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


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

“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.

supply ICYMI – Former Congressman: Let’s not Make America’s Supply Chain Challenges Worse benchmark

ICYMI – Former Congressman: Let’s not Make America’s Supply Chain Challenges Worse

Writing in the Journal of Commerce, Former Rep. Charles Boustany (R-LA), who represented the Port of Lake Charles for more than a decade, argues that America’s supply chain problems are the result of landside congestion that the Ocean Shipping Reform Act will not solve. Instead, ORSA “would make it worse and ultimately raise costs to the American consumer and businesses.”

Congress should heed Boustany’s advice and invest in new infrastructure that raises the capacity of the transportation industry.

As America’s supply chain continues to be tested, there is reason to be hopeful for the future. Back in November, there was much reporting about Christmas being canceled. However, as we got closer and closer to Christmas, shelves were stocked, and families were able to purchase the gifts they wanted for their loved ones.

It might seem difficult to reconcile these conflicting reports, but as a former member of the US House of Representative’s Ways and Means Committee and having had the privilege of representing much of southern Louisiana, including the Port of Lake Charles, I want to discuss the complexity of the supply chain, how we got here, and where we go from here.

The COVID-19 pandemic has had severe global implications on our manufacturing and supply chain system. From day one, industry stakeholders, including ocean carriers, marine terminal operators, dockworkers, and many more, have worked with the federal government, Congress, and both the current and prior presidential administration to ensure goods flowed.

If we think back to 2020, when the pandemic first came to the US, we can remember how frightened many of us were, purchasing goods in bulk out of fear that shelves would be completely empty. However, those fears never quite materialized. Marine terminal operators, longshore workers, stevedores, and many others put themselves on the frontlines, at a time before vaccines, to ensure that consumer goods, medical goods, and everything else made it to American ports. The shipping industry remains committed to facing these challenges head-on and is working tirelessly to manage the current supply chain issues, while laying the foundation for a stronger supply chain.

Heavy investment in port infrastructure

Transportation industry leaders are investing heavily into US port infrastructure, not just to mitigate the current challenges, but to help pave the way for a 21st century port infrastructure and intermodal connectors capable of meeting the demands of a globalized economy. Here in my home state, industry leaders are investing in a new terminal at Plaquemines, Louisiana, to help facilitate more imports and exports in the Mississippi Gulf region. Industry partners are also making significant investments in new ships, containers, and technologies. In the short term, marine terminal operators and their ocean carrier customers are working closely with the White House on developing solutions to alleviate the current bottlenecks and delays.

Some of these solutions we’ve already seen come to fruition, such as expanded hours at truck gates, more local depots by carriers to get cargo off terminal, and significant private investments into our marine terminal infrastructure. These investments, short term and long term, are vital in supporting America’s advantage in the shipping industry. Ocean carriers have a choice in where to bring their ships and it’s vital we retain our competitive edge to support this industry that provides more than 30.8 million jobs, a large portion of which don’t require a college degree, and has a total economic impact of more than $5.4 trillion. As a former member of Congress, I understand the anxieties many of my former colleagues feel as we enter the election season, and the compulsion to act in the face of this issue. But as we all know, well-meaning intentions can lead to negative consequences.

On Capitol Hill, there is an insatiable appetite to be viewed as doing something for the supply chain. However, today’s bottleneck disruptions are caused by a shortage of physical assets (trucks, warehouse space, truck chassis, rail cars) and labor (truck drivers and warehouse workers). The uptick in COVID cases since late 2021 continuing through the new year also resulted in a shortage of longshore workers. Those disruptions are not caused by the marine terminals, ocean carriers, or inadequacies in existing law. Pending legislation to amend the US Shipping Act will not fix supply chain congestion, but instead would make it worse and ultimately raise costs to the American consumer and businesses.

We have a variety of solutions at our disposal to help facilitate and improve our supply chain. Washington can help by enacting tax credits to stimulate additional last-mile warehouse capacity, and identify off-dock acreage near rail ramps and logistic container hubs. The industry can continue to locate and create temporary warehouse spaces and use tax credits to stimulate investment in clean trucks needed at ports. We can work together to prioritize appointments to pick up essential cargo, such as medical equipment, at marine terminals, and support industry solutions to minimize congestion, such as PierPass.

Similar to the early days of the pandemic, we’ll only resolve these issues by working together. I urge my former colleagues on Capitol Hill to put partisanship politics behind us and work with our friends in the transportation sector to ensure that we find a solution to our infrastructure woes and formulate a solution that has the input of all participants. Speaking over each other, and excluding important voices, will only harm us in the long run.

Charles Boustany served in the U.S. House of Representatives from 2005 to 2017, representing Louisiana’s 7th Congressional District, and later the 3rd Congressional District.