INDIANA — What we’re seeing in the aftermath of COVID-19 — supply chain issues, a need for more employees and businesses changing what they sell and for how much — are signs of change.
However, it may be too soon to understand exactly what that all may mean to businesses, the economy and our society, according to Ball State University economist Michael Hicks.
“I think it’s going to take 20 to 30 years to sort through the changes from COVID,” Hicks said.
And those that adapt will be the ones that survive.
“The economy in some ways is performing quite well,” he said.
Production in the United States hit a peak in the second quarter of 2021, although third quarter numbers aren’t available yet. There’s a huge demand for goods made in this country, but imports also saw new highs in the number of goods coming here and the money for them.
The problem is that the supply chain is getting used to the big increase of needs, and those who ship goods are looking for people to hire.
So firms make decisions on what they’ll ship and when.
“If I’m having trouble moving goods, I’m going to move the more valuable things first,” he said.
That would put computer chips for waiting vehicles ahead of things such as fruit coming from Mexico. Even with priorities, there’s a wait on vehicles and other items that need computer chips.
Cass County started its own ambulance and emergency medical service Dec. 15. However, it started off using loaned vehicles and loaned radios because of computer chip scarcity, and the new ambulances ordered in autumn are supposed to arrive in April.
Bill Thompson, owner of Mike Anderson Auto Group across Indiana, said his dealerships are turning the situation in favor of the customers.
“While the computer chips needed for vehicles is still a severe supply chain issue, we are finding that an ordered vehicle will be built faster than dealer stock, thus allowing the customer to obtain exactly what they are looking for,” Thompson stated.
Because of the shortage of new vehicles, the price of used vehicles has gone up. Thompson said that increases trade values, too, giving customers more equity on trade-ins or selling a vehicle to the dealerships.
The service and parts aspect of the business is also having supply issues, especially with parts that use computer chips, he said.
Hicks said that items from other countries are often waiting at ports for two to three weeks.
Adding to this logistics situation is the trucking industry having trouble finding qualified drivers.
“It’s a struggle for everyone, including us,” said Tracey Foutz, manager at Gangloff Industries in Logansport.
The company works mostly with Tyson Food and delivers to Indiana and its surrounding states, going as far as Kansas.
Gangloff isn’t seeing significantly more demand and always operates at the top of capacity for what the company can handle, Foutz said.
“For us, business has really looked the same,” she said. “We’re as busy as ever.”
But over the past year, the company has had up to seven trucks not being used.
“It’s hard to hire drivers,” she said.
The need for drivers has become so intense that the owner, Randy Ferguson, has been driving trucks for more than six months, she said. The company has also been relying on other trucking and logistics companies to help, she added.
Neil Stewart, manager of D&R Fruit Market in Logansport, said shipping logistics also affect the grocery business.
“Trucks are hard to get,” Stewart said. “Some of the pop is hard to get because of the lack of drivers to run the routes.”
He talks with suppliers about priorities, and the store usually gets the items, but the items sometimes don’t make the first trucks.
Stewart said they haven’t been able to get Dole salads at all, and some supplying businesses are closing. The company that makes popular cocktail rye bread is apparently shut down for good because of a lack of ingredients, Stewart said.
Hicks said that a significant reason for the higher demand of goods is that consumers have more money. They happened for two reasons: They received a stimulus check, and they spent less on things like vacations and eating out.
Harvard University’s Opportunity Insight website, which tracks credit card use, shows that people started spending less before distancing and business shutdowns, he said.
The biggest drop happened around March 18 to 19, and Indiana’s quarantine started March 24.
With all those factors, that’s about $2 trillion extra in the country’s households.
At the same time, the workforce has gotten smaller for a number of reasons, said Hicks.
It lost 200,000 to 300,000 people because of COVID-19-related deaths.
Some people who hadn’t taken retirement decided to do so during the shutdown in 2020, and others chose early retirement — partially because of the booming economy.
“The value of retirement savings has just exploded over the last eight months,” Hicks said.
That makes retirement more available to workers younger than the traditional 65. And someone who lost their job at age 62 is likely to see retirement as an option.
People have also been starting their own businesses, from being Uber or Lyft drivers to making things like candles and crafts to providing services related to marketing and advertising.
Other potential workers aren’t returning because they have a fear of the virus or are concerned that their kids may need to go back to learning at home through computers, so they aren’t applying for jobs right now.
The workforce has also been reduced by those who caught the coronavirus and have the long-term symptoms that won’t allow them to return to work.
“That’s contributed to the lower employment rate because they can’t go back to work,” said Kevin Brinegar, president of the Indiana Chamber of Commerce. “Those numbers are validated by the disability insurance claims.”
In a recent press conference, state officials were told there’s not just going to be more life insurance claims, but also more disability claims, he added.
A number of media outlets are confirming that trend.
The search for workers
Farooq Shah, CEO of Midwest First Star Inc., which has 33 Hardee’s restaurants in Indiana and Ohio, said his company is getting hit hard at every store.
And it’s the worst he’s seen in more than 30 years in the business.
“(It’s) killing us,” he said. “It’s impossible to find employees, even if you’re paying double the money.”
In Indiana, minimum wage is $7.25 an hour, and his company is paying $15.
To attract more employees, they’ve gone from using two online employment sites to five of them, more than doubling costs. The company also will pay employees daily instead of once every two weeks, if the employee wants that.
Even when the chain does hire people, too often the new employees don’t show or show for just one shift.
The Logansport Hardee’s had shut down the restaurant mid-day after employees left.
He’s optimistic that he’ll see more applicants now that the holidays are over and has seen that starting in some spots already.
Shah said they have less trouble with the supply chain, which had been improving over 2021.
“It’s not that horrible,” he said. “It’s maybe two items missing. They’re late.”
Sometimes day deliveries are made at night.
The struggle to find employees has also required Midwest First Star to change its business plan.
They’ve taken some items off the menu, and they get by on minimum staff, a cook and a cashier manning a drive-thru while the lobby is closed.
Ivy Tech had been preparing for the changes before the pandemic, and on Dec. 22, the Kokomo-area school announced that it is offering classes in January to prepare its students for jobs in the supply chain and logistics field.
The program had been in the works before “supply chain” became a household word, and projected graduation date for the first students in the program is May 2023.
“Everything that Ivy Tech does is based on community need,” said Dean McCurdy, chancellor for the Kokomo Campus.
The school listens to the students and to area employers, and the pandemic exposed gaps that Ivy Tech is trying to fill.
Technology saw growth during the pandemic, and even before that, the school offered education in cybersecurity, smart manufacturing and digital integration, as well as expanded medical classes.
“The conversations we’re having today are quite interesting and very different than they were 20 years ago,” said McCurdy.
Economist Hicks said that one big cultural change is that more people are doing — and will do — remote work.
According to his research, from 2017 to 2020, jobs for remote workers averaged 1% to 1.5% of the ads for hiring, mostly for call centers or software editing.
Since April 2020, that average jumped to 13% to 15%, and about a third of that is part-time work.
Those kinds of jobs work well for retirees or parents who stay home with their kids.
He predicts that with more remote work, couples will have one person whose job requires their presence, while the other has skills that can work almost anywhere, such as medical workers.
Or one of them may run a home-based business.
Hicks also sees more couples where both work remotely, going into an office once or twice a week so there’s always a parent at home.
That could also reverse the 20th-century migration from small towns to cities.
If people only go into the office once a week, an hour-and-a-half drive is not so bad — especially if they’re paying the housing costs of a small town instead of a big city, he said.
People can live in northern Indiana while working in Chicago, Indianapolis or Fort Wayne.
Brinegar sees remote working as a potential positive happening.
“This could be a real boon to Indiana, but we have to play it well,” he said.
That means Indiana will have to be aggressive in getting broadband internet access to all rural areas and in pursuing grants for that and other matters.
Hicks said these remotes workers won’t mean the end of cities, just that cities will have a bigger “footprint” beyond the current suburbs, he said.
Costs for clothing and vehicle maintenance will also drop for remote workers, he added.
Another change happening is how people eat.
Hicks said that when people started using their credit cards less, the amount that the country spent on groceries increased.
He predicts more of the younger people cooking because the pandemic forced them to learn, and there’ll be more meal kits for sale at grocery stores.
Young people also became more interested in home repairs, Hicks added.
Because of this and fewer workers, more hospitality businesses will have cut hours of operation, and some marginal ones will close.
There won’t be a need for fast food places and pharmacies to be open 24 hours a day, seven days a week, he said.
Is another shutdown possible?
But in the immediate future, what could happen if there’s another shutdown?
Brinegar said he doesn’t anticipate another shutdown, although it’s not out of the question.
“I’m not getting any signals that the governor is heading that way,” he said.
However, having social distancing and staying home again likely won’t mean the end for more businesses or a change in the economy.
“Another shutdown like we had in March (2020) will have little impact,” Hicks said.
We’re used to it now, he said.
We know how to handle it.