Inflation and labor force issues top the list of concerns for Tennessee business leaders, according to the most recent survey by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville.
Conducted in January, the Tennessee Business Leaders Survey shows that respondents are relatively pessimistic on inflation, with about half (53.8 percent) saying the recent high inflation is “here to stay.” The other half said either that the current inflation is transitory (25.8 percent) or that they were unsure about inflation’s trajectory moving forward (21.1 percent).
About half said their companies plan to increase employee wages in response to inflation. As the cost of running a business goes up, 43.5 percent of employers said they will likely increase prices for consumers. Many also are looking into reorganizing their business or will rely more on artificial intelligence and automation. Very few are considering employee layoffs or the closure of stores or offices.
In early February, about 50 survey respondents took part in a forum moderated by Don Bruce, associate director of the Boyd Center. Attendees discussed the survey results and elaborated more on how inflation affects Tennessee employers through the housing market, the supply chain, and a growing skills gap in the workforce.
“Parents are worried about the cost of buying a home in Tennessee and how unaffordable it is for a new college graduate. They say, ‘Where is the $100,000 starter home? It doesn’t exist anymore,’” Bruce said. “These business leaders also say their cost of operating has gone up and it takes longer to get something built—whether it’s due to supply chain issues or not having enough people trained to do the job.”
The concern about trained workers echoes the survey, where more than 70 percent of respondents reported an insufficient supply. About half said that increasing training opportunities and education is key in bridging the gap, and about a fourth said it would be good to reduce the government safety net in order to encourage more people to work.
When looking at Tennessee as a whole, roughly 70 percent of survey respondents said they think the state’s economy will outpace the nation’s in 2022. Those from East and West Tennessee were much more optimistic about the state’s economy than those from Middle Tennessee. There was optimism among individual industries as well, with more than half of respondents expecting their businesses to perform better over the next 12 months and only 9 percent expecting their businesses to perform worse.
“A significant number of people are upbeat about their expectations for revenue, profitability, and employment growth in 2022,” said Bill Fox, director of the Boyd Center. “Despite worries about inflation, this shows me that business leaders in Tennessee have an entrepreneurial spirit and are finding ways to make their companies succeed.”
The full set of survey responses is available on the Boyd Center website. A few other highlights:
- When asked about the local workforce, respondents were able to identify up to three skills or attributes lacking in job candidates. Work ethic was the top concern, listed by nearly two thirds of respondents.
- Almost 58 percent said their company struggles to retain workers. Cost and availability of housing was the primary reason listed, followed by cost and availability of child care services.
- Only 10.2 percent said they believe that reducing fiscal and monetary stimulus would result in a recession, while almost 60 percent said it would not.
- 35.2 percent of respondents believe the Federal Reserve will begin raising interest rates during the first half of 2022. A quarter think it will be later in 2022.
The Boyd Center, located in UT’s Haslam College of Business, conducted the survey between January 10 and 31, gathering responses from business leaders across Tennessee. Respondents represented a broad sample of businesses across all industries and ranging in size from fewer than 50 employees to more than 5,000.
Erin Hatfield (865-974-6086, firstname.lastname@example.org)