Walking The Line

Welcome to The Supply Times! We’re on our 20th issue of TST. How time flies!

Over the last several months, I’ve shared insights and news about supply chain issues and what it means for the health of the global economy, as well as some peeks into what the future of the workplace holds for us in this post-pandemic world.

I really appreciate all of the great feedback you’ve shared with me over the last 20 issues, and I’m so happy to hear I could help you become better informed in some way.

If you ever have any questions or feedback for me—reach out. I’m happy to help!

Let’s hit the gas.

Industry Highlights: Inflation Negation

The Fed is doing its best to walk the line between cooling inflation and triggering a recession, and after hiking interest rates the last two months, it seems to be working.

The Department of Labor reported last week that the consumer-price index stood at 8.5% in July, down from 9.1% in June, indicating a tiny step away from the highest inflation rates we’ve seen in the last 40 years.

We saw the decline primarily in the energy sector, with gasoline prices down 7.7% from June. Unfortunately, food and dining costs were still up 1.3% this month. Economists are hopeful, though, that will change in the near future. “For the things that really eat a hole in our pockets—gasoline and food—we’ve seen the turning point in gasoline and I think we’re on the cusp of some declines in food,” Boston College economist Brian Bethune told the Wall Street Journal.

The biggest issue right now is that while inflation’s easing nationwide, it’s doing so inconsistently region-to-region. The CPI in the northeast, for example, was around 7.3% in July, whereas in the South it hovered around 9.4%, the Bureau of Labor Statistics reported.

This is bad news because it means the Acela Corridor—the northeast stretch that houses most government and financial institutions—isn’t feeling as much inflation pressure as the rest of the company, which may translate into less drastic inflation-busting measures.

Bloomberg reported last week that this regional disparity could definitely have an impact on November’s midterm elections—especially in states like Arizona, Florida, and Georgia that have high-profile Senate races on the horizon.

The Fed hikes are also affecting home prices unevenly. According to real-estate site Redfin, 21% of homes for sale have dropped their asking prices—the largest drop since Redfin began tracking the metric in 2012.

But in “pandemic boomtowns”—low-cost cities that attracted millions of new remote workers—the decline has been much steeper. In Boise, Redfin reported 70% of houses for sale lowered their asking price in July. In Denver, 58% did.

While interest rates should remain stable in August, the Fed is already planning to meet next month to institute another hike. While this one won’t be as sharp—experts are predicting a planned 50 base point increase instead of the 75 pointers in June and July—it’s unclear what the future holds. San Francisco Fed President Mary Daly said she anticipates a “raise-and-hold” strategy.

“The worst thing you can have as a business or a consumer is to have rates go up and then come rapidly down,” Daly told Reuters. “I do think we want to not have this idea that we’ll have this large hump-shaped rate path where we’ll ratchet up really rapidly this year and then cut aggressively next year—that’s not what’s on my mind.”

The Future of Work: Quite a Time to Quiet Quit

If you pay attention at all to social media trends, you’ve likely heard the term “quiet quitting” gaining traction.

Rather than pack up their desks and search for another more fulfilling position, workers dissatisfied with increased demand and stagnating wages are now pledging to stay where they are—but only perform the bare minimum.

“You’re not outright quitting your job, but you’re quitting the idea of going above and beyond,” TikTok user Zaiad Khan said in a post. “You are still performing your duties, but you are no longer subscribing to the hustle culture mentally that work has to be our life.”

News outlets started picking up on the trend shortly thereafter, the term “quiet quitting” appearing in the Wall Street Journal, CNN, and The Washington Post over the course of this week. A New York Times article suggests a lot of the reason has to do with how the pandemic blurred lines between work and home.

Work-life balance has been an issue on the minds of many workers for the last few years, but data shows this might be more than a silly TikTok trend.

When looking at labor statistics, there’s an interesting data set that’s diverging—and it suggests that workers are getting paid more for doing less.

The most recent jobs report shows non-farm productivity—a measure of goods and services produced per hour of labor—fell 4.6% in Q2. That’s the largest quarter-over-quarter decline since BLS started tracking the metric in 1948.

Meanwhile, the labor costs over the same time period increased by nearly 11%. Economists partially attribute this rise to inflation and cost of living adjustments, but the deviation of these two metrics are concerning.

What’s more, a recent Gallup poll found that Gen Z and younger Millennials reported the lowest workplace engagement of any generation—31%.

What these quiet quitters fail to understand is that by scaling back on productivity, they’re actually destabilizing the business environment. “Worker productivity…props up a company’s output and is the key to improving living standards,” writes Jeffrey Sparshott in the Wall Street Journal. “Theoretically, a company with higher sales and revenue is more likely to increase wages without passing on the higher labor costs to consumers.”

Wharton School of Business professor Christian Terwiesch suggests that business leaders can find ways to encourage the workforce toward improved productivity by doing a better job of measuring it. That includes tracking the time it takes employees to perform a repetitive task, use data to track output and collect information on the tasks performed by each worker, and using AI to collect real-time data for workers.

Sounds a little Big Brother to me, but here’s what I do agree with: Unless companies find better ways to incentivize and motivate their employees, they’re going to have a mediocre labor force, which will in turn cause more problems for consumers down the line.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About RE: Supply Chain, Work, and Beyond

📕 Read: I recently moved from my long-time home of Chicago down to the great Lone Star State, and one of the people who helped me move was Brandon Jordan, an author and speaker who’s dubbed himself “The Mind Shift Guy.” I started reading his book, Courage Under Fire, an incredible story about the importance of harnessing your internal grit and overcoming life’s challenges. I love a good motivational book now and again, and Brandon’s definitely fits the bill. He’s a great guy with an inspiring story worth checking out.

📺 Watch: The Washington Post recently produced a fascinating five-minute video on the history of the 40 hour work week that I found fascinating. In a relatively short period of time, it delves into why the US arrived at this structure, as well as the associated downsides and ways employers are trying to innovate it. You’ve got five minutes, don’t you?

💡 Think: As I said earlier, the discrepancy between wages and productivity is a concerning trend—more so for recent graduates entering the workplace. I just talked with a bright young candidate who graduated from a strong supply chain management school, and they’re literally making TWICE what my cohorts made coming out of GRAD SCHOOL. It begs the question if this is sustainable and part of the new reality when it comes to wage increases. If we do indeed dip into a recession, those high-wage, low experience positions will be vulnerable when companies need to tighten their belts. I’m all for appropriate compensation, but setting those types of wage expectations for entry level talent might be cause for concern in the future if companies aren’t able to keep up.

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Also, something I’ve been evangelizing to candidates, friends, and colleagues for years is to build a personal brand through a website. Finally, thanks to my friends at Arcbound, I’ve begun practicing what I preach and created one for myself at www.naseemmalik.com. Take a spin around and let me know what you think—any and all feedback is welcome!

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