Dr. Michael Walden heaped praised onto Surry County right from his opening remarks Thursday at the Viticulture Center at Surry Community College in Dobson, “I just feel the stress drain out of me when we are in Surry County.”
Sponsored by the Surry Economic Development Partnership and Greater Mount Airy and Yadkin Valley Chambers of Commerce, Walden came to town to offer remarks to business, community, and civic leaders on the economic outlook for Surry County.
Walden has a resume to accompany the gravitas with which he wielded the microphone while he spoke to the group. He is an author published many times over, a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University, president of Walden Economic Consulting, LLC, and recipient of the Order of the Long Leaf Pine among many other accolades.
In a global economy that has been plagued with supply chain issues, inflation, and the increasingly insecure access to fossil fuels thanks to the ongoing conflict in Europe, Walden provided some context. “The current condition of the economy is that we have been through a recession in 2020 due to COVID.”
“Economists knew there was going to be a recession once the governors in most states said stay at home and selected industries were told don’t even open your doors; so, we had a fairly nasty recession in the early part of 2020.”
During that time, he said a major reallocation of labor took place as a rash of retirements led to folks leaving the work force. Also, he notes labor ‘sit-outs’ are still occurring for those such as parents who stopped working to be at home teachers or full-time care givers. This left job openings in sectors that allowed for large movements between differing fields
“If you look at North Carolina, not only have you seen shortages in sectors like leisure, hospitality, construction, and manufacturing,” he said, “But we have also seen a reallocation of labor. In fact, something very unusual happened during the recession of 2020 that I have not seen” in the eight recessions of his professional career.
“What we saw in 2020 was when the government was providing assistance to households… many people, particularly young people, didn’t just take that time to watch TV or play video games. What they did was they used the time to get better skills to move up the economic ladder.”
When the economy started to reopen people were moving away from lower paying sectors to higher paying sectors, which led Walden to one of his suggestions to businesses who are having trouble finding workers.
Higher wages and better benefits can attract more applicants and he noted that in the restaurant field the average wage rate in the state rose 14%. “That is one of the few industries paying wages high enough that they outpace inflation.”
Yes, Walden knows higher wages may mean that prices must go up but here is a chance for business owners to explain why prices are changing rather than keep customers in the dark, “You’d be surprised sometimes how understanding people are.”
Substituting automation and technology is another suggestion he makes for solving labor shortages. He recounted meeting the McDonald’s order kiosk for the first time and coming to the realization that other customers were already acclimated to the new set-up.
Finally, he recommended taking a long broad look at the employees, their tasks, and the systems in place that create the distribution of labor. Finding redundancies in duties to eliminate them can increase efficiency by reducing the number of employees needed.
The nine-letter curse word of 2022 is inflation, and it is a global problem. Walden reported, “For most of the 21st century inflation averaged between 1 – 3% a year; since the end of 2020 we have seen a gigantic jump to the latest reading is 8.6%. Unfortunately, the average wage increase over the last year has been less than half that. Peoples’ standard of living is dropping because prices are going up faster than income.”
Walden explained if demand outpaces supply, prices will go up. The government pumped $5.5 trillion into the economy during the pandemic, a 40% increase in the actual money in circulation, “but the economy wasn’t open.”
During the pandemic personal savings rates increased dramatically from 3% to 14%. Now, stores are back open, and stay at home orders are a thing of the past, but the supply does not meet the new demand. Americans have money to spend but cannot buy many of the things they want because of supply issues. This is what he called “the perfect recipe for high inflation.”
Walden focused on Surry County, and he presented $2.3 billion as the total amount of good and services produced in the county for 2019. Data was available for 2020 but COVID skews all numbers from that year making a real comparison a fool’s errand.
The biggest sectors of the local economy are manufacturing, construction, retail, and financial services / real estate. All sectors of the labor market grew from 2009-2019 except for a 30% drop in manufacturing. Growing those sectors means the county needs people, in the past decade as the state grew in population 9.3%, the county lost 3.2%.
In a projection for the next three decades the state may see an increase in population of one-third. while Surry County stabilizes it losses to 1% a year. This trend of a lower population count may be one factor discouraging housing construction in this area, he said.
The growing population of the state may be a long-term benefit to Surry County. While the state attracts 4% migration from other states, the appeal of a “new farm lifestyle on cheaper land” may draw people away from the metros. “For a county like this, the future is very exciting,” Walden said.
With expanded broadband thanks to the initiative with Surry Communications, almost everyone can have access to high-speed internet which will be essential. The work from home trend has peaked, he feels, but the genie is out of the bottle and work from home will only expand with time. As it does the importance of living near a brick and mortar office will decrease, adding again to potential county population growth.
He offered some advice to job seekers as the labor market will slow, “Don’t pass up on that job that may not be your number one. It may not be there in three to four months.” He is seeing a trend of retirees reentering the labor force, some of whom feel they retired too hastily during the pandemic.
Education remains a key component of the future financial growth and long-term health of the local economy, and Surry Community College is helping create the work force this community needs. Dr. Walden said, “I think it’s very fitting we are here at Surry Community College.”
“I think the vanguard of education in terms of dealing with changing labor markets are community colleges. They respond to changes in the local community, so I think we will see these kinds of institutions at the forefront of dealing with labor market disruptions.”