Tennessee is Open for Business

Sexton, who was elected to the legislature in 2010, also works in business development for One Bank of Tennessee and serves on the bank’s board of directors. With an academic background in public administration, he’s well-positioned to think about market questions in a public context.

“At CSG, we love to celebrate the success stories of state governments and highlight the elected officials who helped achieve great results,” said CSG Executive Director/CEO David Adkins. “The Tennessee story didn’t happen overnight or by chance. Speaker Sexton, a valued leader within CSG, has demonstrated vision and skill in helping govern and guide his state. By being strategically focused on smart growth, leveraging strengths, marshaling resources and innovating to sharpen the state’s competitive edge, Speaker Sexton and those who serve with him have come together to position Tennessee for continued success now and into the future. Other states will undoubtedly seek to emulate Tennessee’s success as they work to replicate it.”

In the legislature, Sexton is known for his pragmatism, but he’s equallymarked by a passion for his work. During a time of rapid economic and workforce change, Sexton is energized by emerging economic opportunities. 

One of the state’s most noticeable job market trends, Sexton says, is wage growth. Pointing to the ground-up nature of the change, he noted that Tennessee doesn’t have a state minimum wage — it’s one of just five such states, according to U.S. Department of Labor — but wages are still responding to the market.

“You’ve seen that in health care, with the hourly rate almost triple what it was just a year-and-a-half ago,” he said. “You see people even in starting jobs, like the fast-food industry, the ones where you get your start in the labor market, paying anywhere from $12 to $16 an hour now… The market is driving the wages up.”

Wage growth is apparent in banking, where Sexton says he’s seeing more money flowing in and more deposits. He also sees a connection to mortgage financing, which has spiked during the last two years. 

According to a study of moving data by United Van Lines, Tennessee was among the top 10 states for inbound migration in 2021, with a total inbound percentage of 62% (38% outbound). 

“With interest rates going up, you’re watching to see if that slows down, but as of right now, Tennessee’s a very hot market in real estate, all across the state,” Sexton said. “It used to just be you could say it was just the areas in Nashville and outside Nashville — now it’s West Tennessee. It’s Knoxville, it’s the Tri-Cities, it’s Chattanooga. You have really seen uptake all across the state in real estate.”

The reasons behind inbound migration to Tennessee are varied. Sexton points to low costs and regulation. Data from United Van Lines showed that the primary reasons for inbound moves were job (31.61%), followed by retirement (21.90%), family (29.13%) and lifestyle (17.36%). Whatever motivations movers may have, the numbers confirm that people increasingly see Tennessee as an attractive option.

“When you went through the pandemic, people realized that they could work virtually and live anywhere they wanted,” Sexton said. “I think people are moving to states like Texas, Tennessee and Florida because, I think, they agree with that approach [of low taxes and low regulation].”

The biggest challenges in the Tennessee economy, Sexton says, are worker shortages. Like many states, Tennessee has seen early retirements and women leaving the workforce, and businesses have struggled to find the workers they need. 

“Our biggest problem right now is you can’t talk to any business in Tennessee that’s not looking to hire individuals,” Sexton said. “[We are thinking about] what that means as we continue to look at reforming our business policies. Also, I think you’ll see more innovation and more efficiencies coming, to a certain degree, to make up for the lack of labor that’s available right now.”

Education, apprenticeships and skills training play an important role in the workforce conversation. (Read more about employee upskilling and retention on p. 12). In the wake of school closures and virtual learning, Tennessee saw “a reduction in our attainment levels in all grades throughout the state,” Sexton said. In response, the state has invested in literacy and math proficiency measures to help students regain lost ground. 

That’s only part of the puzzle, though. Leaders are also focused on reworking funding formulas to better support today’s classrooms, as well as building more educational pathways to good jobs.

“We’ve had a huge uptick in certificates for very well-paying jobs for kids who can almost graduate high school with a certificate, or shortly thereafter, to go get a job in a lot of different areas,” Sexton said.

Another area Tennessee leaders are investigating is closer partnerships between businesses and schools to shorten the time frame to a vocational certificate. Most vocational programs, he says, are 18 to 24 months long, but combined with on-the-job training, Sexton hopes to see more four- to six-month vocational certificates.

“In our state, I’m sure it’s like anywhere else ­— the goal, when someone graduates high school, is to have the aptitude, the knowledge and the skill set to either go find a job, be able to go to vocational school or go to university… Tennessee’s approach is really not to have the government decide what’s best, but to really partner with the businesses and try to do things that will help them be successful to get the employees that they need to continue to grow their business.”

As a leader, Sexton says he’s benefitted from CSG offerings, especially in the Southern region, and he appreciates the ability to interact with policymakers from other states, as well as having a nonpartisan resource for technical assistance.

“It’s great having an organization that has technical staff that you can call and say, ‘Hey, we’re looking at this right now; do you know of any other states?’ and them giving you papers and information and helping you through issues,” he said. “It’s a very beneficial, nonpartisan group that allows each state to be individual, and not trying to force you one way or the other.”