Economy Matters

Small businesses and lower-wage workers face an array of economic challenges as the COVID-19 pandemic's aftermath reshapes the nation's economy and workforce, according to panelists at a recent Fed Listens event.

At the Community Listening session August 7 in Atlanta, Federal Reserve Bank of Atlanta president Raphael Bostic and Federal Reserve governor Michelle Bowman moderated two panel discussions. One explored perspectives from small businesses and the second considered perspectives from workers and employers. Topics covered in the two-hour event included inflation, housing costs, worker training and retention, and the digital divide.

Fed Listens began in 2019, and 14 sessions held around the country that year were a pillar of the Fed's first comprehensive review of the monetary policy framework it oversees to achieve its congressionally mandated goals of maximum employment and price stability. The Fed decided to continue and expand the program, Bowman said.

"We broadened the scope of Fed Listens to become an ongoing process of consultation with the public, so that through Fed Listens and other Board and System convenings, we can learn directly from those of you who are experiencing the economy about how households and businesses are faring and how they are affected by Federal Reserve decision-making," Bowman said in her opening remarks.

The listening sessions add to the Atlanta Fed's long-standing commitment to communicate with the public to gather information that informs decisions, Bostic said. This event was the third hosted by the Atlanta Fed, following Nashville in 2022 and Augusta, Georgia in 2019.

The listening sessions add to the Atlanta Fed's long-standing commitment to communicate with the public to gather information that informs decisions, Bostic said. This event was the third hosted by the Atlanta Fed, following Nashville in 2022 and Augusta, Georgia in 2019.

"We do our job better when we hear from people on the front lines of the economy, find out what's working, what's not working, where there are challenges, and where there are opportunities," Bostic said.

The sessions highlighted aspects of the economy as the pandemic winds down. Participants reported that high housing costs and transportation difficulties were exacerbated by the pandemic. Small businesses reported reduced access to bank lending as the Fed raised the benchmark interest rate to tame inflation, matching reports in the Fed's Senior Loan Officer Opinion Survey on Bank Lending Practices.

Perspectives from small businesses

Bowman hosted the first session, "Perspectives from Small Businesses." Participants included Anita Davis, founder and president of Praxis Strategic Solutions in metro Atlanta; Will Ruzic, vice president of facilities and operations of Provalus in Brewton, Alabama; and Aleia Shipman, founder and chief executive officer of 3G Chemical Solutions LLC in Bessemer/Birmingham, Alabama.

Bowman invited the three leaders to describe their economic landscape as the business closures of the pandemic were followed by shortages of supplies and workers, rising prices, and higher interest rates.

Davis said two spectrums have emerged for clients of her consulting firm, which serves the community of small and underserved businesses. Some companies can navigate the tighter lending standards while others cannot. Those in the second group face challenges to grow their businesses.

Lack of internet services in rural communities remains a big challenge, Ruzic said. Provalus has a social mission to deliver outsourced IT services from rural communities where broadband tends to be available only on Main Street. The lack of last-mile connectivity to broadband in homes became a problem as more people worked from home.

A labor shortage is the prime challenge for Shipman's company, which provides industrial chemicals used in treatment of water and wastewater as well as maintenance and janitorial services. Part-time workers and interns from the University of Alabama add to her workforce, but the company's prime focus is on retaining workers by offering incentives and other measures to foster an attractive corporate culture.

Bowman turned to pricing pressures, asking Davis and Shipman about cost drivers that may lead to price hikes. Each responded that pricing pressures are felt across the economy. Despite the falling rates of inflation recorded month over month this year by the Core Personal Consumption Expenditure Price Index, each of the business leaders cited inflation as driving price hikes in their sector.

"Pricing challenges are everywhere throughout our economy, so everybody is used to seeing pricing increases," Davis said. "My clients have to sell the value of what they do to make sure that their customers are understanding [that] this is what you're receiving for the increase in your value. But just like most of the customers that they have, they are increasing pricing as well. It's just spread out across the board that everybody is seeing the need to increase prices to keep up with the inflation."

Shipman said her company is on the brink of raising prices while it also considers expansion. The company is considering buying a manufacturer of some industrial chemicals her firm sells, an acquisition that could help the business reduce its overall costs and pass savings to customers. Lower prices might also attract new customers, she said.

"Moving into the manufacturing space, we would be able to cut costs," Shipman said. "The costs that we were then passing along to our customers as a supplier, we become the manufacturer, we now can keep that cost low for them.

Perspectives from workers and employers

Bostic hosted the second session, "Perspectives from Workers and Employers." Participants included Keith Parker, president and CEO of the nonprofit Goodwill of North Georgia; Ruzic, who stayed to fill the seat of a panelist unable to attend; and India Watson, a property monitor with Kinstone Communities and a "graduate of the year" from Goodwill of North Georgia.

Bostic's first question went to Parker, asking him to describe his thoughts about economic mobility and resilience for workers in North Georgia. Economic mobility and resilience is an important part of the Atlanta Fed's mandate from Congress to foster maximum employment.

Parker responded that metro Atlanta continues to rank among the nation's regions with the lowest rates of intergenerational economic mobility. "If you're born in certain ZIP codes here in this incredible place, the chance of you getting out of poverty is like lottery odds," Parker said. This point is affirmed in a 2020 Census report that updated a landmark study released in2014 by economists from Harvard University and the University of California–Berkeley.

Economic mobility begins with a job, Parker said. That's the foundation of Goodwill's "ABC" motto of income progression, "A job. Better job. Career." Goodwill focuses on providing training and support for individuals who may be viewed as unemployable. "With the right type of upskilling and the right type of support, that individual can become a superstar team member, and we have countless numbers of examples of that," Parker said.

For much of her life as an airline employee in Atlanta, India Watson said she had stable employment that provided pay and benefits sufficient to raise her son as a single mom. She moved to Arizona in search of better opportunities and had saved enough to return to Atlanta just as the pandemic hit.

Watson moved into a dwelling managed by a landlord who refused to accept payments from the state-administered federal Emergency Rental Assistance Program. Watson became homeless and, with a poor rental history, found her way to the Atlanta Mission homeless shelter. Desperation led to panic until Watson, rested and recovered at the shelter, sought out the computer lab at a Goodwill career center.

"I really thought about it: 'Career center. I do need a career. I don't need a job. I need a career.' They were able to provide that for me," Watson said. She enrolled in Goodwill's maintenance technician training program to learn skills such as plumbing and sheetrock repair that are needed to get a job maintaining rental residences. Upon completion, Goodwill helped her find a position with a temp agency so she could build her confidence without the pressure and risk of being fired for lack of experience. Now she has a full-time job.

"I am a 51-year-old woman going into a new industry that's predominately male," Watkins said. "[Goodwill was] very patient and allowed me to get my feet wet a little bit so that when I applied for a permanent position, I had more confidence. I knew more questions to ask."

Bostic brought the conversation back to Goodwill's motto of the ABCs of economic mobility. "On many levels," Bostic told Watkins, "what you're saying is the difference between a job and a career. A career is knowing all those things and knowing which questions to ask, and knowing that if you get an answer that doesn't sound right, that this may not be the right place for me."

Inspirational stories and shared insights

As the event concluded, Bowman and Bostic thanked participants for offering inspirational stories and shared their insights on next steps in the Fed's public outreach programs.

"We're still seeing a lot of the same challenges that we saw last summer coming out of the pandemic, still presenting issues for us that we'll need to continue to track and listen and ask questions of people across the country about how we can deal with some of these issues, like affordable housing, like access to childcare and all these things that can be significant barriers to work, and to work in a reliable and meaningful way," Bowman said.

Bostic said the panelists provided lots of thought-provoking materials and reminded the audience to stay connected and engaged with the Atlanta Fed. "Please, we're doing these things for you. So please take advantage of them."

David Pendered

Staff writer for Economy Matters