When COVID-19 hit in early 2020, unemployment rates across the United States were low. While the initial wave of the disease caused a number of layoffs and furloughs, the story since has been one of labor shortages and better pay for employees across the board for those willing to work. During the May 18, 2022, Hoard’s Dairyman DairyLivestream, panelist Mark Stephenson called this a long-term supply chain impact. This entire situation is stymieing dairy’s ability to fulfill export orders.
“If I think more about our current port issues, I think the root cause of a lot of these things is the labor shortage,” the University of Madison-Wisconsin economist explained. “COVID-19 precipitated this or exposed the labor problem to us, and we want to blame the pandemic for all of the supply chain issues. But the truth is that it probably had more to do with demographics than COVID-19.
“There's a big portion of the population that's just getting older, and it’s a supply chain issue that's going to take some time to work itself out,” he detailed.
Stephenson offered truck drivers as a simple example. That industry is short nearly 80,000 workers. Because of the shortage, pay is on the rise. However, the higher pay also has led to some truckers working fewer hours to achieve their same salaries.
“The ports have also been experiencing those labor issues,” Stephenson continued. “The longshoreman and port workers have not been in a better position to negotiate wages as they are in the current time. Negotiations are currently underway with about 22,000 workers that service the West Coast ports through which about half of our dairy products are sent overseas.”
Even if these negotiations get done and some of the labor shortages are addressed, it will take a while for the supply chain to even itself out.
“It's a little like fast moving and crowded traffic on a freeway, when one car gets a little close and taps on the brakes, it sets off a chain reaction of the cars behind them tapping on their brakes,” Stephenson described the situation. “And before you know it, there's a long delay with backup traffic for no particular reason.”
To watch the recording of the May 18 DairyLivestream, go to the link above. The program recording is now also available as an audio-only podcast on Apple Podcasts, Spotify, Google Podcasts, and downloadable from the Hoard’s Dairyman website.
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