NPR’s finance podcast, Planet Money, coined the phrase “skimpflation” to summarize the deterioration of customer service across several industries. So, what is skimpflation in practice, and should you worry about it?
Skimpflation: Less for the Same
The central idea behind skimpflation is the deterioration of customer service consumers began to recognize during the height of the COVID-19 pandemic. Essentially, companies began to cut back services and downgrade customer support capabilities without lowering their prices to match.
For example, call centers cut back hours and staff, hotels suspended housekeeping services, and mail took longer than ever to reach its destination. Entertainment, in particular, has taken a hit since moviegoers were no longer able to go to the theater. Now, most production companies have limited, one-day-only theater releases and upload their film to a streaming service. Despite this change, movie ticket prices haven’t changed – in some cases, they have increased.
Theme parks have also jumped on this trend by cutting complimentary transportation between resorts and airports. Additionally, the resorts themselves also have less to offer guests. They have followed the rest of the hospitality industry into a more “streamlined” approach.
This Isn’t New
The trend of cutting back products and services, shaving little complimentary details, and cutting corners isn’t new. In fact, the American Customer Satisfaction Index, which measures consumer sentiment, says that customer satisfaction efforts have declined over the past few decades.
While the pandemic has undoubtedly exacerbated the issue of companies laying off workers and making budget cuts to stay afloat, these practices were already in place before lockdown. Many companies eliminated large portions of their customer service staff in favor of automation.
If you have ever called an airline, it takes at least ten minutes to navigate the automated menu to a natural person, and you must go through the question/answer responses at least twice. You aren’t getting the same level of customer service, but you end up paying the same in time and money for your plane.
A Twofold Issue
Skimpflation is the cousin of shrinkflation – the decrease in the amount of product you receive while the price stays the same (think: smaller cereal boxes than you remember at the same price). However, the critical difference between the two is that skimpflation causes a twofold problem.
- Consumers pay the same amount for less service than they did five years ago
- Job seekers have less flexibility within these fields
Inflation, in general, is not necessarily a consumer-only issue, but consumers feel the impact of inflation more keenly than large corporate entities. The second gas prices start to rise, commuters, low-income families, and those with low gas mileage cars are the first to feel the strain. The same is true for food price inflation – the lower classes feel the impact far sooner than the wealthy.
Skimpflation affects these same groups. People who need assistance with their bills need to resolve an issue with Social Security Payments, or those trying to contact their credit card companies may not be able to without allotting a three-hour block on their calendar to be on hold. Most people at a lower income level don’t have the time to waste waiting for the answers they desperately need.
Some don’t have a choice, while others choose to go without the help they need because they are the provider for their families. Government offices also don’t have the staff they used to, which means resolving a dispute with the IRS or scheduling an interview with an immigration office is much harder than before.
These median income jobs are less available for job seekers, and those who have a job in skimpflation industries are at risk of a layoff or furlough at any time. Consumers are willing to put up with less, which tells companies that they can cut wherever they need to because their customers will still rely on them no matter what.
In an already challenging job market, those who lost their jobs in the pandemic are reaching a breaking point emotionally and financially. There is a shortage of workers, but employers don’t seem to be hiring anyone to fill their empty desks. In the years since the pandemic began, have these employers learned to operate with less? It looks as though the answer is yes, which poses a problem for unemployed workers without specializations in fields where employers are urgently hiring.
What the Future Looks Like Under Skimpflation
The relationship between buyer and seller is very tenuous at the moment. Companies depend on inertia and customer loyalty to sustain them as they cut back on customer satisfaction services. On the other hand, job seekers have a narrower field of positions to apply for, which removes them from being buyers.
Whenever the balance of commerce is tipped in one extreme or the other, crisis often ensues. It’s unclear how skimpflation will affect the economy in the long term, but it’s essential to take steps now to refocus and recover personal finances.
If you are struggling financially because of unemployment and debt or want to protect your assets preemptively, contact Buchalter & Pelphrey Attorneys at Law. You may qualify for debt relief through bankruptcy.
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