The baby formula shortage and the twisted priorities of the American economy

A nearly empty baby formula display shelf is seen at a Target store in Orlando. (Photo by Paul Hennessy via Getty Images)

Throughout the country, there is an acute shortage of baby formula that millions of families rely on to feed their children. According to research from Datasembly, "the national out-of-stock rate for baby formula reached 43 percent" last week. That's up from 31% last month, 11% in November, and the low single digits in the first seven months of 2021.

The result is that many parents are struggling to keep their children fed. Some are driving hours to find a place with formula in stock. Others are paying exorbitant prices from resellers seeking to exploit the crisis. Many have been forced to ration their supply, watering down the formula and potentially leaving their children undernourished. 

There are a variety of reasons why baby formula is in short supply. For months, the industry has struggled with supply chain challenges related to the pandemic. Then in February, Abbott Nutrition — one of a handful of major manufacturers — recalled three popular varieties of formula. Four babies were hospitalized with bacterial infections after drinking the formula and two died. The Michigan plant where the formula was manufactured remains closed. 

This agonizing situation is the function of the American economy, which provides little support or protection to new parents. In the best of times, millions of American families are hanging on by a thread. 

In San Antonio, where supplies of baby formula are particularly scarce, "doctors are encouraging new mothers to increase the amount of milk they pump and breastfeed as much as possible." But this is a personal decision and not an option for many parents due to allergies, medical conditions, and other factors beyond their control. 

Moreover, many mothers are unable to breastfeed because America is the only developed country that has no guaranteed paid family leave. In 2018, the average guaranteed paid maternity leave benefit among the 38 OECD countries, a group that includes the European Union, Japan, and Australia, was 51 weeks. 

Working mothers are guaranteed breaks to pump milk. But this requires expensive equipment and there is no requirement that workers are paid while they are pumping. And even unpaid time for pumping might require confronting management. For many women in low-wage industries like retail and fast food, pumping milk is not affordable or practical. 

Biden's Build Back Better proposal included a modest paid family leave benefit of 12 weeks. But it was defeated in part due to multimillion-dollar lobbying campaigns by corporate trade groups like The Business Roundtable and the U.S. Chamber of Commerce. These campaigns argued that providing a paid family leave benefit was not worth modestly increasing corporate tax rates, described as "harmful tax increases on job creators."

The failure of Build Back Better protected corporate profit margins but also meant the expiration of the expanded Child Tax Credit. As a result of the decision to let the expanded child tax credit expire in December, 3.7 million children fell into poverty, according to a study by the Center on Poverty and Social Policy. The child poverty rate increased from "12.1 percent in December 2021 to 17 percent in January 2022" — a 41% increase. 

Millions more children live in families with reduced purchasing power. And these families — if they are lucky enough to find baby formula — are facing increased prices. Over the last 12 months, the "average cost of the most popular baby formula products is up as much as 18%."

Even before the price increase, baby formula was a large expense for many families. Brand name formula costs between $130 and $428 per month. These costs are hard to justify for a product that "consists mostly of dehydrated cow’s milk, vitamins, and a ton of sugar." But the baby formula industry is highly concentrated, with four companies (including Abbott) controlling about 89% of the market, as of 2018. This kind of market is excellent for corporate profits but leaves consumers vulnerable if a single supplier faces disruptions. 

The American economy prioritizes the profit maximization of major corporations over families, especially new parents. And now, in the wealthiest country in the world, parents are having a difficult time finding food for their babies. 

Abbott's safety issues

In February, Abbott announced that it was “voluntarily recalling three types of infant formula,” including Similac, Alimentum, and EleCare, following reports of four babies contracting infections of Cronobacter sakazakii and one case of Salmonella. While the bacteria “wasn’t found in the sample [the babies] drank,” Abbott recalled the product as a “precaution.” 

According to the FDA, an inspection of the factory in Sturgis, Michigan “detected cronobacter in test samples,” but Abbott insisted that the results were from “non product contact areas.” Abbott said it found no “traces of either bacteria” in the finished products. 

“[W]e know that our recent recall caused additional stress and anxiety in an already challenging situation of a global supply shortage,” Abbott said in a statement. “We are working hard to help moms, dads and caregivers get the high-quality nutrition they need for their babies.” 

In October 2021, a whistleblower raised concerns about Abbott’s manufacturing plant in Michigan, alleging that “Abbott falsified records, failed to maintain proper records and released untested baby formula.” The whistleblower also criticized Abbott for allegedly “hid[ing] information during a 2019 audit by the FDA” and making products that are “unable to be properly traced.” According to a report by Food Safety News, the complaint alleged that “some of the equipment associated with the drying process at the Sturgis site was failing and in need of repair,” resulting in a “number of product flow pipes” having holes, allowing “bacteria to enter the system” and be picked up by the product flowing through the pipes. 

Abbott said that it would “thoroughly investigate” the allegations. The company also claimed that the report came from an employee who was “dismissed due to serious violations of Abbott’s food safety policies.” Abbott can afford to update its Michigan factory. In the first three months of 2022, Abbott had $2.9 billion in profits. 

The FDA delay

In February, the FDA “warned consumers not to use certain powdered infant formula products” from Abbott’s Michigan facility and said it was investigating “consumer complaints” of bacteria contamination. The agency found that Abbott “did not establish a system of process controls covering all stages of processing” to prevent products from being contaminated, according to an investigation conducted between January 31 and March 18. 

Still, the agency did not take action until four months after they received the whistleblower's statement. "I am…concerned that the FDA reacted far too slowly to this report,” Representative Rosa DeLauro (D-CT) said in a statement. “Why did the FDA not spring into action? Why did it take four months to pull this formula off store shelves?”

Now, as supply of baby formula continues to dwindle, the federal agency is scrambling to address the shortage. 

“We are doing everything in our power to ensure there is adequate product available where and when they need it,” FDA Commissioner Robert M. Califf, M.D said in a statement. “Ensuring the availability of safe, sole-source nutrition products like infant formula is of the utmost importance to the FDA.”

Yesterday, the U.S. Food and Drug Administration (FDA) announced that it was permitting Abbott to release some of the baby formula produced at its shuttered facility in Michigan “on a case-by-case basis”— a reversal of its initial guidance.