Winter 2023

Supply Chains & Working Conditions During the Long Pandemic: Lessons for a New Moral Political Economy?

Authors

Richard M. Locke , Ben Armstrong, Samantha Schaab-Rozbicki, and Geordie Young

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To Dædalus issue

Abstract

In recent decades, the global economy has become increasingly structured around supply chains that connect firms within and across national borders, a reliance that has been the subject of controversy in light of disruptions from the COVID-19 pandemic. In response to these disruptions, firms have adapted in various ways to maintain their level of production. In this essay, we describe two approaches companies pursued during the pandemic: the “sweating” strategy in which firms shifted costs onto the worker, and the “securing” strategy in which firms chose instead to invest resources into supporting their workforce. In doing so, we argue that the companies’ respective approaches in the context of the COVID-19 pandemic reflected their long-standing management models. Furthermore, we suggest that the insights gained from examining these approaches may provide a novel perspective on how to reimagine the current political economy.

Author Information

Richard M. Locke is Provost and Schreiber Family Professor of Political Science and International and Public Affairs at Brown University. He is the author of five books, including Production in the Innovation Economy (with Rachel Wellhausen, 2014), The Promise and Limits of Private Power: Promoting Labor Standards in a Global Economy (2013), and Working in America (with Paul Osterman, 2001).

Ben Armstrong is Research Scientist and Executive Director of the Industrial Performance Center at the Massachusetts Institute of Technology, where he co-leads the Work of the Future Initiative. His work has appeared in journals such as Economic Development Quarterly and Boston Review.

Samantha Schaab-Rozbicki is an undergraduate student at Brown University pursuing a double concentration in Political Science and Health & Human Biology.

Geordie Young is an undergraduate student at Brown University pursuing a double concentration in Computer Science–Economics and Political Science.

Our world is shaped by supply chains that link firms across borders, fragmenting and dispersing production around the globe and generating controversies over poor environmental and labor standards.1 The COVID-19 pandemic has exposed how these supply chains, once celebrated for their just-in-time efficiencies, can make the economy more fragile, creating shortages and bottlenecks. The pandemic has not only revealed the vulnerabilities of an economy structured around supply chains, but it has given us the opportunity to reimagine how our economy can become more resilient, sustainable, and just.

Consider the different ways in which firms have responded to the pressures of the pandemic. Some doubled down on exploitative labor practices, while others charted a different path. Some firms across retail, manufacturing, and other sectors sacrificed short-term profits to invest in improved worker safety and better pay for those whose work became more crucial and less safe in the pandemic’s early stages. This latter group of firms provides potential lessons for building a new moral political economy that privileges solidarity over “fissuring” the workforce, and worker safety and voice over short-term profitability.2 Did firms embrace this more worker-friendly strategy because they discovered a new “purpose” (see Rebecca Henderson’s contribution in this volume), sparked perhaps by the dramatic losses of life and widespread sense of mutual dependence, vulnerability, and solidarity during the early months of the pandemic?3 Or were they just responding to the “great resignation” and tighter labor markets that developed as the economy began to recover from the pandemic?

Before the pandemic, the average consumer did not have to think much about where the goods they bought came from, or how they were made. The coronavirus did not just disrupt the supply of health-related products like lab reagents key to producing accurate testing kits or personal protective equipment. It made it harder to procure essential daily items such as food, cleaning supplies, and toilet paper.

Companies across an array of sectors responded by pursuing two alternative approaches to managing their workplaces and workforces: sweating and securing. Sweating required workers to take on more tasks in unsafe working conditions during the early stages of the pandemic. Securing saw firms invest in protecting frontline workers from coronavirus while compensating them with increased wages, time off, or other measures in return for the increased risks and burdens they faced at work. Firms that pursued the securing approach sacrificed short-term revenues to support employee well-being.

Some firms and industries kept operating through the pandemic on the back of workers in critical industries. So-called “essential workers” were more likely to be low-income and less likely to be college graduates.4 Black and Hispanic workers were overrepresented in sectors deemed essential during the early stages of the pandemic, such as food services and nursing assistance.5

Such workers faced dramatic risks. Data from the U.S. Occupational Safety and Health Administration show that American workers across all industries reported more than four times more illnesses in 2020 than they did in 2019.6 Respiratory illnesses increased more than fortyfold, from 10,800 cases in 2019 to more than 428,700 in 2020.7 The crisis was particularly acute for production and logistics workers, who already experienced higher rates of workplace injuries and illnesses before the pandemic.8

There were abundant examples of densely packed, unsafe working conditions during the early months of the pandemic. Some meat industry firms continued operations by pushing costs and risks onto their workers. When consumers began to panic-buy because of fears that meat processors would shut down because of high infection rates, President Trump invoked the Defense Production Act to designate meat and poultry producers as “essential to the national defense.”9 Continued operations at U.S. livestock processing plants during the pandemic were related to higher rates of morbidity and mortality from the virus, leading to an estimated 236,000–310,000 excess COVID-19 infections and 4,300–5,200 excess deaths.10 Additionally, for every worker infected at a livestock plant, between seven and eight local residents were subsequently infected.11

The sweating strategy was not limited to U.S. producers. When demand for medical gloves soared, producers in Malaysia ramped up production by turning to migrant workers. A majority of these workers lived in unsanitary and overcrowded quarters provided by their employers, facilitating the spread of the virus.12 They were regularly pressed to work excessive amounts of overtime, and some employers forced them to stay through deceptive contracts that fined them for quitting or confiscated their passports.13

Employees of firms serving critical functions had longer hours and riskier working conditions. Distribution workers faced a surge in online order volumes. Retail workers had new cleaning and restocking duties, while also dealing with rude and belligerent customers. Surveys of essential workers—and workers as a whole—indicate that a majority worried about mental health or felt burned out due to increased workloads.14 This helps explain why workers in low-income retail, distribution, and manufacturing positions have resigned in droves, searching for higher-paying, safer, and more manageable jobs.15

While some companies maintained operations by sweating their workers, other firms protected their workers by preventing risks or providing compensation during the COVID-19 crisis. In the early months of the pandemic, many retailers limited their hours and the number of people allowed in their stores, reducing risks for workers and customers. Home Depot closed stores early to allow more time for restocking and cleaning.16 Other retailers adopted similar practices, although restricting customer traffic hurt their bottom line.17 Factories redesigned their workplaces to allow physical distancing, or changed shifts so that fewer employees were present simultaneously. For example, Ford Motor Company, in coordination with the United Auto Workers union, temporarily suspended production early in the pandemic (in March 2020).18 When the company restarted production in May, it introduced mandatory health checks and redesigned workstations that allowed for social distancing.19 Ford also tested wristbands that would buzz whenever individuals came within six feet of one another, making it easier to trace contacts if an employee tested positive for the virus.20

Firms also improved benefits and pay for essential workers who took on extra work and risk during the pandemic. Some companies—including Home Depot and other retailers–gave employees paid time off if they had been exposed to the virus, encouraging them to quarantine. Others compensated workers for the expanded duties and risks they had taken on during the initial pandemic surge, through means ranging from one-time bonuses to longer-term raises.21 Target, for example, accelerated its commitment to a $15 per hour minimum wage to its employees, and offered periodic “hazard pay” bonuses to essential workers.22

Why did some firms favor sweating and others securing? Perhaps industries like nursing homes and long-term care facilities, with high numbers of essential workers and dense workplaces, found it too expensive to secure workers given their underlying business model, while firms in other sectors with different financial conditions and competitive strategies found securing less burdensome? However, this does not explain variation within sectors.

Tyson Foods and Sanderson Farms both faced outsized pressure to continue producing during the early months of the pandemic. The federal government mandated that meat processing facilities remain open, leading to especially poor workplace safety conditions during the early phases of the pandemic.23 Yet these two firms ended up with quite different responses.

Tyson is the largest poultry processor in the United States, and Sanderson Farms is the third largest, with 137,000 versus 18,000 employees, respectively. Both firms are publicly traded, enabling us to compare financial data and disclosures about the companies’ response to the COVID-19 pandemic. They operate in similar geographic areas and compete in the same markets and market segments.

Controversies over food processors’ treatment of workers go back to Upton Sinclair’s 1906 novel The Jungle.24 A government review of the labor conditions in meat processing facilities in the late 1990s found a majority of plants were violating “wage and hour and safety and health laws,” and workplaces were so densely packed that coworkers risked cutting one another with their knives.25 It is unsurprising that COVID-19 would spread quickly through these facilities, or that Tyson and Sanderson had limited choices. They could not shut down production like automakers, or even suspend operations to reorganize themselves, because the government deemed their activities “essential.”

Initially, both companies apparently pursued similar policies, consistent with the guidelines from the Centers for Disease Control and Prevention (CDC). They pledged to sanitize workspaces and check workers’ temperatures, sending those with a fever home. Yet by May 2020, Sanderson Farms had recorded only 400 positive cases of COVID-19 (approximately 2 percent of their workforce), while Tyson Foods had reported more than 2,800 COVID-19 cases in the State of Arkansas alone (approximately 12 percent of the company’s workforce there).26 Eighteen COVID-19 deaths had been linked to Tyson by May 2020, while some reports alleged that Tyson had suffered three times more cases and twice as many deaths per worker than any other firm in the industry.27

Apparent similarities in management approaches disguised important differences in practices during the initial outbreak. Even before the first cases of COVID-19 had been identified in the United States, Sanderson Farms established a COVID-19 task force and procured personal protective equipment (PPE) for its workforce. When its first employee was infected on March 23, 2020, Sanderson notified all other employees in the worker’s facility, and quarantined the six other employees in the infected employee’s work area, coordinating with local and state-level health authorities.28

Public statements from Tyson indicated that it also established a COVID-19 task force and put policies in place to protect workers. However, lawsuits and investigations suggest that the company’s actions were inconsistent with its public announcements. One lawsuit alleges that Tyson plant managers in Waterloo, Iowa, downplayed the dangers of COVID-19 to their workforce while setting up a daily betting pool on how many workers would test positive for the disease.29 More than one thousand workers tested positive, several were hospitalized, and six died.30 Tyson was slow to provide data to public health officials, limiting their ability to monitor and contain the spread. Both a class action lawsuit on behalf of Tyson shareholders and the New York Comptroller suggested that the company’s disclosures regarding its COVID-19 response were misleading.31 While the company emphasized publicly that it was promoting social distancing and providing PPE, the Comptroller cited reports that employees were working in close quarters, with only plastic sheeting between them, covering their faces with bandanas.32

Compensation and leave differed at the two firms. Sanderson Farms provided employees who had symptoms or needed to quarantine with paid time off for up to fourteen days, the then-recommended isolation period for infected individuals.33 At Tyson, employees who were ill could stay home by taking short-term disability, but were initially eligible for only 60 percent of their pay (this was later briefly increased to 90 percent).34 Although Tyson suspended its policy of penalizing absentee workers with symptoms or who needed to quarantine at the beginning of the pandemic, it reinstated this policy in June 2020.35

Both companies provided attendance incentives for employees early in the pandemic to maintain production. Tyson gave employees one-time bonus payments of $500, once in May and once in July 2020, both contingent on consistent attendance.36 Workers who were absent due to illness or childcare concerns, however, still qualified.37 Sanderson Farms also attempted to reward attendance, providing workers with a weekly attendance bonus of $1 per hour, from March 30 to June 26, 2020.38 Employees had to have perfect attendance for the entire week to receive the bonus.39

Facing limited case numbers at its facilities, Sanderson Farms did not dramatically change its COVID-19 protocols in 2020 or 2021, providing facility-wide testing when communities experienced surges of COVID-19, but not enforcing any universal testing protocol. Consistent with the firm’s comparatively high wages for the industry, Sanderson Farms announced another wage increase in 2021 with entry-level wages at over $16 per hour.40

Tyson made bigger changes after the outbreaks at its facilities in early 2020. The company implemented widespread testing of its workforce, which revealed surges in COVID-19 at various Tyson facilities during 2020.41 As a result, Tyson plants experienced periodic closures. As the pandemic progressed, Tyson appears to have adopted stricter employee protections consistent with CDC guidelines, but it is unclear how—if at all—these protections translated into a safer work environment. Between March 2020 and February 2021, Tyson reported 29,462 COVID-19 infections and 151 deaths, more than double the infections and deaths of any other large food processing firm.42

Why did Tyson and Sanderson take such different approaches to workplace safety and employment relations during the pandemic? Over fifty years ago, management theorist Douglas McGregor observed that a firm’s choices about organizing work and managing workers are shaped by management’s underlying assumptions.43 Workers can be seen as either variable costs to be reduced, reluctant contributors to the firm’s prosperity who require co1nstant supervision and control; or as assets to be valued and developed, multifaceted individuals who are intrinsically motivated to work and contribute to their workplaces. The differing approaches to the pandemic at Tyson and Sanderson reflect their long-standing attachment to opposing models of management.

Before the pandemic, Tyson underwent multiple investigations associated with illegal or unsafe employment practices, and saw its executives and managers indicted in 2001 for “conspiracy to smuggle illegal aliens” to work at Tyson Foods processing plants, a scheme that allegedly reflected Tyson’s broader corporate culture.44 While several managers took plea deals and testified against Tyson, the company executives were ultimately acquitted at trial.45 In 2015, Oxfam America released a report on labor practices in the poultry processing industry focused on the low wages and poor health and safety standards at Tyson Foods.46 Tyson’s workers complained that the line speed was too fast, causing physical problems, and that they frequently wore diapers because they were not allowed bathroom breaks.47 Since 2017, Tyson facilities have been the subject of more than 230 inspections with the Occupational Safety and Health Administration (OSHA), reflecting incidents that range from amputations to broken bones.48

Sanderson Farms too underwent OSHA inspections before the pandemic, saw complaints about low wages and injuries on the job, and pressed workers not to take bathroom breaks.49 Yet according to Violation Tracker data, Sanderson Farms paid only $5 million in fines for safety and wage and hour violations, as compared with the $74 million in penalties by Tyson Foods, which has approximately seven times as many employees as Sanderson, but almost fifteen times as many penalties for violations.50 According to a ProPublica analysis of OSHA data, in 2017, Sanderson boasted the fewest OSHA violations (per one thousand employees) among its poultry industry competitors.51

These prepandemic patterns are consistent with the two firms’ respective pandemic responses of sweating or securing their workers, although there is some evidence that Tyson began to change its response during the pandemic, promoting testing, enforcing a vaccine mandate, and offering a $200 bonus to frontline workers who could prove they were vaccinated, perhaps suggesting a newfound commitment to the health and safety of its workers.52 By November 2021, over 96 percent of Tyson’s workforce was vaccinated.53 Additionally, Tyson announced plans to offer paid sick leave starting in January 2022, and has begun offering signing bonuses and more flexible work schedules.54 It increased starting pay for line workers in 2021 to $15.20 per hour.55 This was still less than what Sanderson Farms paid similar workers, but provides evidence (together with the pandemic bonus payments) that Tyson’s approach to employment relations may have evolved in 2021.

These different approaches raise an important question. Can firms with a legacy of sweating their workers learn from the challenges they faced during the pandemic and adopt a more worker-friendly approach to managing their operations? The evidence is still preliminary, and Tyson is only one case, but the firm’s changes after the first disastrous months of 2020 provide cautious grounds for optimism. Tyson is not alone. Other firms that sweated their workforces show signs of shifting their employment practices after the pandemic.

For example, Walmart has long been criticized for relatively low wages and poor employee benefits. Yet during the pandemic, it reduced store hours, limited capacity in stores, provided PPE to workers, and instituted physical protections like plexiglass barriers. Walmart relaxed its paid time off policies to reduce pressure on workers who became ill or needed to quarantine, and instituted regular temperature checks at store locations to monitor employee health.

This expensive approach to worker safety is impressive for a firm with a checkered past in terms of supporting employees and a business model focused on the lowest possible prices. After initially paying one-time bonus payments ($300 for full-time and $150 for part-time employees), Walmart also increased its base pay and minimum wage to $12 per hour, while committing to cover 100 percent of the cost of employee education and expanding employee access to mental health resources.56

Of course, these changes may be due to a tight labor market and the “great resignation,” rather than any deep-rooted change in underlying assumptions or business models. Even so, the current moment may allow producers and their suppliers to reimagine how they could manage their operations and their employees. New possibilities may emerge during a crisis as severe as the COVID-19 pandemic. More research is required to assess the viability of this securing strategy across different industries and countries. But the experiences we have documented here suggest there is a much greater range of possibilities for how we reimagine our political economy than was apparent even a few years ago.