Three Things to Know: July 21

This week's information compiled by your SC Chamber team includes: 
SC Chamber Joins Coalition Letter on the UPS/Teamsters Negotiations, Data Shows Wages are Overtaking Inflation, Southeast a Hotspot for New Business Start-Ups

 1. SC Chamber Joins Coalition Letter on the UPS/Teamsters Negotiations

This week, the SC Chamber joined over 260 other federal, state, and local business associations in a letter to President Joe Biden stressing the business community’s heightening concern with the possibility of a strike by roughly 330,000 United Parcel Service (UPS) drivers that are represented by the International Brotherhood of Teamsters (Teamsters) if a deal is not reached on a new collective bargaining agreement by August 1^st, and urged the Administration to intervene to help avoid a costly strike. UPS and the Teamsters have been negotiating since April on a new collective bargaining agreement for the company’s roughly 330,000 full and part-time employees represented by the union that would go into effect after the current deal expires on August 1^st. 

The letter notes that UPS moves between 5% and 6% of U.S. GDP, or $3.8 billion in goods, per day. The roughly 20 million packages delivered by UPS every day include items such as “…cancer screening tests, semiconductor chips, baby formula, back-to-school kits, critical parts for agricultural, construction, and telecommunications equipment, and the everyday supplies needed to keep thousands of small businesses running.” As a result, a strike by the Teamsters could have a devasting impact on the nation’s supply chain and could be the costliest strike in over one hundred years with economists predicting that a 10-day strike could cost the US economy more than $7 billion, with over half of those losses being shouldered by consumers & small businesses.

Negotiations between UPS and the Teamsters are expected to resume next week. To stay informed with the latest updates on the situation, visit here.

2. Data Shows Wages are Overtaking Inflation

The Wall Street Journal recently released an article highlighting that after two years, pay raises are finally beating the rate of inflation. While this event could provide some financial relief to workers, it could complicate the Federal Reserve’s efforts to tame price increases. The Labor Department reported that inflation-adjusted average hourly wages rose 1.2% last month from a year earlier. As long as wages continue to trend above the inflation rate, it could possibly help the United States avoid a recession.

Overall consumer prices rose 3% from a year earlier, which is a significant decrease from a year prior, when the country experienced a four-decade high. There has also been evidence of slower price increases for everyday items that have a large influence on Americans' perception of inflation, such as gasoline and groceries. The Fed has lifted interest rates ten times since March of last year, and while those hikes have contributed to a cooling in the U.S. economy, the labor market and wage growth in the country remain solid.

Jerome Powell, the Federal Reserve Chair, expressed concern that the wage growth is too strong for the central bank in its effort to fight inflation. Pay raises can allow consumers to purchase more expensive items, which will result in elevated inflation. Powell states that the goal is for wage increases to be a “part of the process of getting inflation back down to 2%, which benefits everyone.”

3. Southeast a Hotspot for New Business Start-Ups

Out of the top ten major metro areas with the most new business applications per 1,000 residents last year, the Southeastern United States boasts nine of them. New business applications are usually an important measure of an area’s economic health, suggesting that people are optimistic about that area’s prospects. Small businesses play a big economic role in the country. As of 2021, over 66.7 million Americans worked for companies who reported having fewer than 100 employees and these same companies also posted almost $3.6 trillion in annual payroll. In 2022, over 5 million new business applications were filed nationwide. While the number of new applications are down since 2021, this still shows an incredibly optimistic outlook for the economy.

The top metro areas in the U.S. that received new business applications were Miami, Atlanta, and Orlando. In South Carolina, the top three counties with the most new business applications were Charleston County (24.2 per 1,000 residents), Richland County (23.4 per 1,000 residents), and Berkeley County (20.5 per 1,000 residents).