors have vowed to try to address, including a training for the right job skills and the absence of many workers from the labor market due to drug abuse, health problems or incarceration.
In Georgia, Kemp has pledged to raise teacher pay and work to improve public education, while keeping state spending in check. In Tennessee, Lee has suggested he is open to more vouchers for students in some disadvantaged school zones and has promised to strengthen vocational training in high schools, community colleges and trade schools to prepare more workers with the skills needed for today's jobs.
"I do think that there is a shortage of connection between (workforce development) programs and K-12," Lee says. "I want to engage the private sector in partnerships with public schools so that we have opportunities for work-based learning and apprenticeships and for the children in the seventh and eighth grade to begin to have conversations around the pathways for their success that include a particular skill."
It's a lesson Lee learned in his own business, Lee Enterprises in Franklin, Tennessee, which employs more than 1,200 workers in mechanical contracting and other construction work. Lee has vowed to do more to promote vocational skills training in middle and high school and in community colleges and trade schools.
Bradley Jackson, president of the Tennessee Chamber of Commerce and Industry, said a year-end survey of businesses across Tennessee found the biggest concerns for Chamber members focused on getting enough qualified and reliable workers to staff their businesses.
The staffing shortages can be addressed by state government in three key areas — providing better training in the skills needed in the marketplace, doing more to rehabilitate and bring those in the criminal justice system back into the workforce and limiting drug abuse and other health problems that discourage many workers from staying in the labor market.
According to the U.S. Bureau of Labor Statistics, Tennessee's labor force participation rate in late 2018 — 60.7 percent — ranks in the bottom 10 of the 50 states.
"A new governor and Legislature gives us a chance to look for new ways to help our state and our businesses to grow and to improve our workforce participation rate," Jackson says. "What can be done to make sure that individuals that are coming out of a correctional facility are equipped with the skills and offered the assistance to land a job? Also, how can we work to limit problems with opioid and other drug abuse that keeps many workers out of the labor market?"
Both Lee and Kemp have vowed to oppose expanding Medicaid eligibility under the Affordable Care Act, or ObamaCare, despite appeals from the hospital and medical industries to expand Medicaid to bring extra funding into the region. But Kemp has said he supports increasing the rural hospital tax credit program and seeking federal waivers to help stabilize insurance premiums.
Lee also opposed Medicaid expansion as too costly, but he has supported plans to develop a 20-year-plan to address health care and look for ways to both cut costs and promote wellness and preventative measures to improve the health of Tennesseans.
To help provide less expensive insurance options for some smaller employers, Jackson said the state also will be encouraged to do more to allow and promote association health plans that allow pools of workers from many different small business employers to join together for coverage. Last year, President Trump issued rules for association health plans and short-term health insurance, which often offer cheaper insurance options but do not have to follow the same coverage rules as individual policies sold under Obamacare.
"The rising cost of health care remains a key concern of business so we will continue to look for options and ways to limit those costs and make our companies more competitive," Jackson says.