Calling out private companies won’t fix supply chain issues

In a press conference Wednesday, President Joe Biden threatened that he will call out businesses in the private sector if they do not move to address the supply chain issues facing our nation. This comes after some companies like FedEx have made an agreement to switch their operations to 24/7 in order to relieve some of the shipping congestion.

As reported by ABC News,

The president met with the leaders of the two busiest ports in the United States — Los Angeles and Long Beach, both in California — and the International Longshore and Warehouse Union, and announced that the port of Los Angeles, would begin 24/7 operations in order to help alleviate bottlenecks. The Port of Long Beach started operating around the clock a few weeks ago.

Several shippers and retailers announced that they, too, would take steps to move toward 24/7 operations, according to the White House.

“This is a big first step in speeding up the movement of materials and goods through our supply chain, but now we need the rest of the private sector chain to step up as well,” Biden said.

While most of the actors along supply chains — from suppliers and port operators to trucking and freight companies — are private businesses, Biden said that, “if federal support is needed, I’ll direct all appropriate actions.”

“And if the private sector doesn’t step up, we’re gonna call them out and ask them to act,” the president said. “Because our goal is not only to get through this immediate bottleneck, but to address the long standing weaknesses in our transportation supply chain that this pandemic has exposed.”

Indeed shortages and delays are probably one the biggest issues facing our country and are potentially partially to blame for the high and rising prices of goods and services. But the issue is more complex than companies not wanting to act. Biden’s remarks won’t solve anything. In fact, some of his policies might worsen the worker shortage issue that these private companies –– including shipping companies –– are facing.

Worker shortage is a big part of the problem

For shortages and supply chain issues to ease up one of the things that have to happen is for companies to find workers. But new data shows that worker shortage might be long-lived in the U.S. economy.

The Bureau of Labor Statistics (BLS), for example, just announced this month that while unemployment declined by 0.4 percentage points to 4.8 percent in September, the labor force participation rate declined slightly as people are exiting the labor force. In August the U.S. had a labor force rate of 61.7 percent, which went down to 61.6 percent in September.

The truth is companies are having a hard time finding workers as people seem reluctant to go back into the labor force and even more are quitting or exiting the workforce altogether. According to the BLS, 4.27 million workers quit their jobs in August this year, compared to 4.03 million in July.

So to put it simply, the issue with the supply chain is complex, and it is not a matter of companies not being willing to act. Businesses, after all, are about making profits so it would not make sense for them to pass up profit-making opportunities.

So, aside from this being sheer overreach on the Administration’s part, it is highly unlikely that government efforts will be able to help relieve the worker shortage issue that seems to be at the heart of the issue.

In fact, some of Biden’s policies, like the vaccine mandate or the push to extend no strings attached Child Tax Credit Payments to parents through the reconciliation bill, might worsen discourage employment.

Not to mention that factory shutdowns in other countries due to low vaccination rates are also to blame for shortages and supply chain delays. Biden’s words or policies will have no impact on that.