What’s Behind the Labor Crunch?

The labor shortage crippling everything from manufacturing to the restaurant industry is, perhaps, the bedrock challenge feeding all other challenges in this mixed-up marketplace.

“In talking with my guys that do the welding for us …, they said it all goes back to the steel mills,” said Nic Beck of Carks Ag Supply in Nebraska. “It’s not a shortage of iron ore. It’s not a recycled steel shortage. It comes down to labor.”

In the Pacific Northwest, a TikTok video from farmer Shay Myers went viral after he pointed out 350 pounds of asparagus that was on the verge of going to waste.

“We can’t get the labor,” he said on the video. “We can’t get people to show up and do the work for $16 an hour, with housing, transportation and all of those things.”

Myers said challenges at the border are costing him his workforce, but it is one among many factors. Also in play: a shortage of truck drivers.

The California Farm Bureau says during carrot and onion harvests in South California, they are seeing up to 30 percent fewer drivers than before the pandemic.

“In order to alleviate some of the shortage, we need to get President Biden to enact the Stafford Act, as Donald Trump did last year,” says Joe Antonini with Antonini Enterprises. “This would allow the weights of the loads to go from 80,000 pounds maximum to 88,000 pounds, a 10 percent weight tolerance. Given that, there would be some relief on the amount of drivers needed to bring in the harvest.”

Not everyone sees it that way. Purdue University’s Jayson Lusk says there’s not necessarily a worker shortage in the U.S.

“It’s a little perplexing,” he said. “You mentioned the word ‘shortage.’ If you actually looked at data on employment, there’s actually a lot fewer workers in the restaurant industry, and a little bit fewer workers in food manufacturing and in grocery retail. So that would seem to suggest, well, we don’t really have a shortage.”

The Bureau of Labor Statistics data shows wages and earnings have increased significantly, especially in the grocery and retail food sectors.

“Wages are getting pulled up, so you would think that would pull more workers into those sectors. But we’re not really seeing that at the moment. That’s really where this perception of a shortage comes from,” Lusk said.

The Associated Press last week reported a record number of available jobs in March, illustrating starkly the rush of businesses seeking to find new workers as the economy expands. Yet total job gains increased only modestly, according to a Labor Department report.

The data comes after the April jobs report that fell short of economist expectations, largely because companies appear unable to find the workers they need. Data shows it’s not a shortage of workers, it’s a shortage of people willing to work.

“That is the natural question: why? Why are people (not) showing back up at work? And I think there are several possible explanations,” he said.

In the latest Kansas City Federal Reserve Manufacturing Report, one manufacturer said, “Stimulus and increased unemployment money are wrecking the labor pool.”

Today, someone with a $15-per-hour job, working 40-hour weeks, would bring home $600 a week. However, in Kentucky, the maximum unemployment pay is $569 per week, plus the extra $300 per week passed in the Biden administration’s American Rescue plan. In Kansas, those who were getting $488 for unemployment before, are now getting $788 with the added federal benefit. The numbers show instead of getting paid to work, some Americans can make more money by simply not working at all.

“I haven’t seen empirical estimates of the effect, but it has to be having some effect,” Lusk said. “If people can stay at home and make something similar to what they might at work, that’s going to keep people out of the workforce.”

Source: Farm Journal Report