Goodbye to Cheap Food

Aug. 30, 2021

There has been a lot of hand-wringing and ink- and pixel-spilling over the labor shortages that are afflicting the food supply chain. Quite a few people, myself among them, have concluded that the best if not only way to alleviate the situation is for the food industry to pay its workers more.

I still believe that’s true. But I also believe there’s more to the picture.

It’s easy enough to look at the wages of Big Food CEOs and cluck your tongue. But their big paychecks notwithstanding, Big Food just hasn’t been having a great time of it in the pandemic. Our Top 100 food companies had a collective rise in sales of just 1.7% in 2020. Of course that was unevenly distributed, with some companies making out like gangbusters and others going backwards. But the point is that the pandemic was not the gold mine for mainstream food processors that is sometimes portrayed.

Food processing in general, like many other parts of the food chain, operates on very thin margins. It’s partly the nature of the business, but it’s also in large part because the industry is overwhelmingly dedicated to getting food onto shelves or into coolers at the lowest price possible. Consumers have been trained to expect to pay less than $1 for a taco or $2 for a pork chop, and the industry has been trained to fulfill those expectations.

Making food as inexpensive as possible is a laudable goal, but like all laudable goals, it can be overdone. Cheap calories come with several price tags: the pollution and animal health problems that come with overcrowded farms and feedlots; the proliferation of obesity as a major health crisis; and, of course, chronic downward pressure on worker wages.

Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University in Nova Scotia, who has crossed my path before, reminds us in a recent article that both food prices and industry wages have remained stagnant even while the skill levels of employees at all levels are increasing. As he writes: “Wages and revenues have barely moved in tandem with the amount of knowledge gained, novel technologies used and skills acquired by the workforce in the industry.”

The underlying problem is that decades of cost-cutting, paired with nearly nonexistent inflation, has accustomed consumers to cheap food. That’s about to change, if only because inflation is making a comeback. Charlebois argues that it needs to change more.

As he puts it at the end of his article: “Blaming food companies and restaurants is easy. Asking them to increase wages without paying more for their food and service is just not realistic anymore.”

He’s right. We’ve been living in a dream world of low food prices, and we’re all in the process of waking up.

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