As I was considering my column for this month’s issue of BIZ. Magazine, I was struck by a sense of deja vu. Much of what we are dealing with in the business world — worker shortages, inflation, turmoil — seems all-too-familiar to what we experienced one year ago.
Each morning, I peruse our news sources for items for the BIZ. Daily Report and toward the end of each week, I can usually find unemployment news. In our business, we often publish lists and rankings because, frankly, our readers enjoy this content.
This daily perusal was no different except there was a list that sounded the alarm bells. A recent list from 24/7 Wall St. had Louisiana ranked 13 in the U.S. for the number of resignations.
In Louisiana, 66,000 people quit their jobs in March (the most recent month of available data), according to the Job Openings and Labor Turnover Survey report from the Bureau of Labor Statistics. This is a 26.9% increase from one year earlier.
The total number of monthly quits in the state accounts for 3.5% of the total workforce, higher than the 3% share of workers nationwide who quit their jobs in March.
When you look at these numbers and combine it with reports of inflation making its biggest jump since the recession of 2008, it’s clear we have to look beyond outside forces like COVID-19 for the cause of our price increases.
The most fundamental economic factors that affect the pricing of products are supply and demand. A slightly deeper dive reveals a self-inflicted reason for our current inflated points to this absent workforce.
It’s no secret that Americans have been quitting their jobs in record numbers in recent months – in fact, the Bureau of Labor Statistics says over 4.5 million Americans quit their job in March 2022, the most ever recorded in a single month, and up from 4.4 million quits in February.
Explanations vary with a recent Pew Research Center finding the most common reasons are low pay, limited opportunities for advancement, and a lack of flexibility. Whatever the rationale among our workforce, our nation’s dwindling workforce is exacerbating a labor shortage and creating a crisis for many small businesses.
The article give a name to this nationwide phenomena: “The Great Resignation.”
When supply chains are constrained, yet demand either increases or stays the same, prices naturally rise. When the response to COVID-19 shut down businesses, schools, government entities, and many other job producers, officials sprang into action to help those workers mitigate the sudden loss of income.
The shutdowns didn’t have an immediate effect on inflation, mainly because demand for many products and services also dropped. In fact, many industries thrived by catering to the stay-at-home market.
With stimulus payments and increased unemployment benefits, Americans were still able to spend in the economy, shoring it up for the moment. However, a problem was beginning to materialize. Workers weren’t returning to their previous jobs. The perceived benefits of not working were outweighing the benefits of returning to work. After all, why work for a check when the next one from the government was on its way?
Now that the country is fully open and starting to have a real sense of normalcy, the lack of workers in the supply chains has been felt for a year. From furniture to cars to powdered supplements, just about everyone is feeling the pinch. Restaurants may be open, but cannot serve a “full house” due to a lack of wait staff.
As dangerous levels of inflation linger and consumers are feeling the effects in their pocketbooks, they have continually asked, “What do I do?”
Oddly, national news organizations are suggesting that people pool their resources to buy in bulk, turn off the lights more, and check the freezer for old items that can be cooked. These are always great cost-saving measures, but the suggestions ignore the fundamental issue with this round of inflation.
The quickest way to bring the costs of goods and services down is to increase the supply. In this case, the quickest way to increase the supply is to have an adequate workforce to manufacture, distribute, transport, and sell goods and services.
Do you want inflation to slow or stop? Then, go back to work..
David A. Specht Jr. is publisher and editor of BIZ. and President of Specht Newspapers, Inc.