Loathe to hire, for whatever reason, some companies turn away business

By David Pendered

The economy in the Southeast picked up modestly in July through mid August. An anomaly in the region, compared to elsewhere in the country, is that employers looked for alternatives to hiring when a job became open, according to the latest survey released Wednesday by the Federal Reserve.

construction

Construction companies in the Atlanta District of the Federal Reserve reported turning down business because they did not have workers to do the job. Credit: reconatl.com

Here’s how the situation in the Southeast was described in the Beige Book report on the economy:

  • “Turnover was mixed across the region; however, any time turnover occurred, firms pursued opportunities to increase operational efficiencies by evaluating whether to fold one job into another, replace position(s) with technology, and/or shift the salary towards training and development of other employees.”

The statement seems inexplicable in light of how Atlanta was portrayed in the national summary. Atlanta was among districts where companies turned away business because of a lack of labor:

  • “Firms in the Atlanta, St. Louis, and Minneapolis Districts said that they had turned down business because they could not find the necessary workers.”

In the Atlanta District, it was the construction industry that reported turning down work for a lack of labor.

The report presented a decidedly mixed picture on the overall labor and wage situation in the Southeast, an area that includes Alabama, Florida and Georgia, and portions of Louisiana, Mississippi and Tennessee.

Atlanta Federal Reserve

Business contacts in the Southeast report a decided mixed view on jobs and wages, according to a report released Wednesday by the Atlanta District of the Federal Reserve. Credit: georgiacouncil.blogspot.com

President Trump’s stance on immigration has shown up in the workplace, the report showed.

The report observed that some employers who rely on immigrant labor said Trump’s talk about restricting immigration, “was having a tangible drag on the supply of labor,” according to the report.

Glimmers of higher wages are beginning to appear on the horizon. Companies that have offered other enticements to hire and keep employers think this approach may have run its course. The inducements include flexible work hours and locations, more vacation time, and the promoting of “work-life” harmony.

“Some contacts indicated that these non-wage compensation mechanisms were losing their effectiveness, thus broad wage increases were expected in the near term,” the report observed.

That said, some employers continue to shed older workers:

  • “Some firms noted increased offerings of early retirement packages in an attempt to lower overall compensation costs (replace higher-paid, tenured workers with technology or lower-paid, entry to mid-level workers).”

The reported shortage of workers has prompted some wage increases in order to attract new hires for high-skill positions. The increases were in the 2 percent to 3 percent range, the report observed.

The lack of higher wages may be rippling across the Southeast’s important consumer spending and tourism sectors.

Retail sales were boosted by needed back-to-school purchases. However, the automotive sector continued to report a slowdown in the momentum of auto sales from a year ago. Vehicle dealers voiced similar concerns in the July Beige Book report.

Tourism did not live up to the expectations cited in the May report. At that time, tourism contacts reported an increase in the number of visitors in the first four months of the year. That prompted a sense of cautious optimism, even though guests were slowing down their purchases of food, beverage and merchandise.

However, today’s report shows that, “activity over the summer season was softer than expected.” Operators attributed that dip to the heavy rains in June.

The tourism sector is not expected to improve through the end of 2017, according to the report.

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

2 replies
  1. Burroughston Broch says:

    Small business often is reluctant to hire until added business volume has been proved for a period of time. The standard strategy is to handle added business using overtime for existing employees. Having too many employees is worse than having too few employees.Report

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

What are your thoughts?

This site uses Akismet to reduce spam. Learn how your comment data is processed.