Tariff concerns rise in Georgia, Southeast as tight labor market draws headlines

By David Pendered

A tight labor market continues to headline the Southeast’s economic conditions, though the transportation industry is bracing for job cuts related to trade tariffs, according to a federal report – and that was before President Trump announced potential tariffs on Mexico.

trade, georgia mexico

Mexico is Georgia’s third-largest trade partner, raising implications of potential tariffs on goods. Credit: georgia.org

Transportation firms reported plans to cut labor and delay big-ticket purchases as a result of  declining revenues expected to result from slowing trade with China, according to data in the Atlanta Fed’s contribution to the June 5 edition of the Federal Reserve’s Beige Book.

The report was based on anecdotal information collected from business contacts through May 24 and it observes:

  • “Regarding trade policy uncertainty, some transportation contacts developed contingency plans to reduce capital expenditures and headcount to offset tariff-related revenue shortfalls.”

In addition, seaports across the Southeast are preparing for a slowdown in trade later this year. Their forecasts are based on expectations that businesses have ramped up imports and exports ahead of tariffs and volumes will decline through the year, according to the report.

This account was prepared before Trump announced last week he may impose tariffs on Mexico related to immigration at the southern border. The picture changed Friday, when Trump announced  that the threatened tariffs were “indefinitely suspended,” according to a report by cnn.com. However, cnbc.com reported Sunday that Treasury Secretary Steven Mnuchin said the president, “reserves the right to put on tariffs.”

Georgia trade officials barely had time to respond to Trump’s potential Mexico tariffs before the tariffs were withdrawn. The economies of Georgia and Mexico seem to be fairly closely connected. Mexico is Georgia’s third largest trade partner, trailing only China at No. 1 and Germany, No. 2.

The state maintains two trade representatives in Mexico’s capital city, out of an international delegation of 25 trade reps in 12 markets. Their purpose is to assist Georgia companies that plan to expand into these markets by providing services including market intelligence and prequalifying potential customers. The reps also seek to bring foreign investments to Georgia, according to a report by the Georgia Department of Economic Development.

Georgia Ports, Savannah

Ship-to-Shore cranes are lined up along the dock ath the Georgia Ports Authority at Garden City Terminal, near Savannah. Credit: Georgia Ports Authority/Stephen B. Morton

Labor shortfalls continue to dominate the landscape in both the Southeast and nation, according to the latest Beige Book.

The headline literally said it all, on the Regional Economics review.The headline reads: Tight Labor Market Crimps Hiring, Boosts Training.

Of note, the role of automation was covered in one sentence. It seems a telling observation among employers who remain resistant to staffing at levels that seem to have existed before the Great Recession. The sentence on automation observes:

  • “Firms also continued to push for productivity and efficiency enhancements, typically through automation and technology investment, in an effort to reduce the need to add workers or augment the lack of available talent.”

Another of the firms’ solution is the lowing of job requirements. Here’s how it’s playing out in the workplace:

  • “Employers continued to invest in training programs to upskill new and existing employees…. Further, some business contacts reported adjusting employment standards, e.g., implementing remedial training and relaxing attendance policies, in order to attract and retain workers.”

Despite these efforts, employers reported that labor costs are creeping up, somewhat due to wages and also evidently in incentives that are offered to bring workers onboard:

  • “Annual wage increases, on average, remained between 3-4 percent, though many contacts expressed that labor costs were accelerating when full compensation costs, including healthcare, bonuses, and other incentives, were factored in.”

This follows a trend that’s emerged in recent years of firms trying to keep a lid on wages by offering incentives – which employers report as easier to reduce or remove as the employer sees appropriate for the business.

 

 

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.

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