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  May 17th, 2022 | Written by

How Is “The Great Resignation” Affecting America’s Supply Chain?

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“The Great Resignation” has created a significant labor shortage in the United States and across the world. Workers have quite their jobs en masse, seeking new positions with better benefits, higher pay and opportunities for remote work.

In 2021, 47.4 million workers in the U.S. left their jobs – a record number, including more than 11 million in industries such as logistics and retail. Businesses are struggling to keep their doors open with skeleton crews or closing them entirely because there aren’t enough employees to keep their company operational.

This change might seem like a boon for workers and a negative for business owners, but these mass resignations impact more than just a company’s ability to keep the doors open and the lights on. With that in mind, how is the Great Resignation affecting the American supply chain?

What Caused the Great Resignation?

Understanding the impact of the Great Resignation begins with understanding what caused so many people to quit their jobs and leave the workforce behind in the first place.

The reasoning varies from person to person, but a Pew Research Center survey found similarities between the cases. People who quit cited:

● Low pay (63%)
● No advancement opportunities (63%)
● Disrespect in the workplace (57%)
● Childcare issues (48%)
● No flexibility (45%)
● Poor benefits (43%)

Other variables include cases where employees were either over- or under-scheduled or those with employers who required them to obtain a COVID-19 vaccine. These all sound like reasonably straightforward issues – things business owners could rectify if they chose to – but another challenge lies ahead.

Choose Two: Profit, Efficiency, Stability

Most modern businesses aren’t built on a sustainable model. Of the three points listed above, they most often choose profitability and efficiency, sacrificing stability when it comes to labor.

Employers, especially those that function off what would be considered “low-skilled” jobs aren’t concerned with keeping employees. Employee turnover for these entry-level positions saves them money and helps them pad their bottom lines because, if they replace their entire staff every couple of years, they don’t have to worry about raises.

With rising costs and economists estimating the average person will need to spend an extra $5,200 this year because of rising inflation, people can’t afford to languish in thankless jobs that don’t offer any options for advancement. Thus, the Great Resignation was born. The impacts of this movement are stretching a lot further than most people realize and it’s a lot broader than a “closed because of staffing issues” sign at local fast-food restaurants.

Immediate Impacts of the Great Resignation

It’s not just the end of the supply chain suffering because of the Great Resignation. Upwards of 20% of those who quit their jobs during 2021 left careers in the transportation, logistics, retail,
and wholesale industries.

It’s compounded other problems, such as the truck driver shortage that has impacted the trucking industry in recent years. The industry is currently short about 80,000 truck drivers. And as experienced drivers reach retirement age – with no new blood to replace them – that number will continue to climb. Autonomous electric trucks could help offset some of this shortage, but they aren’t ready for mass deployment.

These sectors have nearly 2 million job openings they can’t fill, impacting every aspect of the supply chain. 2021 saw an inflation rate of 7.0%, higher than it’s been in 39 years, which is driving up the costs of necessities like food.

Unfortunately, these impacts are predominantly only affecting the working class. Corporate pre-tax profits jumped by 25% year-over-year to a mind-blowing $2.81 trillion. When taxes get included, it jumps even higher – up 37% year over year, the most massive growth recorded since the Federal Reserve started tracking profits back in 1948.

Looming Consequences

It’s difficult to project the long-term consequences the Great Resignation might have on supply chains, but trends are starting to emerge that paint a clearer picture.

Inflation is higher than it’s been in decades and it’s expected to keep climbing. Gas prices, for example, are solidly above $4 a gallon as of May 2022 and will remain there for some time. Part of this is due to the war between Russia and Ukraine, but that isn’t the only variable. Food prices will likely continue to rise. If labor shortages in the logistics sector continue, shortages – especially in rural areas or those considered “food deserts” – will become more frequent.
Many of those who left the workforce during the Great Resignation may not have the option to return. This isn’t due to a lack of opportunities but rather a lack of affordable childcare. More
women quit their jobs than men during 2021 and with many childcare facilities closing or implementing strict new rules to cope with the new COVID-19 variants, many are struggling to reenter the workforce.

Fixing the Problem

What can employers do to help avert a potential supply chain crisis caused by the Great Resignation? The answer is simple, but with the current state of employment in the United States, it’s not likely to be implemented quickly or easily.

Employers need to start offering higher pay – an actual living wage. With inflation, $15 an hour is not a living wage anywhere in the United States. In the least-expensive state in the country,
someone would have to work for 72 weeks at $15 an hour to cover basic family expenses.

Other requirements for attracting and retaining good employees might include:

● Competitive benefits.
● Flexible working arrangements, including remote or hybrid work where appropriate.
● Collaborative work environments.
● A focus on emotional intelligence.

This list isn’t exhaustive by any means, and many of the problems are things that might fall on state or federal governments to fix, such as the federal minimum wage. Other solutions are things that employers may not have considered, such as making employee mental health a priority or fostering a culture of care. Offering better childcare options or benefits could also help to bring parents back into the workforce.

Building a Brighter Future

The Great Resignation will impact supply chains and life in general for some time to come. Until it’s resolved, consumers will face higher prices on consumables and more material shortages.

Instead of looking at it as an attack, employers and legislators need to consider it a wake-up call.

It is possible to fix these problems, but it won’t come easy. Building a brighter future is something everyone can and should work toward – together as equals.