“Take This Job and Shove It”

Evidence of the employee shortage is everywhere. Fast-food workers, nurses, school bus drivers, and teachers all are in scarce supply.
Evidence of the employee shortage is everywhere. Fast-food workers, nurses, school bus drivers, and teachers all are in scarce supply.
(Adobe Stock)

A record 4.3 million people quit their jobs in the United States in August 2021, a historic high that has far-reaching effects on American life in general, and agriculture specifically.

“The macro environment definitely shapes the agricultural and dairy industry climate, and right now it’s a mixed bag of fairly extreme pluses and minuses,” said Phil Plourd, president of Madison, Wis.-based agricultural risk management firm Blimling & Associates.

On a recent webcast, “Follow the Money: The State of the American Consumer,” Plourd said there currently is a shortfall in the U.S. of about 2 million workers to fill available jobs. Wages also are growing at the fastest rate in 35 years, up 6% since 2020 and 9% since 2019. The average non-supervisory wage in the U.S. is now $25.60 per hour.

“Workers are emboldened by these metrics,” said Plourd. “They know there are plenty of jobs available, so if they’re unhappy in their current situation, they have little compunction about quitting.”

Evidence of the employee shortage is everywhere. Fast-food workers, nurses, school bus drivers, and teachers all are in scarce supply. And, for the dairy industry, so are the people who milk cows, drive tanker trucks, deliver feed, and process dairy products in manufacturing plants. In many cases, agricultural businesses find it challenging to compete with the wages and benefits offered in other industries.

On the flip side, Plourd said economic conditions are mostly favorable for dairy product demand. Federally funded Supplemental Nutrition Assistance Program (SNAP) benefits have nearly doubled via special COVID-relief measures, and some of those increases have become permanent.

Plourd said the baseline SNAP payment now is $157 per person per month, up from $125 pre-COVID. “A lot of those dollars – about 13% -- are used to purchase dairy products,” he noted. Food sales volume in general is up 16% compared to last year. And while some food categories cost considerably more than a year ago (restaurant food and meat both are up about 5%), dairy products have shown a modest price increase of just around 1%.

Household wealth also jumped a record $141.7 trillion in the second quarter of 2021, owing mostly to stock-market gains and ballooning housing values. “People are feeling a little flusher and are starting to eat out more, which bodes especially well for cheese consumption,” said Plourd.

Still, he sees storm clouds on the horizon that are building on multiple fronts. Inflation is picking up speed, fueled by rising energy, transportation and materials costs. Producer price inflation is up 20% year-over-year from 2020-2021. “That’s a pretty alarming number,” cautioned Plourd. “Most notably, it’s higher than the last peak, which occurred just before the 2009 financial crisis.”

The economist noted it’s only a matter of time before consumers start to feel more pain in their pocketbooks. “On average, households already are spending $30 more per week on gasoline compared to last year,” he said. “And if it costs 10 cents a pound more to move cheese from a West Coast manufacturer to an East Coast marketplace, someone has to pay that bill.”

Supply chain issues also are hampering dairy product availability along with so many other goods. Plourd mused that the 16% increase in food purchases may be due in part to food stockpiling. “Interestingly, shortages actually drive more consumption and price inflation,” he noted. “If a product is perceived to be in limited supply, consumers will buy more of it, pay more for it, and store it to hedge against being without it.”

Unease among consumers also was reflected in the results of the University of Michigan Reuter’s Sentiment Survey, in which consumer confidence collapsed in August 2021. The figure fell a dramatic 30 points in one month, diving below levels incurred even in the depths of the COVID pandemic last year.

“The mood in general is quite vulnerable,” concluded Plourd. “People are nervous about sparse grocery shelves, inflation, and political unrest, and have a lot of general apprehension about the future. I think the warning here is that if things turn south, it could happen a lot faster than in more stable times.”


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