“If politicians stopped meddling with things they don’t understand, there would be a more drastic reduction in the size of government than anyone in either party advocates.” – Thomas Sowell
President Joe Biden’s stimulus bill, which extended federal unemployment benefits for millions of Americans, has created a massive labor shortage that is destroying the country’s supply chain. By filling the wallets of labor with federal taxpayer cash, the left disrupted the pipeline for distributing supplies to people throughout the nation. Biden has made it more lucrative for workers not to work than to go to work.
Employers across all industries have complained that it is difficult to find workers, even though millions of Americans remain unemployed. The depressed state of the labor market has caused massive shortages of products produced by American workers. Producers are rationing products through supply lines, which has fueled double digit inflation. This is a recipe for economic disaster.
Since the pandemic, the U.S. has struggled to import enough of everything, from N95 respirators and other critical medical supplies to laptops, personal electronics and numerous consumer items. With the U.S. overly dependent on the low cost production hubs in China and Malaysia, there is no relief in sight. As U.S. companies scramble to fill the void, they can’t find people that want to work.
For the first time in four decades, American consumers are asking why is the U.S. so dependent on a country that shares no social or political ties with the U.S. and is a military threat to our allies?
“Labor unions demands forced U.S. industries to outsource labor for their survival.” – Larry Elder
When Communist China reopened their free markets in 1978, it was a curse for the over-paid union workers and a blessing for manufacturing. Within months, large manufacturers started outsourcing labor to China. When criticized by labor unions, GE CEO Jack Welch defiantly responded, “Public held corporations owe their primary allegiance to their stockholders, not to their union employees.”
For corporations traded on the U.S. stock exchange, moving production to China was the easiest way to cut costs and dependence on labor unions. It started with low-skill, labor intense industries such as apparel. Many of these manufactures had already been outsourcing to Mexico and Asia.
“You can’t deprive yourself of outsourcing if your competitors don’t.” – Lee Kuan Yew, Singapore
American manufacturers RCA and Zenith were the first major companies to move to China and others followed. American firms believed they could outsource their manufacturing and be more competitive. They never thought China would clone their products and became their competitors.
From 1978 to 2013, Communist China experienced unprecedented growth. China’s economy grew by 9.5% a year. It slowed during the military crackdown in 1989 due to the protests in Tiananmen Square, but it soon rebounded. By 2010, China overtook Japan as the world’s number two economy.
The U.S. GDP fell by 2.3% in 2020, while China’s grew by 2.5%. That puts China only $6.2 trillion behind the U.S. According to Michigan professor Sridhar Kota, “China will overtake the U.S. as the world’s largest economy by 2028. The U.S. will have a fight on their hand to catch up with China.”
“I’ve studied how China works for years. They think of China, not anyone else.” – Donald Trump
The pandemic revealed that America’s broad-based, multi-industry dependence on foreign nations like China has reached a dangerous plateau of dependence on outsourcing and importing for our survival. The shortage of retail consumer goods shows how dependent we are on these imports.
Ports in Los Angeles and Long Beach, California, that handle almost half of our imports hit a record high this month. The queue of ships waiting to unload their cargo increased by 10 ships a week. The shipping time from Asia to the U.S. has increased by 43% this year. And these ships cannot be unloaded because the U.S. labor shortage has affected transportation delivery and retail turnover.
By the end of 2020 when U.S. ports had started to recover from pandemic disruptions, in February they surged past pandemic levels. When the Democrats extended federal unemployment benefits for a year in their $1.5 trillion budget, the backlog of cargo ships in American ports increased 31%.
As a result of the pandemic, shipping costs skyrocketed. Judah Levine, head of research at Freightos, said the price for transporting a 40-foot container from Asia to the U.S. jumped 500% this year. He warned these transportation costs will increase shortages as well as increase prices on all imported goods.
Since the pandemic had already caused global shortages and increased shipping costs across the world, progressives poured gasoline on the fire by paying people not to work. With a port backload of over a week, the last thing our nation needed was to encourage workers “not to return to work.”
Los Angeles port director Gene Seroka said the high volume of imports, a shortage of warehouse space, COVID-19 concerns among longshoremen and the lack of transportation workers is making the backlog worse. There is a shortage of labor to transport and redistribute these products throughout the nation. And the shortage of labor in retail stores to keep shelves stocked is affecting turnover.
In January 2021, the Pacific Maritime Association urged California Gov Gavin Newsom to help with the problems at California ports. He begged Newsom to increase protection for longshoremen from exposure by migrant workers and others who aren’t following infection control protocols. He claimed workers fear working in the ports due to inaccurate reporting of virus cases by L.A. Public Health.
Last year, Marco Rubio issued a report detailing the vulnerabilities in America’s supply chain and our dependence on China. The pandemic exposed these critical problems, not just at our ports but at warehouses, distribution centers, railroads, and other places where workers move cargo. “We learned a painful lesson. We need American workers managing our supply chain.” – Marco Rubio
Philosopher Soren Kierkegaard wrote, “Fools refuse to believe what is true.” For years politicians have failed to address our growing trade deficit, and we keep feeding U.S. dollars to the Chinese like it is Monopoly money. Our trade deficit with China has reached an all time high and continues to be ignored. China knows they are the life line of our supply chain and can pull the plug anytime.
With the economy stuck in limbo and American manufacturers begging for labor, extending federal unemployment for another year was a death blow to American production lines and a gift to China. Now we are paying dearly for it with inflation, a labor shortage and empty retail shelves. This was a bad political move for America at home and abroad. And it will get worse not better.
“The fact that so many successful politicians are such shameless liars is not only a reflection on them; it is also a reflection on us. When the people want the impossible, only liars can satisfy.” – Thomas Sowell
By William Haupt III | The Center Square contributor
