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Friday, October 15, 2021
In a tight labor market, vaccine requirements are a double-edged sword
Greetings readers! In today’s episode of Mixed Signals on the Macroeconomy, a hot read on consumer prices was followed up by jobless claims setting a new pandemic-era low. That labor market read, combined with strong third quarter earnings, was sufficient enough to power the S&P 500 Index (^GSPC) to its best day in about seven months.
The unexpected drop in unemployment claims — the latest testament to how tight labor conditions remain, even as bad news literally piles up in other parts of the economy — allows us to consider an as-yet under-explored question about the nexus between COVID-19 and understaffed service-sector jobs.
To wit: Are newly-implemented vaccine mandates helping or hurting a staffing shortage that’s now found its way to pizza deliveries? Especially since those requirements disproportionately impact workers of color who demonstrate high levels of vaccine hesitancy?
It’s a fair question, and one Yahoo Finance’s Anjalee Khemlani explored this summer, when New York City was among the first wave of cities to impose stiff vaccine/COVID-testing requirements on workers and businesses.
The Big Apple’s data show non-whites still lag the broader population as having received at least one dose, a trend confirmed by the Centers for Disease Control’s own figures. And according to Bureau of Labor Statistics data, Blacks and Latinos comprise the largest share of retail, hospitality and leisure workers, among the professions directly affected by coronavirus infections and vaccine mandates.
According to Andrew Hunter, an economist and co-founder of job search engine Adzuna, resistance to vaccine mandates and burnout (including, but not limited to health care) are converging to drive up quit rates. The dynamic is also becoming an impediment to filling open jobs.
“With this in mind, employers are experiencing new and unique challenges; those without firm vaccination policies are struggling to hire for in-person roles, especially as approximately 9 million Americans are hesitant to return to work due to Delta concerns,” Hunter told the Morning Brief in an email.
“On the flip side, for some companies, vaccine mandates to ease these concerns could in themselves alienate staff. This wasn’t a factor in the last JOLTS (job openings and labor turnover survey) report, but we will likely see an impact in the September report since Biden’s mandate recently went into effect,” Hunter added.
And battle lines are being drawn all across the country, with first responders in NYC and Los Angeles sparring with city officials over mandates. In the private sector, where companies are moving to comply with the Biden administration’s recent executive order, some employers are courting legal challenges by firing unvaccinated workers.
Taken together, it suggests companies are going to have a tougher time filling open jobs.
“Sectors with a higher proportion of vaccine-hesitant staff may be better off increasing incentives for employees to be vaccinated, such as cash bonuses,” said Adzuna’s Hunter, who cited Amazon’s (AMZN) recent giveaway of cash bonuses and cars to those who took the shot.
“Adzuna data shows that incentives aren’t uncommon; in August, 27,700 job ads on the Adzuna platform mentioned a bonus on offers to employees who get a COVID-19 vaccine, up from 10,900 in July,” he added.
It also suggests that some areas insisting on a COVID-19 inoculation may see an outflow of workers to more permissive states like Texas or Florida (in the interest of full disclosure, a vaccine-hesitant relative told me a few days ago he was mulling a move to a “red state” that wouldn’t require the shot).
“We’ve seen Elon Musk announcing he’s moving the Tesla (TSLA) HQ to Texas and the more libertarian state views are likely part of the appeal — vaccine mandates and otherwise. However, this is not a new trend,” said Hunter.
“There has been a large-scale migration into states like Texas and Florida over the last year, regardless of differing views on vaccine mandates with many different factors at play, including a lower cost of living and better quality of life,” he explained.
“Job seekers who don’t want to be vaccinated will likely opt for remote positions rather than uprooting their lives. When that isn’t a possibility, we anticipate that they will choose industries or companies where a legal mandate is not in place,” the economist added.
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