It should not be a surprise, but the current high price of labor (mistakenly called a “shortage”) sheds light on what is not as visible when wages are not increasing as fast: in a free-market economy, employers need employees as much as employees need employers.
Many employers don’t want to mandate Covid vaccination for their employees because they fear losing them—or having to pay them even more. One example among others is given by a story in today’s Wall Street Journal (Jesse Newman, “The CEO Wants His Staff Vaccinated. He Also Worries They Will Quit,” August 19, 2021):
“As much as I’d like to say it’s 100% required, I don’t want to lose 10% of my workforce,” Mr. Taylor [CEO of Taylor Farms] said. …
Taylor Farms is in no position to impose a mandate. On average, the company has raised its hourly wage by 18% in the past year and a half, with particularly steep raises in competitive labor markets including Florida, Tennessee and Texas. Wages in one location increased 42%, the company said.
READER COMMENTS
Alan Goldhammer
Aug 19 2021 at 4:20pm
Yes, don’t mandate vaccines for your employees but pray they don’t get Covid and miss work, or even worse die. Pretty short sighted for a CEO.
Pierre Lemieux
Aug 19 2021 at 4:25pm
Alan: Only in a socialist or fascist economy are the (public) employers the fathers of their employees. In a free-market economy, if business owners make “short-sighted” mistakes, they pay the price in lower corporate valuations. And entrepreneurs like you can make a fortune by purchasing their businesses at a discount and correcting their mistakes.
Jon Murphy
Aug 19 2021 at 5:13pm
I’m not sure it is short-sighted. We’d have to assume that the CEO doesn;t understand what COVID is. Surely, the CEO understands that COVID is a disease (just like the flu or the common cold) that can cause employees to miss work. Thus, in the calculus of his decision, he surely took into consideration the risk of some portion of the workforce being ill and the other portion having to step up.
From an economic perspective, the choice seems straightforward: either risk having your staff shrink approximately 10% permanently due to the vaccine mandate, or temporarily overwork your employees in the event of an outbreak.
Jens
Aug 19 2021 at 6:37pm
Does he really have to fear that he will permanently have 10% fewer employees available or should he fear that he will lose 10% in the short term and permanently only have access to 90% of the eligible labor supply? The latter is of course a problem. But he could advertise that the staff is completely vaccinated, both for new staff and investors. Seems like a trade-off. Or maybe he just doesn’t want to decide the question and is looking for excuses.
Jon Murphy
Aug 20 2021 at 11:46am
He certainly believes so.
Craig
Aug 19 2021 at 6:08pm
So why aren’t many companies imposing mandates who otherwise would love to impose a mandate? The first problem is that the company is going to create a problem dealing with legitimate exceptions and if they don’t allow ‘reasonable accommodation’ they make themselves targets for ADA lawsuits.
Secondly the benefit of imposing the vaccine mandate is the perception that employees who don’t want to comply are just going to fake the card anyway or for that matter just claim they lost the card. The card I have is a piece of paper with my name written on it in pen. It has my dob on it, but trust me, I couldn’t use it to buy liquor though I am sadly at an age where people take my word on it. Beyond that the physical card is larger than a credit card slot in a wallet and comes in a plastic case so its not something that fits in most wallets making claims of simple misplacement over the course of time somewhat credible.
I know there are ways that they are attempting to make this more verifiable, but I can attest I would have difficulty recreating the credential. I drove from FL to NJ to get the vaccine at an inoculation site in Summit, NJ labelled on the card as ‘OMC’ and I don’t even know what that stands for. Its four months later I already don’t really know who even gave me the shots. If I were to have lost the card the best I’d be able to do would be to say, “Oh, I got the jab sometime in early spring up in NJ”
Take my word on it?
Craig
Aug 19 2021 at 6:32pm
“As much as I’d like to say it’s 100% required, I don’t want to lose 10% of my workforce,” Mr. Taylor [CEO of Taylor Farms] said. …”
But COVID also is playing a role in people not wanting to work. Its not just unemployment on steroids which has been terminated in many of the free states.
“Taylor Farms is in no position to impose a mandate. On average, the company has raised its hourly wage by 18% in the past year and a half, with particularly steep raises in competitive labor markets including Florida, Tennessee and Texas. Wages in one location increased 42%, the company said.”
But why are they paying more for labor. Sure, unemployment on steroids existed and that surely raised the reservation wage. But the companies where employees were exposed to a COVID risk so companies had to compensate those employees to assume that risk. That phenomenon existed before COVID with premium wages for 3D jobs, dirty, dangerous, demeaning positions where to get people to accept them companies have to pay them more.
I think this is an extension of what Alan was contemplating when he wrote: “Pretty short sighted for a CEO.”
Yes, I’d say the CEO in this instance is employing relatively bad logic. In a country where 50% did get the vaccine so far perhaps he might see the benefit of offering a safer work environment, ie “Work here and you’ll be safer from COVID because everybody has had the jab”
Pierre Lemieux
Aug 19 2021 at 10:54pm
Craig:
We have to distinguish between supply and demand. It is likely that the fear of Delta has reduced, or is reducing, supply—compared to what it would otherwise be. Ceteris paribus, this would push down wages. Since wages are in fact increasing, we know that the dominant effect is an increase in the demand for labor (which, ceteris paribus, increases both employment and wages). This is why Taylor Farms (like many other employers) has to bid up the price of labor.
It is also possible that, double ceteris paribus, the supply of labor is lower because part of the workers don’t want to get the vaccine (at their current wages). This we don’t know, but the owner of Taylor Farms thinks it is happening, at least in his labor submarket. We don’t know if he is right, and nobody knows, including no government bureaucrat and me and you too. The efficient way to deal with this is to let him do what he thinks will maximize his profits and let others who have contrary entrepreneurial intuitions do the same by mandating vaccination. And if they make a mistake… see my answer to Alan above.
Craig
Aug 20 2021 at 12:05am
“We have to distinguish between supply and demand. It is likely that the fear of Delta has reduced, or is reducing, supply—compared to what it would otherwise be. Ceteris paribus, this would push down wages”
Why would it push down wages? Its increasing the, at minimum the perceived, risk of going to work and to have workers accept that risk you have to compensate them more or they just won’t show up anymore or take the job to begin with. Also consider that not an inconsiderate number of lower wage service workers happen to be the supplemental second income in a family. They’re might not be coming back at any realistic wage because they would have to now be exposed to Delta, maybe bring it home to the kids. So now the mom who dropped the kids off at school at 730A and worked P/T for McDonalds for $10/hr pre pandemic just to pick up some cash and grocery money and then go to pickup kids from school at 230P. Well, guess what? She’s not doing that even for $17 now.
I’m not saying unemployment on steroids didn’t play a factor, it almost assuredly did, but COVID risk is a factor and it continues to be a factor after the elimination of the steroids in FL.
Now of course with Delta people who were vaxxed up and feeling bulletproof before Delta was in the public consciousness, well, now they’re feeling at least a little bit less bulletproof now.
Craig
Aug 20 2021 at 12:15am
Prior to the termination of the UI on steroids, I thought the second it ended people would simply go back to work. That, yes, perhaps there were other factors at play but that the dominant one was the additional $600 which was then stepped down to $300.
But it ended in places like FL and now its pretty obvious that other factors are also playing a role too and a much stronger role than I previously would have thought and the two largest ones is fear of COVID itself and of course family/child care situations.
Pierre Lemieux
Aug 20 2021 at 10:32am
Craig: In your comment beginning by “Why would it push down wages?”, you are totally right. I was of course wrong. (Demand for labor slopes downward!) So the fear of Delta plays in the same direction of the increase in the demand for labor: pushing up wages. (I was trying to answer an objection to my own explanation by demand for labor.)
Pierre Lemieux
Aug 19 2021 at 11:05pm
Craig: The factors you mention may well play in Taylor Farms’ decision not to impose a mandate. But since some other corporations do impose it, your factors are likely not sufficient conditions for no mandate (or the submarkets for labor or other conditions are different). Now, maintain all this constant. If you have an increased demand for labor, it is very plausible, for the reason explained by Mr. Taylor, that it will be profitable for some companies to not impose the mandate.
PS: As for “OMC,” the Urban Dictionary says it means “Oh My Chuck,” that is, “Oh My God!”
Craig
Aug 19 2021 at 11:51pm
“PS: As for “OMC,” the Urban Dictionary says it means “Oh My Chuck,” that is, “Oh My God!””
I looked it up, its Overlook Medical Center part of the Atlantic Health System. They had a center set up in Summit, NJ at the community center where a bunch of people were getting it in an elementary school sized basketball court. If I had lost the card though I wouldn’t have remembered that, though if I lose it now, I probably will.
Mark Brophy
Aug 21 2021 at 1:46pm
The vaccine only works for 6 months so that you’re really unvaccinated. In contrast, natural immunity is robust and lasts a long time.
suddyan
Aug 20 2021 at 8:24am
[Yes, don’t mandate vaccines for your employees but pray they don’t get Covid and miss work, or even worse die. ]
Oh noes. Oh woe is me! “Even worse,” they may “die.”
Let me just go check with Chicken Little… … …. Nope, I understand the sky has not fallen yet. However, Chicken Little assures me any time real soon now!
In the meantime, there is apparently a huge, blown-up “fear of a virus which has a survivability rate of 997 out of 1000” going around. You know, not much different than influenza.
And in the weather report today: Expect random occurrences of hyperbolic over-reaction. Take an umbrella, wear a raincoat, add a face diaper, even a perspex shield, or best, lock yourself in your basement and cower in fear until you see the actual light drizzle of reality.
Meanwhile the rest of us are simplydealing with the ageless risks of being alive by behaving like mature, reasoned adults.
Thomas Lee Hutcheson
Aug 19 2021 at 8:09pm
Why would anyone want to work at a place where some of the other workers could transmit a disease to you? Why wouldn’t a mandate be an attractive feature for employees?
suddyan
Aug 20 2021 at 8:30am
[Why would anyone want to work at a place where some of the other workers could transmit a disease to you? Why wouldn’t a mandate be an attractive feature for employees?]
Maybe because BOTH the vaccinated and the unvaccinated transmit the virus.
In short: your purported argument is 100% short on actual scientific evidence.
Jose Pablo
Aug 20 2021 at 9:41am
Yes, it seems to be the case that the viral charges in vaccinated people who get the virus are high enough to transmit Covid, but the “who get the virus” is the part that makes the trick.
Since it is much less likely that you get the virus in the first place the statement “You are way less likely to transmit the virus if you are vaccinated” is 100% “scientifically” (or at least “statistically”) correct.
Otherwise, vaccines will be useless reducing the transmission rate. They are not.
robc
Aug 20 2021 at 9:34am
You mean, every job forever?
Mark Brophy
Aug 21 2021 at 1:49pm
Many people who claim to be vaccinated received their shot more than 6 months ago are deceiving their employers, they are unvaccinated until they get a booster shot.
Thomas Lee Hutcheson
Aug 19 2021 at 8:15pm
Why would anyone want to work at a place where some of the other workers could transmit a disease to you? Why wouldn’t a mandate be an attractive feature for employees? And an attraction for customers? It would show a firm that was concerned for the customers, even more effectively than having employees wear masks.
Pierre Lemieux
Aug 19 2021 at 11:14pm
Thomas: For the same reason that people work at places where their comrades get the flu or other contagious diseases (or STDs); or at jobs cleaning nuclear power plants, etc. Moreover, not all employees are in contact with customers. And do you know many businesses that don’t want customers–for more, see my answers to Alan and Craig.
Thomas Lee Hutcheson
Aug 20 2021 at 6:49am
That was my point. Vaccine mandates could be a way to attract workers and customers. Clearly it depends on the firm’s situation in its local market. I could be neutral/positive for attracting customers and negative/positive for attracting workers.
Thomas Lee Hutcheson
Aug 20 2021 at 11:45am
Maybe I was being too elliptical/snarky. I was reacting to the idea that employers cannot mandate vaccines for workers because it will drive away workers. But the reverse could also be the case. The profit making decision would depend on the distribution of worker preferences and customer preferences (including the preference or not for knowing that workers were spreading the disease among themselves.)
And of course it was also premised on the vaccinated person being less likely to pass on the disease both because he is less likely to get it and because the window of transmission is narrower in the case of the vaccinated person.
Christophe Biocca
Aug 20 2021 at 7:20am
I find this comment surprising, coming from someone who so often insists on the importance of doing cost-benefit analysis, because the stated principle doesn’t stop at vaccination (which dramatically reduces, but cannot completely eliminate, the risk of transmission), but at never working anywhere that doesn’t allow 100% remote work.
If you’re reasonably healthy and vaccinated, the danger posed by an unvaccinated coworker is minimal, enough that it blends into the background risks of having an in-person job in the first place (commuting, tripping on power cords, etc). Personally I would prefer that risk to the annoyance of having to cover for people who are forced out by a mandate while the company tries to hire replacements.
Jose Pablo
Aug 20 2021 at 9:28am
“If you’re reasonably healthy and vaccinated, the danger posed by an unvaccinated coworker is minimal”
Maybe …
But still bigger than the danger of getting vaccinated. Since we are talking about “non rational expectations of danger” in both cases (getting vaccinated or working alongside a nonvaccinated coworker or provider) the “commercial advantage” of mandating vaccines could, very likely, exists.
Christophe Biocca
Aug 20 2021 at 9:46am
Sure, if you’re assuming the existence of a “terrified of COVID” worker contingent, it may well outweigh the “terrified of vaccines” contingent.
However assuming the former group will be satisfied by a simple vaccine mandate seems unfounded. And if the set of interventions needed to satisfy them grows to include universal masking, social distancing, regular testing, etc, the total costs are much greater than “merely” having to fire and replace 10% of your workforce.
This isn’t theoretical. I’m fully vaccinated and still working remotely, because the list of rules I’d have to follow to work in person is utterly bonkers, including filing paperwork every single day. I’d happily take an office full of unvaccinated coworkers over this nonsense.
Jose Pablo
Aug 20 2021 at 10:52am
And so, there is an opportunity to design a “covid19 policy” that could attract the kind of workers that you want to have as an employer.
Not the ones in the antivaccine camp (although maybe yes if you are in need of high testosterone manual workers), not the ones in the mandatory vaccines + mask + travel bans + washing your hands 100 times a day (although maybe yes if you are in need of a compulsive obsessive labor force).
I think there is an opportunity to “labor arbitrage” here. I would start with a “pilot” if I were Taylor Farms, though.
Pierre Lemieux
Aug 20 2021 at 10:54am
Christophe: With due respect to Thomas, yours is a very interesting point. It does seem to be the case that proponents of cost-benefit analysis—which amounts, in its result, to transferring to some people benefits that are higher than the costs imposed on other individuals—are often reluctant to admit that an individual makes cost-benefit analyses for himself when he gets both the higher benefits and the lower costs!
Jose Pablo
Aug 20 2021 at 9:24am
When I read that story this morning, I thought of the possibility of some employees of Taylor Farms leaving because vaccines are NOT mandate. They will leave out of fear of their unvaccinated co-workers posing a risk to them (breakthrough cases, the spread of new variants, …)
So, making the vaccines mandatory at your workplace could, actually, attract “some kind” of workers. Since it is likely this policy would attract the most responsible and thoughtful workers (my guess) you could end up with a more responsible and productive (again my guess) workforce at the end.
Have to think more about this “sensible labor arbitrage” strategy.
Pierre Lemieux
Aug 20 2021 at 10:45am
Jose: If you are right, you can buy Taylor Farms for a price that would give its current owner more returns over time than he actually gets (because you could attract workers at a lower cost) and still make money for yourself. But then, if that is true, others will bid for Taylor Farms. So I would leave the decision to the owner of Taylor Farms and the rest on the ordinary workings of the market.
Jose Pablo
Aug 20 2021 at 11:01am
I could not agree more, Pierre. But I was actually thinking about a “less skin in the game approach” and selling Bruce Taylor advice on the design of a “Covid19 related workplace policy” that would allow him to attract precisely the kind of workers he need, using for that the personal preferences revealed thru the individual worker approach to covid and the vaccines and their (very likely) correlations with individual characteristics attractive to Taylor Farms.
As always Federal and State workplace regulations that are mandatory reduce the possible scope of my advice on this topic and, by doing so, of the increase in productivity that Taylor Farms could get if my (pricey) advice would not be constrained by regulation.
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