Nationwide labor shortage adding to inflationary pressure
WASHINGTON (TND) — The "great resignation" is still impacting employers across the U.S. There are twice as many job openings in the United States than there are people looking to fill them, according to data released Tuesday by the Commerce Department.
On the last day of March, there were 11.5 million job openings, according to the U.S. Bureau of Labor Statistics' monthly Job Openings and Labor Turnover survey. Monthly hires were steady at 6.7 million while separations — meaning quits, layoffs or discharges — increased to 6.3 million.
Over the past year, the labor shortage contributed to the slow return of productivity as pandemic lockdowns ended. Economists point to it as one of the triggers for the soaring cost of everyday goods, including food. It's sending shockwaves through global supply chains.
“When food prices go up, fertilizer prices tend to follow," said Dr. William Burke, an agricultural economist and consultant at Food Tank.
Burke, who's also an associate professor of International Development at Michigan State University's Department of Agricultural, Food and Resource Economics and the acting director of research at MwAPATA Institute in Malawi, described a "perfect storm at high tide" that started before Russia's invasion of Ukraine.
Increasing fuel, food and fertilizer prices were already starting to put a strain on farmers and vulnerable populations around the world, then Russia's invasion and the sanctions that followed made it even worse.
“Those three countries — Russia, Belarus, and Ukraine — produce about 10% of the world’s nitrogen and phosphoric and over a third of the world’s potassium fertilizers," Burke said.
Iowa farmer Steve Swenka told KGAN in April that during his 30 years of farming, he's never seen fertilizer prices this high.
“Last year we were paying $340 a ton for nitrogen in the form of urea. This year it’s $1,000," Swenka said.
While some of the spike in fertilizer costs gets passed on to the customer, Burke explained farmers are in a position to take a financial hit too.
"Because of the sort of friction involved in setting prices," Burke said. "Farmers tend to be price-takers, they’re going to, probably at least in the short term, absorb some of these costs."
Burke said he's hesitant to make predictions or forecast how the price volatility will impact any one industry or region of the world. He did say, however, that he expects food prices to keep rising in the U.S. but doubts the country will experience any food shortages.
He said he's also worried about food availability in the poorest parts of the world.
“In anything that has to do with food security and in particular this issue, no one is immune. This should concern all of us," Burke said. “Whether it be your grocery bill or whether or not you’ve got large populations who are going to be hungrier in the coming year or years, that affects all of us directly. It’s not indirect.”
