Supply chain issues and labor shortages: How concerned should we be?

As the United States enters the busy holiday season, the nation is also in the midst of a severe labor shortage and supply chain crisis. As the Covid-19 pandemic continues, and with new variants such as Omicron continuing to spread, the world’s economy is still trying to catch up from a global shutdown. 

A major concern for retailers and consumers in the supply chain crisis and the potential implications on Christmas gifts and travel. Experts spent much of the fall encouraging people to begin buying gifts, particularly items such as cars and electronics, before the holiday rush began to get ahead of supply chain backups. Due to an ongoing computer chip shortage across the US and China, technology products with computer chips have been both harder to find and more expensive to purchase. For cars specifically, some manufacturers have been forced to slow or stop production at points this past year, creating a much lower supply and driving up prices.

However, many major retailers have planned ahead for this particular holiday shopping season, and experts urge consumers to be mindful, but not fearful, of potential supply issues. Some stores have been stocking up on inventory in anticipation of a busy shopping season, according to NPR. Additionally, experts have stressed that many of the supply chain issues aren’t just a result of the pandemic but of long-term infrastructure issues that will require more serious investment in upcoming years, according to Business Insider. 

Back in October, President Biden addressed the supply chain crisis, announcing that two of the nation’s largest ports in Los Angeles and Long Beach, California, would be open 24/7 to help alleviate the supply chain issues. He also called on the private sector to step up its operations to match and support the efforts of the government. He thanked companies such as UPS, FedEx, and Walmart for their efforts in ramping up their own supply chains to match other avenues of support. 

In remarks to the press, Biden said, “We need to take a longer view, though, that invests in building greater resilience to withstand the kinds of shocks we’ve seen over and over, year in and year out, whether it’s the pandemic, extreme weather, climate change, cyberattacks, or other disruptions. In fact, research tells us that a company can expect to lose over 40 percent of one year’s earnings every 10 years due to supply-chain disruptions. A longer-term view means we invest in systems that have more time built-in and in our ability to produce, innovate, and partner with our allies,” according to the White House. 

To add even more pressure to an economy under stress, the nationwide labor shortage has also continued. According to CNBC, many workers are voluntarily quitting jobs in an economy where workers are significantly more scarce than in previous years. The problem has been seen across industries, even in industries such as healthcare that have been in high demand throughout the pandemic. According to the Bureau of Labor Statistics, as of November 12, approximately 4.4 million people quit their jobs. This trend has been seen globally, and some experts predict it is a trend that may last a few years, with workers fighting for better pay and benefits. The labor shortage has contributed to the various supply chain issues by making it much more difficult to operate at or above normal capacity.