The Labor Effects of the Federal Vaccine Mandate

I’m about to touch on a hot topic- the new federal COVID vaccine mandate.  I don’t think I’m quite into electrified third rail territory, but it might be a bit like working with hot jam that you’re about to jar. Why this topic? This past week I was honored to sit on a panel focusing on vaccine hesitancy for the annual State of Reform healthcare conference. The question of the mandate and its potential effect on Alaska’s labor force came up during the panel discussion. While the topic has undoubtedly political aspects, the question is relevant and important. Thus, my goal is to be as informative as possible while discussing the potential labor force effects of the mandate. I leave you to judge how well I do.

What is the federal vaccine mandate?

The federal vaccine mandate is a series of mandates and actions aimed at increasing the portion of U.S. residents who are vaccinated against COVID-19. The Biden Administration announced this series of actions on September 9, 2021. The series consists of four new requirements and one “call-to-action” including:

1. Requiring the vaccination of all federal workers and contractors that do business with the federal government;
2. Requiring all private employers with more than 100 employees to ensure their workers are vaccinated or are tested weekly;
3. Requiring the COVID-19 vaccinations of healthcare workers at organizations that receive Medicare and Medicaid reimbursement;
4. Requiring employers to provide paid time off for employees to get vaccinated;
5. Calling on large entertainment venues to require proof of vaccination or testing for entry.

When do those covered by the vaccination requirement need to complete their vaccination series?

The September 9 executive order give federal employees 75 days (late November) to complete their vaccination series. It also provides them with the opportunity to request medical or religious accommodation. The dates for federal contractors and for employers who employ more than 100 workers have not yet been established by the Office of Management and Budget (for contractors) and the Occupational Safety and Health Administration (for employers). We should see those dates established in the coming weeks.

Who is not covered by the mandates?

While the mandates will affect about two-thirds of the U.S. workforce there are approximately 65 million working Americans who will not be affected by the mandate. These include sole proprietors and those working at businesses with fewer than 100 employees that are not federal contractors. In addition, those outside the labor force including the retired, the disabled, juveniles, the incarcerated, and the unemployed are not covered by the mandates.

What effects are we expecting on the labor force from the mandates?

There will be people who quit their jobs rather than get vaccinated or tested every week. However, I expect the number of those people to be limited for a couple of reasons:

• The mandates offer people the alternative of weekly testing. This option allows people a reasonable (but not cost-free) alternative to the vaccine. With the employers I’ve worked with around the issue of the vaccine this type of “soft mandate” has led to very limited resignations. In general, the people who’ve left these companies have usually had another axe to grind with the organization and this issue just gave them a free pass to say, “It was them!”.
• Another reason I expect limited change from these mandates is that for some classes of employees there won’t be many non-mandated employment options for them to turn to for a new job. Item 3 above covers healthcare workers at organizations that accept payments for the Centers for Medicaid and Medicare Services. While not every healthcare company participates in Medicaid or Medicare nearly every large employer does which means most jobs are going to be covered by the mandates. Openings for unvaccinated workers at non-mandated employers are going to be few and far between and mostly located in smaller practices which don’t except Medicaid or Medicare. A portion of those practice have their own internal mandates.
• Vaccine hesitancy amongst Americans is coming down in part because of the Delta variant and in part because many large corporations were already introducing mandates (or increasing insurance costs on unvaccinated workers) and thus normalizing being vaccinated. A Monmouth University tracking poll recently found that the percentage of Americans who say “they will likely never get the vaccine” has fallen from 24 percent in January to 15 percent in September.

What effects are we expecting on employers from the mandates?

Employers who weren’t already planning on mandates will have some increased administrative costs associated with tracking workforce vaccination and testing. However, the costs will be small compared to the costs some industries are already incurring to keep COVID out of their workforce and facilities. Alaska’s seafood processing industry spent tens of millions of dollars this summer alone trying to keep COVID out of their workforce, plants, and host communities.  In addition to tracking costs, I do expect that some employers will experience turnover costs however I think a significant increase in turnover related to this event is unlikely (particularly given that the economy is experiencing record high levels of churn already). In short, while I don’t expect significant large-scale effects. There will be localized effects from both the federal mandates and local mandates that will have to work their way through the system. Some of these effects will garner media attention but will likely be the exception and not the norm.

Jonathan’s Takeaway: Expect the mandates to capture significant media attention (and lawsuits) but expect the overall effect on employers and employees (most of whom are already vaccinated) to be small.

Jonathan King is a consulting economist and Certified Professional Coach. His firm, Halcyon Consulting, is dedicated to helping clients reach their goals through accountability, integrity, and personal growth. Jonathan has 24 years of social science consulting experience, including 18 years in Alaska. The comments in this blog do not necessarily represent the view of employers and clients past or present and are Jonathan’s alone. Suggested blog topics, constructive feedback, and comments are desired at askjonathan@apcm.net.

9/20/21