A historically tight labor market and pandemic combined to test the meat industry’s workforce this spring. The result? A reckoning with long-ingrained challenges.
In February, before the novel coronavirus and COVID-19 pandemic impacted our lives in such a huge way, unemployment was at record lows for modern times (3.5 percent), which translates to 0.8 job seekers per job opening, according to the U.S. Bureau of Labor Statistics (BLS). Agriculture jobs were especially tough to fill as they are primarily located in rural areas and involve physically demanding work, longer hours and weekend shifts.
“There wasn’t a deep reserve pool to pull workers from to begin with, and COVID-19 exacerbated the problem,” says Lee Schulz, Ph.D and associate professor in Department of Economics at Iowa State University, in Ames. “Meatpacking is also a highly skilled job, so even though there is now a higher unemployment rate — about 10 percent — and about three people looking per job, even if plants attract workers they still can’t start on Day One.”
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The pandemic also increased absenteeism numbers from sick or quarantining employees. According to the Food and Environment Reporting Network (FERN), at least 59,163 workers (42,578 meatpacking workers, 9,453 food-processing workers and 7,132 farm workers) have tested positive for COVID-19, with at least 253 workers dying, as of Sept. 16. Confirmed cases of the coronavirus have been reported at 795 meatpacking and food processing plants and 106 farms and production facilities.
This fall, the Occupational Safety and Health Administration (OSHA) fined a Smithfield Foods plant and a JBS plant about $29,000 for three safety violations related to COVID-19. The Sioux Falls, S.D.-based Smithfield plant reportedly has had 1,294 workers test positive for coronavirus with four deaths. The JBS USA plant in Greely, Colo., has reported 290 workers testing positive and six deaths. Smithfield and JBS are contesting the $13,494 and $15,615 fines respectively as being without merit because of safety changes they have already implemented.
OSHA ordered companies to increase distance between employees, put up barriers when that isn’t possible and adjust processing line speeds so employees can stand farther apart. Regular temperature checks are also being implemented. The agency has received almost 10,000 virus-related requests to investigate workplaces in all industries.
“Certainly, the coronavirus has created a challenging environment for the meat-processing workplace,” says Michael Nepveux, an economist at American Farm Bureau Federation, based in Washington, D.C. “It’s traditionally shoulder-to-shoulder work that is difficult to do, even when spaced out. In late April/early May, it was definitely a challenge to get workers in the plants as they had legitimate concerns about COVID and may have had to watch their children or elderly relatives at home.”
Creating labor incentives
The meat industry’s labor shortage will most likely continue. “It’s definitely a long-term trend that rural plants are struggling to find available workers and turnover is relatively high, due to employees being poached to other facilities,” says Nepveux. “Companies were trying to adjust to this situation before COVID.”
Increased competition from other markets has led to increases in wages, bonuses and overtime for the meat industry, Schulz says. “In the short run, they are helping prevent turnover from increasing, which is an artifact of a difficult rural labor market,” he says.
Compensation packages are also an attempt to make employment desirable by featuring good hours and a fixed routine of days or nights, Schulz says. “Non-wage benefits that are in play or accelerating are day care and benefits packages,” he says.
The crisis also has prompted increased calls of change, from farm to fork. “In packing, there’s more calls for automation or adjustments in the size of facilities, which can slaughter up to 10,000 cattle a day,” says Schulz. “Operational capacity is dictated by labor. But the calculus for changes is complicated. We’re truly in an unparalleled, unprecedented situation.”
A careful balance
The efficiency of the meat supply chain is always countered by the resilience of labor. “There is a careful balance struck between efficiency (an efficient supply chain) and increased resiliency (of labor) during large disruptions,” Schulz says. “How do we embrace resiliency without unburdened cost?”
Many of the cost savings of the last 50-plus years have been based on efficiency and lean operations, which require a steady supply and a predictable, stable demand in order for them to work.
“To operate in a world of disruptions and uncertainty, companies need more robust flexibility and contingency plans, which are expensive — think of them like a good insurance policy,” says Julie Niederhoff, Ph.D, associate professor of supply chain management at Syracuse University, in Syracuse, N.Y. “They are expensive if you don’t need them — then very expensive if you do need them but don’t have them.”
Many companies had cut their processes to a very efficient and streamlined flow, which allows for lowest possible costs in labor, material, inventory storage and waste. “It yields the highest returns on investments like space, machinery and labor,” Niederhoff says. “However, these systems are highly dependent on the environment for which they were designed.”
That our meat supply chain recovered so quickly from COVID’s massive and societal shock is truly amazing, says Nepveux.
“We also have to do our best to protect workers while providing a safe, affordable product,” he says. NP