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Thought much lately about supply and demand? You probably have without knowing it, particularly when you are shopping in a store with an empty or near-empty shelf, table or rack. Your demand, quite simply, is not being met by the supply. Frustrating, isn’t it? We want what we want when we want it!
Supply and demand as a construct is a key model of economic theory, particularly when it comes to pricing goods and services. We’ll first talk about goods or products, their availability to consumers and their price.
The supply chain has been much discussed in recent months. Economics Nobel Prize-winner Paul Krugman stated in a recent op-ed, “About those supply-chain issues: It’s important to realize that more goods are reaching Americans than ever before. The problem is that despite increased deliveries, the system isn’t managing to keep up with extraordinary demand.”
Krugman further discussed the impact of the pandemic by illustrating that when people were prevented from receiving out-of-home services, they compensated for that loss “by buying stuff instead.” The resulting “surge” in purchases outstripped production and distribution due in part to a lack of workers at factories, at ports or behind the wheel of trucks to get us what we want when we want it — thus, a supply-chain breakdown.
Supply and demand relate, as illustrated above, to workers as well as goods, and to an increase in prices — inflation — which should abate as soon as the crunch subsides. Whenever that may be.
The Harvard Business Review pointed out in September that during the third quarter of the year, workers quit their jobs in what was described as “a tidal wave of resignations.” In July alone, more than 4 million Americans quit. Anthony Klotz, a psychologist and professor at Texas A&M’s Mays Business School, coined the term “The Great Resignation.”
As we have conveyed in this space, the lion’s share of problems with workers has been experienced in service-related jobs. Burnout from providing in-person services during uncertain times, with customers on edge, demanding and many times just not very nice, as well as the obvious stress associated with health care-related jobs during the pandemic, have given a great many service workers permission to chunk it.
In a more existential way, Klotz says many employees have simply considered how they feel about life, work and “what they want out of both.”
Business itself has had similar meaning-of-existence questions. Thus, a coming transformation of purpose that affects both.
We have stated ad nauseam that we are all consumers. Consequently, the changing dynamics between employers and employees and how it affects the production, distribution, pricing and promotion of goods and services, as well as the transactional nature of consumerism, is bound to change too. And is.
People are quitting finance jobs to go into music. They’re giving their notice at warehouses and factories to open that bakery they always wanted. And employees who once sought familial meaning in the corporate household are now independent contractors, jacks of multiple trades and spending more time in a fishing boat or on hiking trails than behind a desk and in front of a computer.
Consumers today also have more choices than at any other time in our capitalist history, more options than ever before on how we make purchasing decisions and take delivery of goods. And with the changing nature of our relational society, how we interact, tolerate, accept and work with one another, or how we don’t, will certainly require give-and-take on all sides of the equation. That give-and-take, rather than just take, that newfound equilibrium among work provider, work doer and work receiver, will see a new marketplace playing field without a discernible end zone, an unmapped landscape without horizon.
Krugman sums it up this way: “And although this new choosiness by workers who feel empowered is making consumers’ and business owners’ lives more difficult … it’s a good thing. American workers are insisting on a better deal, and it’s in the nation’s best interest that they get it.”
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