Omicron Supply-Chain Disruptions Are Hitting Low-Income Communities the Hardest

As the Omicron virus of the coronavirus has spread across the U.S., supply chains have been hampered.

Three things seem to be happening: the first is that so many workers are now out sick that delivery systems to grocery stores and retailers are starting to break down; in other words, the produce has been harvested, but in many instances it’s stuck in warehouses, or on ships, or in food silos because of a shortage of people to speedily deliver goods around this huge country. That, combined with a slew of tough winter storms across the U.S. in recent weeks has, retailers report, snarled truck trafficThis caused delivery backups. This is because primary products are now reaching processing facilities. However, those facilities have so many workers who are sick that it is causing delivery backups. they can’t keep up with demand to make processed foods, such as soups and cereals.The result? Groceries are empty shelves. Food chains claim they are out of as many as 15 percentStock at the moment, significantly more than is usual.

That doesn’t mean Americans are about to go hungry as grocery stores empty out — the food distribution system in the U.S. is more resilient than that, and has an awful lot of redundancies built in — but it does mean food choice options are declining at the moment, and food prices are likely to continue their upward march at an even faster pace. This will be a burden that the poor will carry more than others: large-scale studyThe U.S. Department of Agriculture (USDA), in 2016, found that low-income families spend between 28 to 42 percent of their pretax income on food. Wealthier families spend significantly less than 10 percent.

The second is that so many retail workers are sick that stores simply don’t have the staffing resourcesTo stock their shelves fully while still catering to their regular customer base. Many, including big-name stores like Walmart, Apple and Macy’s, have responded by reducing their hours and/or cutting back on services. Some grocery stores report that they have seen an increase in sales. 8 percentMany of their workers are now ill as the Omicron surge across the country nears its peak.

As the pandemic enters its third year, a third contributing factor to empty shelves around the country is a global supply-chain breakdown. Countries that had hoped to be well beyond lockdowns by 2022 have now returned to trying to stop the spread. This is done through the crude instrument, which involves closing large portions of their economies and making people work from home. China — whose Sinopharm vaccine, including its booster shot, has been peculiarly outplayed by the Omicron variant — is locking down entire cities still, affecting tens of millions of people. This has made it so that key components of the international supply chain, which are disproportionately dependent upon Chinese factories, are currently particularly fragile. Asia analysts predict that the supply chain could come under unprecedented pressure over coming months if Omicron starts spreading in Asia at the speed that it has already spread through the U.S. and Europe, and if China continues to enforce its “zero-COVID” policy, which relies on locking down whole cities and mandating universal testing if even a single case of the virus is picked up by health authorities. Lock down enough cities simultaneously and it’s inevitable that factories will also have to temporarily cease operations.

“The same capitalist system that moved production out of the U.S. to China to make more profits thereby required long global supply chains to feed production in China and bring the products back to U.S. markets,” Richard Wolff, professor emeritus of economics at University of Massachusetts at Amherst, tells Truthout. “But long supply chains are more vulnerable to disruption than short ones.”

The U.S., along with its corporate behemoths, has so much bargaining power in the global economy, that the country and its wealthy consumers are protected from the worst of this global squeeze. While prices will rise, most goods will still be affordable for those who have the means to pay. Contrary to the past, in poorer countries, real shortages of vital goods and a lack in money to pay them are more commonplace in 2022 than in the past.

These are the global estimates in 2020 alone, as a result of the pandemic, as many as 75 million people fell into extreme poverty; and 80 million more became under-nourishedBecause they didn’t have enough food. The World Bank estimates that in 2020 alone, 97 million people globally saw their income fall below $2 per day. Since then, the situation has only gotten worse as the pandemic has continued. Poorer countries will see their consumption power cut even further if Omicron causes more disruptions.

The exacerbated supply chain woes unleashed by Omicron don’t, of course, play out equally in all locations and across all income groups. The wealthier the countries and individuals, the more options they have available to them — to simply pay more to buy goods that are, at least temporarily, scarce; or, for individuals, to shop around to look for particular goods if one store doesn’t have them. Poorer countries and individuals, however, are locked out of tight markets.

The U.S. is a country where the less fortunate are more likely to rely on a handful of stores. In 2017, the USDA reported that there were more than 19 million Americans had only limited access to supermarketsgrocery stores. A disproportionate number of those living in the U.S.’s “food deserts” are people of color. When goods are absent or prices spike in food deserts, poorer consumers — whose incomes aren’t increasing at the same capacity as are prices — often have no choice but to do without.

Wolff says that fixing supply chains in a way that protects poor people would require building up inventories that can be tapped if and whenever goods delivery stops. He claims that companies are reluctant because it would mean a loss of short-term profits. Instead, they wait for catastrophes to hit and then, if and when they do — witness the pandemic — the market response leads to increased prices.

“Supply chain disruptions threaten corporate profits,” Wolff says. “Their executives respond by allocating reduced quantities of outputs among those who demand those outputs. They raise prices and ship goods to consumers with higher incomes who are most able or willing to pay the higher prices. They correspondingly ship less to those outlets ‘serving’ lower-income folks less able or willing to pay higher prices.”