Soaring energy costs conflated with labor and food scarcity persist in a post-pandemic world still grappling to find its legs in a slow recovery.
Dents in wallets around the globe stand to deepen even more, now that energy prices have become a casualty of war in the ongoing battle of global shortages. In August, food prices increased by 2.8 percent according to the Bureau of Economic Analysis (BEA), while heftier energy prices occurred right along with it at 24.9 percent.
In a domino effect, rising energy bills resulted in heightened fertilizer rates in the agricultural industry. So fast are prices skyrocketing, the UN ushered in a warning: this increase in pricing could be the basis of diverting more crops from making biofuels. Which implies more issues in food security.
“It’s the combination of things that’s beginning to get very worrying,” said UN Food and Agriculture senior economist Abdolreza Abbassian.
“It’s not just the food-price numbers, but all of them together. I don’t think anyone two or three months ago was expecting the energy prices to get this strong,” Abbasion continued.
Currently, the production, distribution and consumption of food is interdependent on a third of the world’s energy. The spike in the cost of cereal, which increased by 3.2 percent, along with vegetable oil going up by 9.6 percent and wheat by five percent, has only exacerbated this issue.
Incidentally, the transportation of goods and people account for 25 percent of the world’s energy, which translated into increased costs for drivers, passengers and freights in Europe.
“We identify other medium-term measures to ensure that our energy system is more resilient and more flexible to withstand any future volatility throughout the transition,” said Kadri Simson, the European Commissioner for Energy. Similarly, freight costs have increased by 17 percent in the US.
Supply chain congestion
The ports of Long Beach and San Pedro, two seaside cities in Los Angeles County, are the busiest in the world, handling 40 percent of the inbound containers for the United States. Due to an unregulated transportation system, they have been outsourced to foreign companies according to retired Lt. Russel Honore.
“[For years] much of our ports [have been] operated by foreign companies [who do not want to pay workers overtime],” said Lt. Honore.
“The way we’ve structured the port system caused us to move more stuff by truck [rather] than by train,” he continued.
Now as the economy slowly recovers from the pandemic and gears up for another holiday season, the residual effects of outsourcing are being felt. The ocean has become a parking lot for ships that are not able to load or unload due to full port capacity. Electronics, toys and ingredients sit on the water in metal bins, which equates to empty shelves in stores.
“All those different products that you have to substitute now are 30 percent, 50 percent, 100 percent more,” said La Taqueria Brand co-owner Ricardo Mosqueda.
As concerns rise for holiday shopping, the ports of Los Angeles and Long Beach have announced that they are going to operate 24 hours per day, seven days per week in order to alleviate the strain.
Employers resort to outsourcing
“What’s happening is truck driving companies make more money with local shipments, so those companies that would drive across the country don’t have to,” explained Dame Crawford on Ark Republic news.
“We came into the pandemic with a 61,000 employee shortage on drivers and now we’re predicting a 160,000 shortage over the next seven years,” stated CEO of the American Trucking Association Chris Spear.
In the UK, there were a record one million job vacancies between June and August. The British government responded to this by offering 10,500 drivers and poultry workers temporary visas to avoid supply chain disruptions ahead of Christmas.
“The truck driver shortage in the UK has sparked a massive 307 [percent] spike in interest in UK-based jobs from overseas drivers. Applications are primarily coming from South Africa, India, the UAE, Poland and Nigeria,” tweeted FOCUS on Transport.
The job vacancies are a repercussion of widespread low wages and poor work conditions among drivers. “Because truckers are paid per mile not per hour, they lose $1.3 billion annually waiting at warehouses for loads,” said Business Insider Senior Investigative Reporter Rachel Premack.
Indeed, many truck drivers complain that they are being stifled by long wait times at ports. In Long Beach, the wait time for ships to dock averages 18 days. At ports in Savannah, Georgia, some containers sit at the docks awaiting to go onto ships for more than a month. To worsen matters, industry experts predict this issue will go well into 2022.
Similar to the truck driver conundrum, there was a high volume of vacancies due partially to inadequate compensation in the academic sector long before COVID-19 hit the scene. In 2018, the US had an estimated shortage of 112,000 teachers. An attempt to fill positions was made resulting in the US enlisting the help of overseas workers. “In terms of pay, let’s just say my previous pay was multiplied by eight or ten when I got here,” said Filipino teacher Joevie Alvarado who was recruited to teach in Arizona. Now a surplus of educators who were unable to handle the stresses of teaching during the pandemic have either retired or resigned.
In contrast, hundreds of hospital employees were let go due to their refusal to be vaccinated. The recent layoffs have added to the strain on healthcare workers. Some hospital networks boosted hiring prior to vaccine deadlines. In New York, Governor Kathy Hochul signed an executive order that would allow health care workers from other states and countries to be of assistance.
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Concurrently, Republican lawmakers are using global shortages and price hikes to make the case that providing constituents with stimulus would only spike the inflation rate, creating the need for stimulus on a continual basis. “Inflation is a tax on ALL Americans…The average U.S. household now spends $175 MORE a month on food, fuel, and housing. This is OVER $2,000 a year,” tweeted Rep. Elise Stefanik (R-NY)
Sen. John Kennedy (R-LA) highlighted that one year ago, gas in Louisiana was $1.90 per gallon and now it is $3.07.
At the other end of the aisle progressives such as Rep. Alexandria Ocasio-Cortez (D-NY) believe that it is less about the Biden administration providing constituents with stimulus and more about years of overlooking the need to raise the wages of Americans. “When you take the minimum wage from several decades ago and account for inflation and productivity gains, it should be $24 per hour,” expressed Rep. Alexandria Ocasio-Cortez (D-NY). Likewise, the Biden administration maintains that increased wages and increased buying power would offset inflation – it’s just a matter of doing it.
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