May 17, 2022


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The growing link between vaccine mandates and open jobs: Morning Brief

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Friday, November 5, 2021

How the vaccine mandate could be making the job crunch worse

With jobless claims hitting a new pandemic-era low and the October jobs report on tap for Friday morning, it’s worth revisiting a theme the Morning Brief recently explored.

Namely, are looming vaccine mandates helping or hurting a labor crunch that’s still making companies desperate for workers?

The jury is still very much out on what impact demands that workers submit to COVID-19 inoculations will have on the labor market status quo. Unwittingly, COVID-19 era employment has become the nexus between economics, epidemiology and a culture war that’s upending norms everywhere. According to data from Goldman Sachs, 66% in the U.S. have received at least one dose of the vaccine, well below other major economies and only above India and Russia.

To summarize, U.S. employers are obligated to curb the risk of an outbreak at their facilities. Yet a sizable contingent of workers remain hesitant — if not outright hostile — to the idea of submitting to the jab. The ethics of forcing them to do so in the face of losing their livelihood is still being fiercely debated, and is certainly fair game.

“To the extent that employers in certain industries can continue hiring and allowing employees to work remotely, companies are doing so, which allows for more flexibility on accommodating employees who may refuse vaccination,” Marc Siegel, founder of Chicago-based labor law firm Siegel & Dolan, explained to the Morning Brief in an email.

For better or worse, vaccine mandates are scrambling the outlook for the service sector, especially in public-facing industries like retail and restaurants where evidence suggests pockets of hesitancy prevail. The public sector has not been immune, with opposition flaring among police officers, firefighters and other first responders, which Yahoo Finance’s Dani Romero covered in September.

“Certain employers in the service and retail industries who deal with the public at large, however, have to consider the risks of allowing unvaccinated employees engage with fellow employees and the general public,” Siegel added.

All of this matters, because worker shortages are pushing up wages across industries in a dramatic way, with employers desperate to attract and retain talent, which also puts upward pressure on already surging inflation. 

“The big story in the labor market is the worsening shortages that are pushing up wage growth. All the evidence suggests those shortages are worsening thanks to the imposition of vaccine mandates, with 9,000 New York City workers (around 2.5% of the total) being put on unpaid leave” Michael Pearce, senior U.S. economist at Capital Economics, pointed out recently.

To the extent that potential or current employees are reluctant to meet the basic requirement of a position — namely that they be vaccinated — jobs will remain unfilled in the face of soaring demand.

By requiring vaccinations, “employers are potentially limiting their pool of applicants. Likewise, by refusing to get vaccinated, employees who do not meet criteria for employment are limiting their potential job opportunities,” according to Siegel.

However, “requiring proof of [COVID-19] vaccination is not much different than other lawful requirements that employers already make,” he added.

In a convoluted way, the standoff between the vaccine hesitant and government/private sector strong-arming them into taking the shot may be playing a role in prolonging both the labor crunch and rising price pressures (some economists might call that a negative externality).

So what’s the answer to an increasingly nettlesome quandary?

In a fascinating New York Times article, Tyson Foods shed some light on the delicate balancing act that employers have been forced to walk in requiring vaccines for employees, especially with President Joe Biden setting a Jan. 4 deadline to mandate the shot, or implement a weekly testing regimen, as Yahoo Finance’s Alexis Keenan reported on Thursday.

“We made the decision to do the mandate, fully understanding that we were putting our business at risk,” Tyson CEO Donnie King, told The Times’ Lauren Hirsch (my former colleague) in an interview. “This was very painful to do,” he added.

And The Times’ reporting yielded this interesting nugget: The food giant, which was hit hard by COVID-19 infections that forced it to temporarily shut down operations, now boasts a 96% vaccine uptake among employees. As unpopular and polarizing as mandates may be, they’re clearly effective on some level.

Jobless data suggests that COVID-19 shot requirements haven’t pushed workers out of the labor force en masse, although it’s very much an open question whether workers who voluntarily quit based on their refusal to get a shot are eligible for unemployment.

That said, tightening vaccination requirements may very well be playing a role in keeping a host of jobs open. October’s nonfarm payrolls is likely to tell the tale of an economy that can’t create new jobs until they fill their existing vacancies.

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

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