“I am all in favor of growing the American economy and engaging in trade with the world, but not at the expense of American workers.” – Theodore Scott Yoho.
If you get your news from the Main Stream Media, you would probably assume that the labor supply issues we’re facing worldwide can be quickly explained with phrases like lazy workers, low wages, lockdowns, a pandemic, socialism, lack of childcare, lack of business, COVID-19, unemployment benefits, or government handouts. When you move past the surface on this issue, ignoring the soundbites spoon-fed to us in order to provide quick and easy answers to complex problems, several factors float to the surface providing us insight into what is causing a tectonic shift in worker priorities, desires, and job availability. Before you rush to the comment section and blame a particular politician or political party, please try to stick around until the e nd of the video as there is quite a bit to cover to get to the root cause of why we’re seeing massive unemployment issues right now in the U.S. and abroad. The whole system has been turned on its end right now, and the fact is that there isn’t one singular cause but several causes that put us in this situation. In this video, we’ll try to pull back the curtain of one-liners and singular causes espoused in the MSM and do a deep dive on this issue.
Our national and global economic recovery will all be determined by how we emerge from this labor crisis. In this blog, we will explore the major factors and avoid hasty generalizations and dismissals. So, while this video may be a little longer than usual, it’s essential to examine and understand these deeper causes, not to push any singular agenda, and ncot to simply skim the surface and glom onto the nearest convenient truth. America, the UK, the entire world can emerge stronger and wiser from this, or things can continue to unravel. Either way, I will tell you what we can expect to see through mid-year 2022. I will examin ce some of the misconceptions of t he labor shortage to get us beyond MSM soundbites and how these real labor issues will impact you, and what you should be doing now to insulate yourself from them. Let’s take a look…
A BIG PROBLEM YOU SHOULDN’T DISMISS
The fact is that there has never before been a global shutdown. We are in uncharted territory at the moment. Even during the World Wars, more product and food was sourced from within a nation’s borders than without. The 9-11 attack hit the travel sector hard and slowed port traffic as countries scrambled to beef security, but that was more of a yellow light compared to the glaring red light of the total global stop we are experiencing today.
You may be one of the lucky ones if you haven’t experienced a job loss or work slow down in the last year and a half. Maybe the worst thing to happen to you was needing to adjust your schedule with a spouse now working from home or children or grandchildren out of school last year. When it comes to COVID, there are large swaths of people who have remained largely unaffected. Others have lost multiple family members, jobs, and businesses.
When the cruise ships docked, the hotels emptied, airline flights canceled, conferences canceled, zoos, museums, restaurants, and entertainment venues closed, some 16 million American workers were suddenly out of work in the hospitality and tourism industry. The closing of this industry resulted in it shedding 42.1 percent of its total value. Imagine overnight being worth almost 50% less. Businesses, even ones who accepted copious amounts of money from the 953 billion dollar Paycheck Protection Program, laid off or let go workers and were forced to stay closed. Beyond those closures, you might have noticed, other manufacturing countries were on extreme lockdown.
Schools, universities, and colleges have closed either on a nationwide or local basis in 63 countries, affecting approximately 47 percent of the world’s student population. By April 2020, about half of the world’s population was under some form of lockdown, with more than 3.9 billion people in more than 90 countries or territories having been asked or ordered to stay at home by their governments. Pandemic restrictions have had social and economic impacts and have been met with protests in some territories. Countries that didn’t lockdown or locked down light didn’t fare any better. They were still subject to the economic effects of the global lockdown, and their population suffered far worse mortality numbers.
Factories and raw material producers around the world stopped production and locked their doors. So, it wasn’t just a shortage of copper or avocados or cheap plastic products or whatever. It was everything that halted. Advanced Pharmaceutical Ingredients from India suffered production stoppages. Cell phones and electronics from China, coffee from Vietnam, ceramic filters, copper wire, lumber, chlorine, microchips, pork, beef, you name it, and it probably stopped production.
At the same time, people were at home, and their spending priorities globally shifted. They also probably received a stimulus boost, one of the historical tools of governments to stimulate a healthy economy. The money they would have spent on happy hours, lunches out or childcare was now spent online, on home improvements, paying off debt, or building out home offices. With pockets full, demand skyrocketed at the same time that supply ground to a halt. Add to this the complications in the trucking industry, shipping industry, on-hand inventories evaporating, and a little panic buying, and you have a combination pummeling of the global supply chain we have never seen before.
It has been slow to get better, too. It might not. Pig farmers in the UK are killing off their surplus pigs because they can’t get them to the slaughterhouses. Cars are in short supply. China is sending empty cargo ships away if a crew member tests positive for COVID. Labor shortages are hitting the agricultural industry as borders remain closed. Drought and heat-induced crop failures persist and further complicate already strained supply lines. Soon, winter cold will bear down on the country, and minor problems will become even more significant. This all plus the fact that there’s still a lack of shipping containers, truck chassis, rail cars, and the problems go on and on all at the same time as we have never encountered before.
HISTORICAL RESPONSES WON’T WORK
Previous economic downturns were usually confined to countries. You probably didn’t notice Greece defaulting on its debt in 2015, but some of that affects you today when it comes to shipping capacity. People in middle America probably aren’t too concerned about Brexit, though it’s currently doing a number on the UK’s pork industry, among other things. The fact is that when a country suffered an economic downturn, they simply printed more money by borrowing more money from other countries. This robbing Peter to pay Paul policy usually worked well enough to carry the economy over to better days, but it relied upon just your country’s suffering. Right now, all but a few first-world countries are suffering a loss of gross domestic product.
Another response to high unemployment rates was for colleges and training schools to kick it into high gear and train a whole next generation of workers or retool an existing workforce for today’s new jobs. Yet, through the chaos and uncertainty of 2020, enrollment in colleges and trade schools went down. The conclusion drawn from that is that the uncertainty of enrolling in a degree or trade program is outweighed by a lack of faith in the future. Many choose to “wait it out” before committing to going all-in on something that might not end up advancing them but only increasing their personal debt.
Often discouraged at the forecasts they saw, investors would often fiscally flee one country to invest in another. In some cases, they would pull their money from stocks and redistribute it in safer bonds or precious metals. Currently, there is so much global uncertainty, and the supply chain is so out of whack that there doesn’t seem to be any single safe haven for their money. Traditionally, governments would adjust interest rates to keep money flowing. Still, those have already been ratcheted down so low that there isn’t any actual room left to go lower, and raising them could trigger even greater inflation. While bond prices are up as of late, they’re still less than half of what they were in 2018. The yield is lower than it has been in over a half-century, so this safe haven for investors is gone too. The uncertainty has led to investors holding tight to their purse strings and not venturing their dollars on risky investments with unpredictable futures. The ultra-rich have been buying the most stable asset on the planet–land. I’ll post a link in the cards above to a video I recently did detailing this issue. https://www.youtube.com/watch?v=jufc0XtbCwU
At the risk of oversimplifying the situation, the federal banks don’t have any tools left to keep the money churning, and now the country risks yet another government shutdown showdown, a default on its creditors, and a slash to its credit rating. The rob Peter to pay Paul practice is coming to an end because Peter is out of money. It’s not just the US reeling in a financial meltdown. Brexit has had devastating effects in the UK, and several European countries are revising their expectations for a healthy GDP in 2021 and 22.
The simple truth is we have not been in such a dire and precarious fiscal situation since the Great Depression. The historical responses and policies we might put in place to pull our economy back from that cliff just aren’t there anymore: the toolbox is empty. Here’s a look at a few of the myths and realities.
LOCKDOWN RE-EVALUATIONS: THE GREAT REASSESSMENT
As the lockdowns occurred, families were forced to take a hard look at whether it was feasible to go back to a lifestyle that had them barely getting by and left them further in debt or more desperate with each passing month. The problems of a lack of affordable childcare, schools, being out, and many childcare centers downsizing operations has been, for many, replaced with the necessary solution of parents shifting schedules to stay home with kids. Parents are now weighing whether they can make it work. They’re weighing the pros and cons of figuring out how to make it work or returning to paying hundreds or more likely over a thousand dollars per month in childcare. They are re-evaluating their spending and their priorities in their work-life balance.
Food Away From Home (FAFH), the money spent eating out, has plummeted over the last year. Many people never realized how much of their income went to entertainment, drinks, and food. That concert, happy hour round, lunch break from work, even Latte added up to big dollars. That’s great for the average consumer but not so great for the millions of service workers. The repercussions of this have led to many restaurants and food suppliers slashing their labor force. Now, they’re having a hard time getting those workers back. The traditional teen labor force that would typically take fast-food jobs, for instance, isn’t willing to risk becoming ill in exchange for less than a living wage. At least they aren’t given the potential that pay will be better or things will be better next year or the year after that.
Beyond what some call lazy teenagers, though, the average US fast-food worker makes $12.43 per hour. That’s $25,000 per year. People on the lower end of that spectrum, the bottom 10% to be exact, make roughly $18,000 a year. The average monthly rent for a one-bedroom apartment in 2020 was $1,098 a month. The average utility bills came in around $240 per month. That leaves 162 dollars if you don’t include taxes, social security, or any other deductions for a person to buy any food, personal hygiene products, or anything else. That’s $5.40 per day to cover every single one of your individual needs. Granted, some workers make more, and some make living arrangements out of necessity– one or more roommates or living at home– but it’s easy to see that working 40 hours or more per week to survive barely is not an option many would want to pursue with any zeal.
Moving out of the food sector, you can peruse any job board, and you don’t have to look far to see low entry wages or jobs requiring copious amounts of experience and college degrees to pay wages that one can barely survive on. The federal minimum wage has been at $7.25 an hour, or $15,080 a year, since 2009– over 12 years ago. At the same time, prices for everything have gone up and continue to skyrocket. A gallon of milk in 2009 was $3.10. Today that’s $3.68. That may seem small, but that’s an 18% increase. Looked at another way, that’s a half-hour of work, before deductions to be able to buy a gallon of milk. Everything has gone up, too. Bacon in 2009 was $3.45. In 2020 that was $5.83. Today, due to the pork industry being hit so hard in the early days of the pandemic and frozen inventories being brought to all-time lows, the price is over $6.00. That’s almost a 75% increase.
I’m not going to argue for a wage increase because that’s not the point of this channel. For our purposes, suffice to say costs have risen and are spiking right now, while wages have not. This encourages many to sit on the sidelines until the game is less rough or seek under-the-table employment opportunities outside traditional models. While we could discuss the rising costs of thousands of food products, staples, and life necessities, each would reveal the same simple truth– prices for everything have gone up while wages have remained stagnant. So, it is little wonder that many are trying to find other ways to make a living outside of the traditional systems. Funds that people may have allocated to groceries or not thought about spending on meals out are being repurposed and re-evaluated. This is causing turmoil as the demand side of the supply and demand equation experiences a massive 180-degree direction turn. One of the primary drivers of the labor shortage are people taking a hard look at the rat race and deciding that they don’t want to be the rat. Lockdowns have forced a re-evaluation of life priorities.
DID UNEMPLOYMENT & STIMULUS MONEY FAIL?
The position of some Governors in the U.S. and the U.S. Chamber of Commerce offered that unemployment benefits and stimulus money were holding back hiring doesn’t capture the whole issue and the thought processes of the American worker. Stimulus money and unemployment benefits have provided many people with the opportunity to make this personal re-evaluation of their life priorities. A thousand dollars, a per month child payment, extended unemployment benefits, and other forms of federal and state-level assistance have provided workers just enough to stretch out their pause from the workforce mindfully. Last year, the federal government enhanced and expanded unemployment benefits to help Americans weather the economic shock of the COVID-19 pandemic, which shuttered businesses, crippled the leisure and transportation industries, and erased 22.4 million jobs. Remember that minimum wage worker? In 2020, 73.3 million workers age 16 and older in the United States were paid at hourly rates, representing 55.5 percent of all wage and salary workers. That 2k in stimulus money and potential unemployment benefits for all of those workers laid-off or let go because business was slow provided enough for them to drag their heels about re-entering the labor market. This assertion that workers are choosing not to go back to low-wage jobs has some truth to it.
But is it the sole reason? No. States that ended a federal boost to jobless benefits early experienced virtually the same drop in unemployment this summer as states that maintained the extra assistance. The hypothesis that unemployment benefits were what was holding back hiring has been disproven. Even with the expiration of benefits or the early end of benefits, people have taken the extra money and saved it, stretched it, paid down debt, adjusted living arrangements, and circled their personal economic wagons. Many simply do not want to return to low-wage jobs. They are re-evaluating their family structures, eating habits, and every dime they are spending. Even if they could spend the extra income to boost the economy as was hoped in the old model of recession and recovery, they can’t because they can’t afford to.
So, for many, the unemployment benefits and stimulus money has provided a means to somewhat control their re-engagement into a challenging work-life, but does it mean workers are lazy? That’s what some people would have you believe. Some workers between the ages of 40-60 are having difficulty re-entering the labor market after being laid off or released during the great slowdown of 2020 because their high-paying jobs that they incrementally worked hard at for the last several years aren’t there anymore. Older workers find that their jobs have been divided up, eliminated, or filled by younger or more desperate workers. Workers over the age of 50 are evaluating their next moves and determining if their equity and 401ks might serve them better in early retirement to a state with a lower cost of living. Most people who move across state lines do so for economic or family reasons. The vast majority of adults cite jobs (49%), housing (23%), or family (20%) as the primary reasons.
When the dust settles on the unemployment benefit extensions and stimulus money, America may find itself better or worse off. Only time will tell. We can say for sure right now that it isn’t the sole cause of the labor shortage, but it may be a deciding factor for many as to whether they will re-enter the job market at the same or lower level than they were when they were struggling to get by before. If shortages can be contained and supply lines flowing again, and confidence is somewhat restored, look for employers to re-evaluate what they are willing to do to hire people and look for an uptick in employment numbers around April of 2022. Sustainable economic recovery will require employers to be creative to tackle the many interconnected labor issues and provide greater work-life balance to workers who are currently making hard choices and are likely to stick by them.
WHAT YOU CAN DO NOW
This is not the apocalypse. It may change the way we live moving forward, but it isn’t likely to completely unravel the country. America will become slightly less comfortable, less convenient, less instantaneous with its deliveries. It may take longer to get the products you once received 2-days after ordering them. You might have to get more creative with your spending and eating habits. You might have to drive the same old car for longer. You might just have to figure out how to temporarily fix a thing or two instead of waiting on a repairman or disposing of the product as you might have done in the past.
The best thing to do is to take stock and refill your essentials now. Learn to do the same or more with less. Decrease your dependence on foreign products. Build local networks and local connections for the things you need. Do you know someone raising chickens and selling eggs? Hit up the local farmers market more often and build your network. If not, now would be the time to make that connection. Do you know someone who can change your oil and fix your car? Make that connection and buy that oil now you’ll need for your car later. It can sit in the corner of your garage. Shop local, even if that means you pay a little more. The things you buy will be fresher, regionally generated, and you will soon pay even higher prices for the cheaply made import equivalents. Live within your season and stop trying to eat grapes and watermelon in winter.
Now is the time to learn that new skill or hobby you have been contemplating. Your favorite beer might be in production, but they may not have the glass they need for the bottles. If that’s the case, you will be glad you learned to homebrew. If you can’t buy new clothes, you will be happy you learned how to mend the ones you have or that you purchased that bolt of fabric. Buy that cast iron pan. Get that dehydrator or those extra jars and lids and commit to not letting a single vegetable from your garden go to waste. Start thinking like we may be in the long haul because we very well may be.
Most immediately, emergency supplies will be scarce. Just yesterday, I saw several “limit 1” signs on everything from propane to cases of bottled water. Stock up on water, batteries, and canned goods. Get an extra can or case of soup. Buy an extra bag of rice. Find ways to rely less on imports. The most effective remedy will be for Americans to learn how to consume less. It could get really bad, but you have an opportunity to emerge from this crisis of want with a better understanding and means of addressing your actual needs. You could emerge from this more self-reliant and better positioned to survive subsequent disasters if you start now.
The supply chain suffers from a global shutdown, trucking problems, shipping difficulties, even a lack of chassis and parts. There are new, seemingly odd shortages popping up every day, and store shelf stockers are getting creative with how they fill the empty spaces. Now there is a labor shortage when there is not a shortage of people to fill jobs. Don’t believe the one-liner mainstream media that is more interested in soundbites than analyzing the facts. What do you think? Have you experienced a labor shortage as an employer? Are you one of the many who have decided to figure out a new path forward that is very different from your pre-COVID days? We would love to know. Tell us in the comments below. I read many of the comments and respond to them when I can. That is typically within the first hour of releasing a video. I can notify you when other videos become available only if you take that step to subscribe to this channel by clicking that button. It’s a little thing, but it helps us grow this community.
As always, please stay safe out there.