(flourishing music) - [Narrator] Major support for "Carolina Business Review" provided by Colonial Life, providing benefits to employees to help them protect their family, their finances, and their futures, High Point University, the Premier Life Skills University focused on preparing students for the world as it is going to be, and Sonoco, a global manufacturer of consumer and industrial packaging products and provider of packaging services with more than 300 operations in 35 countries.

- The Carolinas are very unique in many ways.

One way for sure is they both have very active statewide chambers of commerce and very engaged chamber of commerce executives.

I'm Chris William.

Welcome again to the most widely watched and longest running program on Carolina business policy and public affairs, seen each and every week across the Carolinas for more than 30 years now.

Thank you for supporting this dialogue.

In a moment we will unpack with these very engaged chamber executives.

They are Gary Salamido from North Carolina's chamber and Bob Morgan from the South Carolina Chamber of Commerce.

And we will start right now.

- [Narrator] Gratefully acknowledging support by Martin Marietta, a leading provider of natural resource-based building materials, providing the foundation upon which our communities improve and grow.

Blue Cross Blue Shield of South Carolina, an independent licensee of the Blue Cross and Blue Shield Association.

Visit us at southcarolinablues.com.

The Duke Endowment, a private foundation enriching communities in the Carolinas through higher education, healthcare, rural churches and children's services.

(upbeat music) On this edition of "Carolina Business Review," Bob Morgan from the South Carolina Chamber of Commerce and Gary Salamido of the NC Chamber.

- Well, I think we can say, it's fair to say happy holidays and nice to see you both.

Gary, Bob, welcome back to the dialogue, and good to have you both together.

When was the last time that you all had a chance to visit at all?

- I don't know.

I think it's been a few months easy.

I know it's been on the phone, but I think we were in Wilmington one time for an event.

Bob, it might have been close to a year ago.

- Yeah, we missed you in Statesville for the CACCE a couple of weeks ago, but you guys were well represented.

But good to be with you, Gary.

- Yeah, good to be with you too, Bob.

- Well, gentlemen, you're both not just part of the statewide chambers, which in the Carolinas are very active, but you're personally engaged and have been between the two of you for decades.

So let's tease out a little bit.

What are you hearing from your membership?

Bob, we'll start with you.

What's the general tenor or tone that you're hearing from your members about, oh, I don't know, the economy, or what's their biggest challenge?

What's their biggest issue or what are they excited about?

- Chris, we do a grassroots tour August, September and October.

We talk to almost 50 different chambers, over 900 different business people in an interactive engagement.

Inflation at the top of the list, supply chain concerns.

But workforce continues to be the number one issue.

What's also interesting is you ask people, how do you feel about the US economy?

There's a growing pessimism.

You ask them, how do you feel about the South Carolina economy, they are extremely bullish on the South Carolina economy.

So the negativity in the economy feels like it's more elsewhere than here.

- [Chris] Gary, what do you think?

- [Gary] Yeah, I mean, I echo a lot of what Bob says.

We're having constant conversations too.

I think that how our folks are talking about it, well, I've got four things, and the first three are talent, talent, talent in that competitive world that we're living in right now.

And that's, how do we acquire it?

How do we retain it?

We're getting now more and more feedback on there's gonna become a little bit better of a balance between the employer and the employee.

The employee's had a lot of influence over the last couple years going into and coming out the pandemic, but you're gonna see some balancing there, coming back to work and having those discussions.

And the other is cost of capital, as Bob referenced with inflation.

It's almost doubled or more than doubled in the last three or four months.

The next Fed hike I think will give us a lot of insight.

The last Fed hike, our folks were saying pretty much the stuff was baked into that one.

But the next one will begin where we'll begin to feel it.

And to Bob's point too, we're hearing the same thing in North Carolina that the country is really gonna be hurting, but North Carolina is not gonna be near as bad off as some other places around the country.

We'll continue to grow, we'll continue to be an attractive place and we'll weather the storm.

Whether it's a full blown recession or called one or not, we'll do as well or better than most.

- So let's... We're gonna unpack this idea of workforce in just a second, but let's talk about the economies for just a minute, Gary, as you talked about North Carolina, and Bob, as you itemized South Carolina.

So let me get, not that you don't know this, but a couple of high points in South Carolina, Nucor, Bosch, of course BMW, 1.7 billion recently.

In North Carolina, Microsoft, Apple, Wolfspeed, Macy's, Eli Lilly, et cetera, et cetera.

When we talk about all of these projects, the idea that, well, finding workforce, yeah, it's a problem, but it doesn't keep people from announcing big projects with big price tags that are going to be looking for a long line of workers, qualified workers.

So how do you square those two, Bob, Gary?

- Well, we...

If you look at our unemployment rate, it looks like we're at full employment, right?

We have 100,000 jobs unfilled.

And yet an additional part of the story is our workforce participation rate is low relative to the other states around us.

We're trying to figure out what that means.

But clearly there's a combination of our population is growing, we get our share of people moving to the Sunbelt.

Companies know that you can get people into states like North and South Carolina, and so they're willing to continue to invest because Greenville, Charleston, to a little bit lesser extent, Columbia are destination cities just like, just like Charlotte, Raleigh, and others throughout the Carolinas.

- Gary?

- Yeah, I think we worked hard for a long time.

Bob was part of this.

And North Carolina didn't get to be such an attractive place overnight.

Bing number one for business by CNBC didn't happen by accident.

It happened over many years of people pulling in the right direction, aligning our three key pillars, which are education and talent, competitive business climate, and long-term investments in infrastructure.

So they're gonna keep coming 'cause we're building it and because we are a competitive place to come and they're gonna help us redesign and realign our talent and our educational pipelines to meet the jobs and demands.

So I think companies are seeing us.

A, we're predictable.

B, we're competitive.

We're making the right infrastructure investments.

And they can come in and work with a world class community college system and world class university system and design worker training programs that fit what they need.

And the net in migration is helping with that for sure.

But also now we're looking at high schools differently and we're looking at how do we get our young people ready for a post-secondary experience, whatever they choose it to be.

And some of that may be a four-year degree, some of it may be a credential, some of it may be an associate's degree right outta high school, where then businesses give them the bachelor's degrees and help them grow.

Designing that workforce for the future, Chris, I think is what is making North Carolina, after we make sure we're competitive everywhere else, really appealing.

- Yeah, I think, and this is not meant to be disrespectful at all, but I think what happens is we try to square the dissonance between all of these companies that continue to move to the Carolinas.

But at the same time, not you two of course, but at the same time, many people saying that, well, we don't have enough jobs, we won't have enough workers.

Yeah, but it doesn't stop the forward momentum.

At what point do we hit a tipping point?

At what point does it really start to make a difference where folks will stop moving, or is that because it's a nationwide thing?

Either one of you, please.

- Chris, I think it's the continued macro trend of folks moving from the northeast and the Midwest to the southeast.

It's not just the Carolinas.

Georgia's looking at record investment, other states in the southeast.

And we have to continue to make ourselves attractive from a, as a place to live, in terms of the business climate, the business environment.

I think a part of this conversation needs to include the subject of immigration.

We as a country are not growing as fast population wise as we have historically.

Immigration is a mess.

The borders are not secure.

We don't have a coherent immigration policy that helps bring in not just the workers, the knowledge workers who bring talent, but also those who wanna come here and work and do the jobs that the rest of us don't.

And so obviously, we have to continue to keep our states attractive to get our fair share, or as I like to say, a bit more than our fair share of those who are moving with their feet.

But we need to turn up the immigration pipeline as well, as a country, and we will certainly, in this region, see the benefits of that.

- Gary, how do you work that?

How do you work that specifically around immigration to expand it?

- Yeah, I think that it's twofold.

One is we have a great opportunity, and I think this order helps set the table for immigration.

We have a great number of adult learners in North Carolina and in the Carolinas that are coming back into the workforce.

So what are we doing to help retrain, reeducate our adult learning populations, particularly our veterans and our second chance hiring groups?

There's a group of folks out there that can meet some of the immediate needs if we can realign the systems to help our adult learners.

If we do that, then the immigration discussion gets to be even a little bit easier to have than we ordinarily would have.

We're fully...

I couldn't echo any better what Bob said then.

Immigration is an incredibly important part of how our country and how our two states will continue to be competitive as a thoughtful, comprehensive, transparent immigration process.

My father was first generation.

Back in the early 1900s, they found a way to get 20,000 people from southern Italy and eastern Europe to come to a small town in upstate New York to help produce shoes for World War II.

If you could do it in the middle of early 1900s and get 20,000 people to come from, spend three weeks on ships and other ways to get here to produce a product that our country needed, we can certainly sort it out right now with the technology, the understanding, the relationships that we have.

So I think it's just a matter of will, not a matter of how to do it.

I think how to do it is there.

Can we in our states and in our communities talk to our elected in Washington, and say, "We want you to do this, It's a will to do it.

Let's get it done."

- Bob, do you think that there is a... Are you hopeful that there will be a break in some sympathetic move toward immigration next year?

- I don't see it that quickly.

There's a lot of pessimism out there.

And I've tried to take the approach that every conversation with our congressional leadership, we the business community need to raise the issue.

It's a losing issue politically at the ballot box, frankly.

And yet, when we talk to Senator Graham and others, there's a recognition of a need.

And in a conversation with him, for example, he has said, "Look, if we're gonna talk about reform of immigration, we also have to talk about border security."

And there's no evidence that the two different sides are ready to come together around both of those issues.

That is what it's gonna take.

- A darker side of the economy, and not to be pessimistic, but a darker side of the economy is the cost of living, as we've all seen it.

And the rapid increase in the rate of inflation here within the last 12 to 18 months has been obvious because of federal policy, fiscal policy, and the tremendous liquidity in the system.

But if we take that out and we look at all of these places that you both have talked about and know well, these urban cores in the Carolinas, how do we address the issue of a increasingly more and more cost to live within a city for the average or even the median wage?

Is there some policy?

Is there something we're missing that we're not addressing on that?

- There's a small issue in South Carolina.

We tax rental income as commercial property.

That makes us uncompetitive to some of the states around us as it relates to affordable housing and rental housing.

And so when we talk about comprehensive tax reform here in South Carolina and the need for that, that's right at the top of the list is how we treat the taxation of rental income and apartments.

And as a for example, there's a movement of build to rent in the real estate world.

And a developer in Simpsonville, South Carolina, in the upstate, the property taxes were 25% of the total gross rental income on that project.

Just put them out of the market.

In Tennessee, that same development, the cost was 7%.

The property taxes were 7% of gross rental income.

So we need to do a better job of making sure that our tax policy keeps us competitive with the states around us because it does affect issues like affordable housing and the cost of living generally.

- Gary, how do you come down on that?

- [Gary] Yeah, I think...

I don't think there's a silver bullet for it, Chris.

I mean, it's one of the side effects of growing and one of the side effects of being a good place to live.

And we gotta be thoughtful and make sure that there is housing available to folks.

I think we gotta look outside of what we've done traditionally.

Are there public/private partnerships for infrastructure investment that we should be looking at beyond roads?

Should we be looking more at water and sewer, and should we be encouraging regionalization of communities for those infrastructure projects to help put those infrastructure projects in before the developers even come to do that?

Is there a better relationship that needs to exist, and how we do that?

The key ways, and Bob knows this too in South Carolina, you attract businesses is you put the infrastructure in and you make it really easy for them to come in because you have put the fundamentals in and got the site ready.

There should probably be some thought about how do we get housing sites ready in a way that's different, that helps it become more affordable.

And there's also interest rates are gonna go up.

That being said, there are vehicles out there, there are housing authorities within each of our states that have some ideas, and we're in the process of meeting with them now.

We're starting to build a coalition with some non-traditional folks to talk about what are the steps you have to go through.

'Cause I think the mistake we often make is say, "Here's the bullet, you gotta go do that."

Why not just take about a quarter of the loaf, get that, and then go after the other three quarters later and begin a predictable way to make those investments?

So yeah, it's a side effect of growing, but there are ways if we wanna be innovative around it.

- Chris, there's an interesting dynamic.

Some percentage of jobs we've learned through the pandemic can be done from home now.

We came across a company in Spartanburg, an IT company.

They're not even hiring in South Carolina.

The jobs they're trying to fill are work from home jobs and they're filling them around the country, which raises a whole host of do we count these folks as part of South Carolina's workforce?

Are they part of whoever else's?

But it gives people the option to then live in the lower cost, more rural parts of the country if you have broadband access, which of course is a critical piece of the infrastructure bill and the funds that we all have.

But it'd be interesting to see how much of that we see in the work from home economy that's gonna be a legacy of the pandemic.

- [Chris] Let me just do a one quick off, and this is a question for both of you.

Broadband access has been talked about so much and seemingly fully funded, at least in spirit.

Is it that last mile?

Are we still trying to figure out how to hang or how to bury that fiber to all of these communities?

Is that what's holding us up?

Either one of you.

- I'll start.

The money is there, Chris.

I think it's how do we work together.

How does that, how are our local communities held accountable for the, for getting the money into the ground.

So I think the money's there for the last mile.

I really, really do.

I think there's plenty of money.

It's just how do we get that money into the communities, get it deployed, and make sure there's an accountability for it.

'Cause as you know, if it's there, and we don't spend it right, getting it again is gonna be really hard.

So making sure we do it right and have the accountability from the state to the local municipalities would be really important.

But I think it's there.

- [Chris] Bob, is it procedural for you in South Carolina?

- [Bob] Yeah, we're way out of my (chuckles) expertise here.

But as I understand it, it's not just getting the broadband down the street to an area that's currently not covered.

Once you do that, do you have the capacity that they enjoy the same levels of speed as the rest of us who have the infrastructure?

So we'll see.

There's a lot of money that's gonna be invested in broadband and hopefully it will help those rural areas.

- [Chris] Here we are, we've got about eight minutes left, and here we are over the holidays, right, and people are distracted and rightly so and would rather probably not talk about policy and business and all those things that are strategically important to communities sometimes.

But as we look forward now to 2023, for both of you, not just, again, not what your legislative agendas are, because they're important, but what do you see as maybe one or two things that will bubble up in 2023 and that will be critical?

- [Bob] I think Chris, first of all, fiscally, as we look at tax revenue collections, we just had a record year in terms of in revenue into state government, the ability of legislators to then appropriate our largest tax cut in history, significant strategic investments and infrastructure.

It looks like we're gonna have a similar opportunity again in 2023.

And so I think striking the right balance between saving for a rainy day, returning tax dollars through rebates or tax cuts or tax reform and continue to make the strategic investments in things like the port and our roads and other critical infrastructure.

I think an issue that we're gonna see politically, we just had a summit and brought together a lot of folks from the business community.

A lot of people have not even heard of the subject of ESGs, but the idea that larger companies are in some cases mandated or potentially mandated or for competitive reasons are doing things around environmental governance, sustainable issues and measurements.

Politically, there's already resistance to that.

I think we're gonna see more of that in 2023 with the potential to divide the business community, and hopefully we can help prevent that from happening.

But see that as an issue on the horizon for the next couple of years.

- Gary?

- Yeah, the opportunity to, while you're doing well, to change your game when you're on top of your game, is probably the one we're looking at most.

And that is how do we make strategic infrastructure investments at a time when the state is growing, roads, rails, ports, water, sewer, continuing with broadband, but also computer infrastructure.

How do we continue to make those key investments and how do we wanna incentivize the community, incentivize regional cooperation?

Because the investments we need to make, we can't make them in the time we're gonna make and much less afford them in some of the places just don't have the tax base.

So what does that mean?

Are there public/private partnership guidelines that should be for a lot more of our infrastructure investment?

I would argue that they need to be with it.

And do we need to look at other parts of infrastructure investment the way we look at strategic transportation infrastructure investment and use a scoring system there?

And do we need to...

Some bridges in our state won't fall into that, but are very significant hundred million dollar, billion dollar projects that won't fit into the system.

How do we make sure we make those investments?

So I think our opportunities are our headwinds on the infrastructure investment side of things for sure.

And the business community, I think, small business in particular, small business is the lifeblood, but it's also intricately tied to the bigger businesses.

So what are we doing to help small businesses navigate coming out of this pandemic?

One of the issues that continues to come up is affordable healthcare for small businesses.

How do we make sure that small businesses can have the ability to retain employees?

They wanna take care of their employees, but still afford it.

So we're interested in how do we look at association health plans?

How do we aggregate small business lives?

I think a headwind is for North Carolina is that if we are not good at helping those small businesses thrive, the costs continue to go up for everybody because there's that intricate relationship between large and small businesses that is so important.

And I think the last piece, the headwind is, is we have a world class community college system.

What we need to do is make sure that we can encourage more regional cooperation and alignment there.

So not every community college is, or feels like they have to offer everything, that we learn to cooperate regionally more as they are doing right now in the Carolina Core for those projects there where those communities are coming together, and they're not all doing the same things.

They're saying, 'We're gonna address this region."

More of that would be important.

And lastly, the real headwind is the political acrimony that comes out of a very heated election.

Whether it's a senate election or elections down to the school boards, the business community has an opportunity to elevate that discussion and has an opportunity to bring and put guardrails around that discussion about here are the points that create private sector job growth.

Here are the things that can continue to give the communities the resources they need to pay the teachers and invest in infrastructure and grow private sector jobs.

And if it's outside of those areas, then we're gonna talk to you about what those are.

We issued a statement right after the election that talked about that.

We'll work with anybody.

But growing private sector jobs, there's ways to do that, and we've done it in North Carolina.

South Carolina's done a really good job.

We know how to do that and we also know what they're not.

And so if we stay focused on our knitting, we're gonna continue to be just fine.

- One of the things that came out of the last couple of years has been the acute nature of the personal and the professional liability, if you will, around mental health.

We've talked about it.

Do you think in 2023, and this is, again, a question for either one of you, you think in 2023 we're gonna start to see some movement and/or champions for mental health, which could be additional funding?

Either one of you.

- I think- - From our members we're seeing it.

I'm sorry, go ahead, Bob.

- Go ahead, Gary.

- From our members, definitely we're seeing it.

We talk about it a lot.

They're looking at their EAP programs, they're looking at their HR policies, they're looking at their time off policies, they're looking at their benefits, they're incorporating telehealth into the mix now as a way to help folks address some of those issues.

So on the private sector, yeah, they've seen it.

They know people coming back or different people that left after the pandemic and different relationships.

So in the private sector, it's a priority.

Now in the public sector, I think you'll see even more and more.

We wanna encourage folks to continue to have that Medicaid expansion discussion.

We think that's a part of the population that could use those services.

But there's also services, in talking with our DHHS secretary, that are available to people that people don't even know are available to them.

And we've gotta do a better job of talking about what's available, what's working, and get it out to more people.

Address some of the authority policy issues for sure.

But there's no argument I can hear anywhere of people thinking that that's not an issue.

It's a big issue.

We were doing well with the opioid epidemic before the pandemic.

We're actually starting from zero.

And we're trying to get back.

- And that's the issue.

As it increases, as it accelerates, as it becomes worse, Bob, do you think we're gonna be able to slow that?

Like the rate of inflation almost.

- Yeah, I think we're gonna see the private sector lead.

I don't see any great public policy solutions or expenditures to come in 2023.

I think it's gonna take more time than that.

I think the private sector will continue to lead.

Chris, I wanna go back to your previous question about 2023.

I think we're also gonna see, on a more positive note, the electrification of the automobile industry.

The Carolinas, Georgia are ground zero of that industry.

And we've seen some dramatic announcements this year, anticipate more to come.

What are we doing as states to prepare our workforce for the jobs of that industry, to help transition others in the automotive sector away from the combustible to the electrification?

And I think that's gonna be a big part of the story in 2023 and beyond.

- [Chris] Okay, all right.

That's final word.

Bob, thank you for taking the time.

You look healthy and thanks for joining us.

Good to see you.

- Always good be with you, both of you.

- Gary, nice to see you as well.

And thanks for taking time to join us as well.

It's good to have you both back together again.

I think between both of your leadership around economic development and leadership in general, we're fortunate to have both of you.

So thank you for joining us.

Until next week, I'm Chris William.

As we head into the holidays, we hope you get a chance to reflect a bit and to minimize the stress and to remember how fortunate we all truly are.

Until next week, I'm Chris William.

Happy holidays.

Goodnight.

- [Narrator] Major funding for "Carolina Business Review" provided by High Point University, Martin Marietta, Colonial Life, the Duke Endowment, Sonoco, Blue Cross Blue Shield of South Carolina, and by viewers like you.

Thank you.

(exciting music)