KERSHNER: Workforce, Supply Chain are Perfect Storm

Workforce and labor shortages continue to plague the business community across the globe and supply chains everywhere, for everything…. I mean literally every single thing is being impacted.  But there isn’t one single cause to blame. It is literally a perfect storm and confluence of events that has led us to this breaking point:

  • Some two-person working families made the decision for one person to stay home during the pandemic, and they haven’t gone back to work.
  • The pre-pandemic workforce skills mismatch didn’t go away. There are still thousands of jobs and thousands of job seekers who may not have the skills for the specific job openings.
  • Baby Boomers (70.7 million people ages 57 years – 75 years) are exiting the workforce hard and fast, and there aren’t enough Generation Xers (64.9 million people ages 41 years – 56 years) to fill the workforce voids.
  • New business registrations are being filed at a record pace, pointing to a significant number of people who exited the workforce and started their own business.
  • Hospitality jobs everywhere were eliminated in the pandemic and some still aren’t fully open again.
  • Covid-19 unemployment benefits were extended for longer than they needed to be. They are over now, but the extension through September 2021 kept people out of the workforce for longer than needed.

All of this has created a perfect storm of workforce shortages and supply chain disruptions that are leading to rapid inflation and an eventual economic correction.   When will the correction be here? This is the big question.    Cars are sitting in parking lots waiting for micro-processor chips, construction supplies are sitting on freight liners in California shipping ports, and it seems that literally everything you need at a store is on back order these days.   I’ve never seen an economy where consumers have money to spend, but they can’t buy the products they want because of supply chain shortages or nobody is working to sell it to them.

Supply and demand across the board is so off-kilter that employers are raising wages to compete, gas prices are soaring, and retail products & homes are selling for way above value.  This is a reflection of a free enterprise economy and a supply and demand economy. But, eventually, there will be an economic correction and we have to begin preparing for it now. Building reserves, making strategic investments and being very deliberate about business operations changes will help us weather this storm when it gets here. Businesses need our public sector partners to do the same. One-time pandemic relief funds are helpful, but they can’t be a part of the permanent solution moving forward. Maintaining balanced budgets, not over-hiring, and keeping expenses inline will help the public and private sectors be prepared for what’s next.

In the meantime, let’s work together to help our businesses fully reopen, get fully staffed and get our supply chains moving again.

Chris Kershner, CAE
President & CEO
Dayton Area Chamber of Commerce

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