US President Joe Biden gives an update on the Covid-19 response and vaccination program, in the Roosevelt Room of the White House in Washington, DC, on October 14, 2021.
Nicholas Kamm | AFP | Getty Images
Worried that President Joe Biden’s Covid vaccine mandate for private companies could cause a mass exodus of employees, business groups are pleading with the White House to delay the rule until after the holiday season.
White House officials at the Office of Management and Budget held dozens of meetings with labor unions, industry lobbyists and private individuals last week as the administration conducts its final review of the mandate, which will require businesses with 100 or more employees to ensure they are vaccinated against Covid or tested weekly for the virus. It is estimated to cover roughly two-thirds of the private sector workforce.
OMB officials have several meetings lined up Monday and Tuesday with groups representing dentists, trucking companies, staffing companies and realtors, among others.
The American Trucking Associations, which will meet with the OMB on Tuesday, warned the administration last week that many drivers will likely quit rather than get vaccinated, further disrupting the national supply chain at time when the industry is already short 80,000 drivers.
The trucking association estimates companies covered by the mandate could lose 37% of drivers through retirements, resignations and workers switching to smaller companies not covered by the requirements.
“Now placing vaccination mandates on employers, which in turn force employees to be vaccinated, will create a workforce crisis for our industry and the communities, families and businesses we serve,” Chris Spear, the association’s president and CEO, wrote in a letter to the OMB last Thursday.
Retailers are also particularly concerned the mandate could trigger a spike in resignations that would exacerbate staffing problems at businesses already short on people, said Evan Armstrong, a lobbyist at the Retail Industry Leaders Association.
“It has been a hectic holiday season already, as you know, with supply chain struggles,” Armstrong told CNBC after a meeting with White House officials last Monday. “This is a difficult policy to implement. It would be even more difficult during the holiday season.”
Thirty percent of unvaccinated workers said they would leave their jobs rather than comply with a vaccine or testing mandate, according to a KFF poll published last month. Goldman Sachs, in an analysis published in September, said the mandate could hurt the already tight labor market. However, it said survey responses are often exaggerated and not as many people will actually quit.
The Occupational Safety and Health Administration delivered its final rule to the OMB on Oct. 12, and the mandate is expected to take effect soon after the agency completes its review.
The National Retail Federation, the trucking association and the retail leaders group are asking White House officials to give businesses 90 days to comply with the mandate, delaying implementation until late January at the earliest.
The Business Roundtable told CNBC it supports the White House’s vaccination efforts, but the administration “should allow the time necessary for employers to comply, and that includes taking into account employee retention issues, supply chain challenges and the upcoming holiday season.”
The U.S. Chamber of Commerce, which met with the OMB on Oct. 15, also asked the administration to delay implementing the rule until after the holiday season. Officials at the OMB declined to comment on the implementation period.
However, former officials at OSHA, which will enforce the mandate, told CNBC that businesses will likely have some time to implement the rules.
Jordan Barab, deputy assistant secretary of OSHA during the Obama administration, said the administration will probably give businesses about 10 weeks, as they did for federal contractors, until employees have to be fully vaccinated.
However, the compliance date could come sooner for weekly testing, he said.
“OSHA has always had provisions where its required equipment, for example, that may be in short supply to suspend enforcement if an employer can show its made a good faith effort to procure that equipment,” Barab said. “They may make a relatively early date for weekly testing but also provide some additional time in case supplies are not adequate.”
The National Association of Manufacturers, in a letter to the OMB and OSHA head James Frederick last Monday, asked the administration to exempt businesses from the requirements if they have already implemented companywide mandates, or achieved a certain level of vaccination among employees through voluntary programs if certified by a local public health agency.
Robyn Boerstling, a top lobbyist for the manufacturers’ group, called the federal requirements “redundant and costly” for companies that already support vaccination among their staff. Boerstling also expressed concern that businesses with barely more than 100 employees could lose valuable people to competitors who are not covered by the mandate.
“A realistic implementation period can allow for workforce planning that is necessary given the acute skilled worker shortage and ongoing supply chain challenges by supporting the need to keep manufacturing open and operational,” Boerstling wrote in the letter to the administration last Monday.
The American Trucking Associations, in its letter last week, also asked the administration to consider exempting truckers from the mandate, arguing that drivers are similar to remote workers because they do not interact with another employee for days or weeks at a time.
Industry lobbyists have also raised concerns about the cost of testing, and who will cover those costs. The Retail Industry Leaders Association believes employees who choose not to get vaccinated should pay for their weekly testing.
“If folks are allowed to refuse vaccination, and the employer takes testing obligations from a cost standpoint, then there’s no real motivation for those employees to get the vaccine,” Armstrong said. With an estimated 4 million unvaccinated retail workers, testing costs will also add up quickly, he said.
However, Barab said OSHA generally requires employers to cover the cost of equipment and procedures called for under its rules throughout the agency’s 50-year history.
Industry concerns about the impact of Biden’s vaccine mandate on employment come after a record 4.3 million workers quit their jobs in August, the highest level of turnover in 20 years. The retail industry was particularly hard hit, with 721,000 workers leaving their positions.
Goldman Sachs says the mandate would actually boost employment by reducing Covid transmission and mitigating health risks that have been a drag on labor force participation, encouraging many of the 5 million workers who have left the job market since the pandemic to return.
Global supply chains are also strained amid a surge in pandemic-related demand for durable goods, factory shutdowns in places like China and Vietnam, and a shortage of truck drivers and skilled longshoremen on the West Coast.
The White House admits there is little it can do to tackle the macro issues like increased demand and foreign factory operations. But it has recently taken some steps to help, like brokering a deal to keep major West Coast ports open 24 hours a day, seven days a week.
“We’re already having supply chain issues; we’re already having workforce shortage issues,” Ed Egee, a top lobbyist at the National Retail Federation, told CNBC after the group’s meeting with the OMB last Tuesday. “This mandate cannot be implemented in 2021 without having serious repercussions on the American economy.”
— CNBC’s Nate Rattner and Christina Wilkie contributed to this report.
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