America is in the midst of a nationwide crisis- labor and supply shortages. The Department of Labor shows in a recent study that the number of workers quitting their jobs is at an all-time high in 2021 with a “quit rate” of 4.3 million. While office jobs moved mobile, hospitality businesses such as restaurants, grocery, and clothing stores were forced to stay open due to high demand. As many Americans thought “why go to work when you can often make more from staying at home and being self-employed through the GIG economy?” the economy began to unravel.

Causes:

• In 2020, retirement alone caused a 0.6% hit in the labor market.
• Equity markets have risen 401k pension plans.
• Border control and immigration limits are a major factor in the shortages.
• People are voluntarily quitting their jobs and going on strike for better working conditions, benefits, and wages.

 Major businesses such as Kellogg, Frito-Lay, Deere & Co. Southwest Airlines, more than 24,000 nurses and healthcare workers from Kaiser Permanente, and nearly 60,000 union members in film and television recently walked out of their companies with demands concerning health care, retirement benefits, and overall higher pay.

“There are more than 10 million job vacancies right now spread across all sectors with a record proportion of companies raising pay to attract staff. Instead, it is a problem with the supply of workers, which is both holding back output and increasing inflation pressures in the economy”

–conversations between ING economists Carsten Brzesky, James Knightley, Bert Colijn, and James Smith

 By June 2021, 50% of the states ended the unemployment benefits early with hopes of helping the workforce shortage but they still sit with “Help Wanted” signs in their windows.

Effects:

• 4 million job openings as of August 2021.
• Businesses may have to raise their wages to keep staff.
• Slower birth rates mean fewer young workers are now entering the workforce.
• Lockdown was lifted, demand has skyrocketed creating a never- ending cycle of high demand with little means to supply.
• Globally, the supply chain is struggling as many lower-income countries scramble to find workers and raw materials.

 The ripple effect of the pandemic has disrupted all parts of the consumer change: from manufacturers to suppliers and distributors with disruptions devastating their economic growth. The pandemic, above all else, has opened the eyes of many Americans to show how reliant we are on an interconnected economy, and how easily it can sever. The best thing a person can do in this season- shop for those Christmas presents early!