Category: Food and Drink

For those with pandemic pangs for the sweet crunch of Grape Nuts, take heart. The Great Grape-Nuts Shortage of 2021 is officially over.

After months of being out of stock, the cereal is shipping at full capacity to stores nationwide, parent company Post Consumer Brands told USA TODAY exclusively.

And if you paid wildly inflated prices on the black market to get your hands on a box, you may be eligible for reimbursement.

“It became abundantly clear during the shortage that Grape-Nuts fans are ‘Nuts for Grape-Nuts,’” Kristin DeRock, Grape-Nuts brand manager at Post Consumer Brands, said in a statement. “So much so that some of our loyal super fans were willing to pay extreme prices just to ensure they wouldn’t be without their favorite crunchy cereal.”

Here is the full story, via John B. Chilton.  One way to read this is Grape Nuts subsidizing habit formation.  Alternatively, you might read it as Grape Nuts subsidizing very loyal customers, and hoping to get publicity in the process.  Or is Grape Nuts subsidizing future middlemen in any future black market transactions by assuring them of ongoing demand?  How are you supposed to prove you bought a black market box?  And was it illegal to resell and buy Grape Nuts in the first place?  I don’t entirely understand all of the microeconomic mechanisms at work here.

Yesterday I outlined my supermarket job from ages 16-18 in suburban New Jersey.  I did know plenty of economics at that time, including Adam Smith and Paul Heyne and most of classical economics, and here are some of the observations I made.  Please note this is all n = 1 or n = 2, these may or may not be generalizable.  Here goes:

1. Mockery was the relevant incentive at the margin, and the “enforcer of first resort.”  If you did something wrong you were mocked, sometimes mercilessly.  My first night on the job I put too many fruits and vegetables in the refrigerator, relative to expectations, and so I heard about that multiple times on my next appearance.  The jokes at my expense were funny.

2. There was strong competition to win overtime hours. Working Sunday 12-5 was a prime slot, and not hard work either because customer demand was slow that day.  Saturday 1-9:30 had extra payoffs as well.  These labor supply curves definitely sloped upwards.  And allocation of overtime hours served to keep the better workers around.

3. My sense was that the demand for labor was pretty inelastic in the following sense: once you were soundly established as someone who would show up, complete your list of tasks, and not steal too much, they really were not looking to fire you.  You were “a keeper,” and in principle they would pay you more in response to a minimum wage hike, rather than firing you.

4. My sense was that the demand for labor was quite elastic in the following sense: the lower-tier workers were given a lot of luxury hours.  For one thing, if you didn’t get an average of at least fifteen hours a week, you might leave for another job.  Second, and more importantly, a lot of the night hours were optional.  Did they really need you back there that Tuesday night after 6 or 7 p.m.?  Well, maybe yes, maybe no.  There was a sense that if customers came by with questions, it was useful to have someone around to help them.  But if the produce department was not making a lot of money, they would cut back on these hours quite readily.  In slow times I didn’t get the 5-10 p.m. slot a whole lot.

5. Department managers, including in produce, were paid an “efficiency wage time profile” of returns, a’ la Eddie Lazear.  That is, in early years they would pay you below marginal product, but pay you above marginal product in the later, outer years.  That schedule would keep you in line, because you needed to avoid getting fired to reap the high later returns.  That said, in the outer years you would end up getting canned, because the prescription is not entirely time consistent.  Why keep someone around who is getting paid above marginal product?  It was called “getting busted.”  At that point you would typically start all over again with another supermarket.  (I did understand this all at the time, though I hadn’t yet read Lazear and a lot of the work hadn’t yet been published.)  A minority of department managers ended up promoted to store managers, but that was hard to pull off, especially without a college degree.

6. There was plenty of employee theft, though never from me.  Things disappeared off the back of trucks, and in this time there was no CCTV.  At a smaller scale, to be caught eating or taking food without a receipt was considered a fireable offense, though if you were a good worker and kept it to brief snacking within limits they did not try too hard to catch you.  They didn’t want to have to fire you, yet they did want to keep the rule in place.  Collusion between male line workers and female cashiers sometimes was a problem, as it meant some people would just take foodstuffs home.

6b. Shoplifting was rampant, though much more in the meat department than in produce.  Overall, the customers and workers were less honest than the bosses.

7. Correctly or not, the line workers typically were cynical about the union.  You paid dues to it, and you were told it gave you higher wages, but otherwise it had no presence in your life.  People saw the dues that left their paycheck, but were not convinced they were getting comparably high wages because of the union.

8. Due to gas prices and commuting costs (you had to keep your car in OK shape, which took competence as well as money), there was a modest degree of monopsony.  Still, everyone understood that a higher cost of labor meant fewer hours and in the longer run fewer hires.  No one thought that allowing vastly more shoplifting would lead the company to hire more labor, which is in fact what the more radical monopsony models imply.  Nope, it wasn’t monopsony of that sort.

9. The store manager, and in turn the department manager, would be terrified when the regional boss would do a store walk-through, and typically that happened by surprise.  That was when they really wanted you to scurry and have everything looking spic and span.

10. Workers had various personality types, and within a given type only so much motivation was possible, no matter what the rewards.  All rewards were seen as temporary, and to be followed by an eventual firing or demotion.  Slackers were slackers, and you had to accept that and work around them accordingly.