How The Recession Affects Pallets and Small Businesses

It's hard to believe that it has been nearly 3 years since the pandemic began. During this time we have seen spikes in unemployment, lower demand for non-essentials, credit/ debit conditions, and widespread fear.

All of these are key aspects that indicate a recession. But what is a recession exactly, and how does it affect the palate industry?

First, we need to know exactly what a recession is.

According to the National Bureau of Economic Research, “recessions generally occur where there is a widespread drop in spending. This may be triggered by various events such as a financial crisis, adverse supply shock, or a large-scale natural disaster (e.g a pandemic)”.


In the past, the United States has had many points where there was a drastic economic decline. However, since the 1980s there have been 4 or 5 recognized recessions. Depending on who you ask, 2020 to 2022 may not be a recession. While those at the top are only now calling for a recession, many households and businesses have been trying to call attention to the general downturn these past few years.


There are still a few industries that have been considered ‘recession proof’. These are industries that provide essential goods and services, such as health care, information technology, and grocery stores.


So how are pallets affected? It wouldn't be unreasonable to assume that pallets would be a generally safe industry considering their role. Pallets are the base for everything materialistic. They transport medicine, food, clothing, and electronics along with an endless amount of other supplies. Pallets make it possible for our essential needs to get from factory to warehouse to store.


Unfortunately, many pallet companies are family-run, small businesses. In the US small businesses are responsible for employing nearly half of the general workforce. Looking at a study on PNAS.org, data from as far back as the great depression in the 1930s was used to illustrate the shocking similarities of how small businesses are often left to suffer alone.



When no hope is given, the consequences are bound to get worse. In 2020 alone 43% of businesses were temporarily closed and employment had fallen by 40%. With this drop in the general workforce, many pallet industries have suffered severe cutbacks. A big part of the pallet industry is manual labor. Without workers, pallets end up being unrepaired and left to pile up. This leaves less storage space to build newer pallets, as well as meet the demands of potential buyers.


Considering the important role pallets play, many customers cannot afford to have a lack of them. While getting the pallet is important, a customer must also consider the pricing. This lack of availability on the pallet manufacturer's side can lead to a sudden increase in competitive pricing and hiring practices.


To learn more look out for our next blog post. In our next article, we'll discuss what pallet companies and pallet users can do to prepare for a recession. Let's prepare together!

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