Why Is The Supply Chain All Jacked Up?
A family friend called me the other day asking why it felt like she was paying twice as much for groceries as last year and why she couldn’t always find some of her favorite items. I’ve also noticed some local grocery chains are raising prices, but they are also running 5-10% out of stocks on a weekly basis. In particular the smaller, local stores that do not have the volume-based, priority agreements that larger chains leverage seem to be affected most. The grocery industry is facing a confluence of factors that will impact costs and in-stock rates for the foreseeable future, including worker pushback and turnover, stark wealth inequalities, raw material cost increases, multiple layers of supply chain logjams, as well as fragile logistics system that just aren’t built to withstand these pressures. But it doesn’t have to be this way.
This week we will look at the most visible aspect of the supply chain crisis, and that is labor. But this is not aboutscapegoating and demonizing workers for avoiding shitty jobs. In reality, Covid-19 has had a devastating impact on food system workers over the past 18 months. Over 90,000 processing and farmworkers were infected and at least 465 died, while over 43,300 grocery workers fell ill and at least 197 died. These numbers don’t account for the friends, family and community members who were also impacted, particularly in meatpacking towns that were Covid-19 hotspots. Many food system workers who fought off the virus are still experiencing long-haul symptoms, and many who remain in the industry are bitter, fearful and disillusioned about the pace and working conditions. Our supply chain and food industry workforce have faced unprecedented trauma, yet keep grinding it out every day to feed us.
But the popular “worker shortages” narrative misses the rapid turnover and disillusionment impacting these industries. Nearly 650,000 retail workers put in their notice in April 2021, and nearly 2 in 5 retail workers has been thinking of quitting and considering new opportunities. This trends similar to food service and hospitality, which has also seen nearly 5% turnover on a monthly basis. This is because the pandemic made a tough job unbearable for many, on top of the safety and health issues. Longer hours, erratic schedules, understaffed departments and pay rates that barely cover the bills, let alone account for the daily strain. Retail workers have had to be the enforcers of mask mandates, social distancing and store sanitation standards, on top of building displays, stocking shelves, ringing up customers and handling deliveries, i.e., the stuff that retailers actually do to stay in business. They have had to deal with increasingly rude customers, harassment and physical attacks. A few retail workers have even been shot and killed by belligerent, armed customers. And retail workers continue to contract Covid-19 infections as mask mandates and safety precautions have been relaxed due to OSHA inaction.
And while many retailers have implemented signing bonuses, generous incentive packages and higher pay rates to lure new workers, some of the largest and most popular food retailers did not equitably share their pandemic profits with their incumbent workforce. Some implemented restructuring and cost-cutting measures despite the pandemic sales bump. And large retailers were even able to grant shareholder dividends and stock buybacks for the wealthy investors and executives that stayed far from the front lines, transferring massive amounts of wealth out of the pockets of clerks and cashiers.
Yet the wealth and income gap for this diverse, blue collar workforce remains stark. Employer wage theft from workers accounts for at least $8 Billion a year, nearly half of all other property theft combined, and it is rarely prosecuted. If the minimum wage rates had increased at the same rate as Wall Street bonuses since 1985, it would be worth $44 an hour today. If wage rates had increased at the same rate as productivity since 1968, the minimum should be $25 an hour. Another way to look at it is that a full-time worker earning the national median wage of $50,000 should be making almost $100,000 now, if our economic growth had continued to be shared over the last 45 years the way it was in the quarter-century after World War II. This accounts for $2.5 Trillion in lost wages every year for the bottom 90% of workers, which includes the vast majority of the 1 in 7 American workers employed in the food system. That’s worth two and half Afghanistan foreign policy debacles annually.
Retail workers may not always know these specifics, but the feeling of being hosed is pretty widespread and mainstream. They are pushing back and demanding better wages at their current jobs, looking for new careers, and putting in notice while living off of their savings and stimulus checks. And they are avoiding and shaming businesses that are still living in the pre-Covid world where it was acceptable to pay terribly, schedule erratically and get away with it. And because the food industry has not systematically dealt with such issues, even some wonderful, high-road businesses are getting caught in the crossfire, unable to fill positions or fulfill customer needs, while other businesses rapidly adopt automation that may make certain retail jobs obsolete.
Yet due to this pressure, as well as widespread activist campaigns to raise the wage floor despite government inaction, starting pay rates are slowing inching towards the $15 minimum that has been the demand for over a decade. Nine states, led by Florida, New York and California, are on their way toward a $15 minimum wage and several cities have done likewise. Some industry CEO’s are getting the message, including Wal-Mart, Costco, Starbucks and Chipotle. Even McDonald’s is no longer lobbying against this new minimum wage, and earlier this year its CEO told investors that “we’ll do just fine” with it. Or as Marc Perrone, the head of UFCW, recently put it more bluntly, “People have come to the conclusion they’re worth more money, and that has helped raise the floor with wages.”
Retailers and other supply chain employers should center worker well-being and upward mobility, and should focus on better pay, just cause protections, stable schedules, safer working conditions and benefits like paid sick leave and vacation time to attract and retail workers. Employers should encourage more workplace democracy and employee engagement, while making sure there is diversity and social equity in the cap tables, option pools and bonus payouts. Congress should pass the PRO-Act immediately; unions have always been the strongest path the prosperity for working people.
But labor is just one aspect of the supply chain equation. Next we’ll take a broader look at food prices, logistics and the operating systems that are crippling our ability to withstand systemic crises, and we’ll offer some ideas on what we can do better.
