The Long-Run Impact of the Great Resignation
Many names have been given to the events of the past two years. Some are printable and others are not so printable. Maybe the one that has brought the most fundamental change to our economy and culture is the “Great Resignation.”
It doesn’t refer to people finally realizing the COVID-19 pandemic was not going to end in a few months or even a year. The Great Resignation refers to the great reshuffling of people in the work force. It originates from people being forced to avoid contact with others and being sent home from offices, packing plants and farms. The government estimates an average of 4 million people per month left their (non-farm) jobs in 2021, a remarkable one-third of that total workforce, which continues to gain steam as late as November 2021.
Working from home proved to be more productive than imagined. The problem, of course, is some careers, such as farming, first responders of all stripes, surgeons, dentists and others, must show up at the place of work to perform their jobs.
In the swine industry, we saw a couple major themes develop as a result of the Great Resignation:
There were people who used the opportunity to find another job. They did this because they didn’t really like the work anyway or, in the face of life-threatening illness and reflecting on the importance of family, they elected to spend more time at home (and many were able to do this thanks to generous government payments and unemployment benefits).
Many made a lateral move to another employer with work-at-home benefits and/or a higher salary. The pandemic created a worker shortage. Salaries for starting positions all the way up the administrative tree took big leaps upward.
This shortage of workers has dealt tremendous damage to our industry and to society in general. It precipitated the need to euthanize more pigs than anyone wants to remember, and it could take close to a decade to fully recover from all its effects. When you examine the impact of putting everything on hold for two or three years (no real investment, no technological advances and simply trying to get the basics done each day), it has created a hole that will take a long time to fill. Many farms lost key people who were factored in as part of the future growth and development of the farm. Repopulating key people on a farm is much more difficult than pigs.
The impact will show up as more disease, stagnation in economic metrics, less productivity and sales per sow, less worker satisfaction and higher-than-normal costs. We hate to be pessimistic, but this could in some ways be the lost decade in our industry. Yes, we might have higher hog prices because of this loss of productivity, fewer pigs to sell, more export demand and packers anxious to fill their own kills if they can maintain full employment. But don’t forget inflation, which will drive up hog prices and input costs.
The smart way up from here is to selectively invest in technology, which can help overcome the labor shortage. Packers are doing this at a rapid rate. The number of people needed in a typical kill plant might be cut in half or more during the next few years. Expect a similar set of investments at the production level. The long-term impact of the Great Resignation on the hog production sector in the U.S. will bring more technology, more data analysis to drive super-efficient investment and fewer people doing labor functions.
