How the Ukraine Crisis is Affecting the U.S. Workforce
The Ukraine crisis is having unforeseen effects on the U.S. workforce that may be more far-reaching than expected.
Elevated inflation rates, a breakdown of global trade and spiking stress levels are just some of the problems American workers are experiencing. But employers can help by offering support through a variety of benefits.
Inflation Hits a 40-Year High
The annual inflation rate in the U.S. accelerated to 8.5% in March of 2022, the highest since December of 1981, from 7.9% in February and compared with market forecasts of 8.4%. According to the Labor Department, higher prices for energy, food and services contributed to the rising inflation.
In part, March’s inflation rate was caused by the COVID-19 pandemic and its negative impact on supply chains. Another contributing factor was the significant talent shortage that led to increased wages and more jobs and workers, making it difficult for businesses to meet demand.
Russia’s invasion of Ukraine caused further economic disruptions, with the worst yet to come. Russia is among the world’s top suppliers of oil and natural gas and rare earth minerals required for a wide range of products, so markets will be affected when they are no longer trading.
According to Federal Reserve Chairman Jerome Powell, Russia’s role in various global commodity markets means “we’re going to see upward pressure on inflation at least for a while.”
Rising Prices May Not Be as Temporary as Advertised
According to White House Press Secretary Jen Psaki, the energy crisis is temporary, and markets will eventually stabilize, leading to inflation slowing. However, many are concerned that prices will continue to rise due to what some perceive as the breakdown of globalized trading systems.
Jennifer Hillman, a trade lawyer who teaches international law at Georgetown University, says, “The trading system as we’ve known it, with the World Trade Organization at its core and with a basic set of rules that everyone traded under, is coming apart. […] I think we’re going to see increasingly blocs, where there are coalitions of the like-minded.”
Some may consider it a good thing if companies shift more production back to the U.S. However, one of the biggest benefits of free trade is that it makes consumer goods more affordable.
The U.S. already has a labor market where demand far outstrips supply, and that will only be exacerbated if companies are forced to move their operations back to the U.S. This will put further pressure on prices and lead to even higher inflation rates, which will affect the U.S. consumer.
US Workers Experience Record Levels of Stress
An American Psychological Association (APA) poll discovered that the Ukraine crisis has led to Americans experiencing higher stress levels than ever before.
Lynn Bufka, a clinical psychologist and APA member, explained the findings. “We found two- thirds or more are concerned about the economy, money and work. And then 80% or more of our respondents reported that they are very concerned about what’s happening in Ukraine.”
She explained that the last time so many people cited the same event as the cause of their stress was in 2008, during the recession.
How Employers Can Help
Constantly rising prices and concerns about the impact of the Ukraine crisis are ratcheting up stress levels in the U.S. workforce. Employers need to consider how they can help reduce the impact on their employees.
While raising wages would be the most straightforward solution, some smaller and midsize organizations might not be able to do this. One alternative would be to provide employees with a wider range of benefits.
Shelley Holt, Payscale’s Chief People Officer, explained, “Employees are looking for more than just pay. Pay is a critical factor, but they want workforce flexibility, they want to live better lives and that is also increasing what [employers] are thinking about for benefits and total rewards.”
According to Payscale, more companies are offering remote work options, mental health and wellness programs, childcare subsidies and four-day workweeks. All these can mitigate the effects of the Ukraine crisis to a certain degree, helping U.S. workers better navigate a world of rising prices and uncertainty surrounding the Russian invasion of Ukraine.