Politick: Supply Chain Crisis
November 2, 2021
Bananas, boondoggles, and bad economic policy
I want you to take a moment and imagine the life of a singular banana. Fun fact: most bananas are imported into the US, about 6.4 billion pounds per year. Before you peel that banana, it has to cross the sea, hopping aboard a gigantic container ship, traveling from one port in South America to another in the US. After the ship docks, the banana patiently waits to be unloaded by one of thousands of port workers. Its waiting time is over, it is loaded onto a train or truck, where over the course of several days it is delivered to a central distribution center. From there, it is once again loaded onto a vehicle and arrives at your local store, or shop or school.
The life of a banana is fascinating. Whether you know it or not, that banana in your grasp has passed through many more hands than just your own. The life of that banana breathes life into a multi-billion dollar shipping industry, feeding thousands of workers in two separate continents.
Now I want you to imagine huge swaths of that industry missing, and instead of just bananas disappearing, it’s toilet paper and bicycles, cutlery and towels. Stop imagining: it’s here.
There are currently 157 ships waiting to dock and unload their cargo in Los Angeles, California. Extend that to the approximately. 360 ports in the United States and you end up with the supply chain crisis today. Where should we aim our ire? Perhaps towards the Biden administration.
The United States is missing a gigantic amount of people in the transportation sector. From longshoremen to truck drivers, every sector in the transit economy is missing laborers. I use the word laborer on purpose: working at a port or driving a truck for long hours is tedious and difficult, oftentimes “unskilled” work. In fewer words that means that people don’t always want to work those jobs, especially when better alternatives exist.
COVID-19 ushered in the era of something called a “UBI” or “universal basic income.” The stimulus checks sent out by the federal government had the effect of artificially increasing every person’s wage, creating a UBI. The huge amount of money pumped into the US (40% of all currency was printed in the last 12 months) had the unintended consequence of getting people used to more money in their pocket. This leads to inflation: businesses recognize that there is more money, and they increase their prices for goods. Eventually “real wages,” meaning how much you can actually buy with the money you earn, returns to the original rate. Everything just costs more than it did before.
In this case, it’s not just prices that are rising. It’s also workers’ expectation of what they deserve for their work. In relatively low paying, physically demanding jobs (like many associated with the supply chain), workers’ unions are demanding more for less. When employers are unable to provide that, port-workers leave. Shoving money into the economy is effectively what crippled it.
There are other factors which play into the supply chain crisis. Vaccine mandates scare away employees from any business, and those involved in transportation are not exempt. Americans, emerging from their Covid-haze, are purchasing goods at an extraordinarily high rate, adding stress onto an already understaffed transit-economy. To top it all off, Secretary of Transportation Pete Buttigieg took the last two months off from work for paternity leave, leaving the supply chain crisis to fester without any central policy.
Many roads lead to Rome: the supply chain crisis causing prices to rise and ports to clog cannot be boiled down to one issue.
The solution, however, can. If the federal government wants port workers to get back to their jobs, they need to do a couple things. First, they need to remove all economic stimulus packages from circulation. A UBI will only serve to increase our economic crisis and inflate prices. Second, they need to eliminate vaccine mandates; the US needs all the workers they can get, and vaccination status should be a personal choice regardless. Finally, the federal government needs to let private businesses make money. Every business will act in its own best interest. If there is a huge demand for transportation services, our free market will eventually fill that demand, and the situation will resolve itself.
It’s worth remembering that every banana you’ve ever eaten wasn’t produced by the government. It was produced by hardworking men and women seeking a profit. Trust people to work in their own best interest and the supply chain crisis will fix itself.
Fleetwood Mac, Henry Ford, and labor unions; saving the supply chain
“And if you don’t love me now, You will never love me again, I can still hear you saying, You would never break the chain.”
When mentioned, the supply chain crisis almost invariably evokes Fleetwood Mac’s The Chain. While this might just be a quirk of my mind, perhaps this song about perseverance through lost love will get the country back on track.
The sheer amount of causes one could attribute to the supply chain shortage could fit into an idle shipping container in San Francisco bay. The one thing that should be brought to the center, however, is the labor shortage.
As of late, there have not been enough workers to fuel the supply chain. For example, Susan Caminiti of CNBC writes that now, “More than 70 container ships at ports in Los Angeles and Long Beach are unable to unload goods because of a shortage of workers.” In total, the labor force participation rate, or the percentage of the working-age population that is either employed or actively looking for work (thank you, Mr. Bordelon), is down roughly by two percentage points since the beginning of the pandemic. That is 4.6 million workers. Why?
Many cite the risk of going back to work. Wages are not attractive enough for people to potentially expose themselves to COVID-19, especially in shipping warehouses or manufacturing facilities, where the work can be back-breaking. Workers here are the power behind the supply chain. A study from the University of California, San Francisco done this past February found that being a packaging and filling machine operator was the second most fatal job to have during the pandemic. Refusing to work like this for little pay is practical, not lazy. If employers want staff, they must pay them.
Good wages have been used to attract workers since the days of Henry Ford. His factories paid $5 per day and promised an 8-hour workday, which translates to roughly $17 per hour today. During the present labor shortage, employers have used higher wages to attract more employees, says Josh Bivens of the Economic Policy Institute. This does not just benefit employees, though. Harvard University researchers Emma Harrington and Natalia Emanuel found that “raising wages by $1 increases productivity by more than $1, giving the firm an incentive to pay more”. They also found that higher wages decrease turnover, which suggests that businesses can find and keep employees if they have higher wages. This is exactly why Henry Ford paid as well as he did back in 1914, and it is what we must do right now. With an increase in workers in the shipping and manufacturing industries, the supply chain can be rebuilt.
Organized labor unions are attempting to remedy the abuses of large corporations. Lots of people with jobs are being mistreated. For example, over 10,000 John Deere workers went on strike this October. Their reason? Michael Sainato of The Guardian reports that “workers have been forced to work overtime consistently,” and a new labor contract proposed before the strike included “cuts to post-retirement healthcare, inadequate wage increases and inadequate pension benefits”. All the while, the company has recorded record profits. No sane person could possibly blame the workers for refusing to tolerate this, besides John Deere CEO John May, whose salary has increased by 160% since the onset of the pandemic.
If companies like John Deere continue to ignore the demands of the worker, more strikes will happen, further incapacitating American manufacturing and the supply chain. So far, 1,400 Kellogg’s workers have joined the John Deere strikers in “striketober”. Overall, there have been 40 recorded strikes in October alone, finds Cornell University’s tracker. A spokesman for the AFL-CIO, the largest labor union in the nation, says that “For too long they’ve been called essential, but treated as expendable, and workers have decided that enough is enough.” Labor is industry’s most valuable resource; it ought to be treated that way. With luck, “Striketober” should spook companies into raising pay.
Now what does this folly have to do with Fleetwood Mac? Well, it is all about love. At the end of the day, workers are people, profits are not. Workers are not lazy for avoiding hazardous working conditions, nor are they greedy for wanting to be paid more. They just want to look after their families. Above all else, what this pandemic should teach us is compassion. If higher wages come at the cost of lower incomes for the wealthiest among us, so be it. If better treatment of workers bucks the status quo, so be it. In my view, these are necessities to fixing the supply chain crisis. By listening to workers, we will never break the chain.