Vaccine mandates at work meet their toughest opponent: America's labor shortage

New York(CNN Business) At Kevin Smith's home health care agency in Massachusetts, only 52% of his 400 staff members have been vaccinated. He'd like to order them all to get the shot, but he says he can't risk a mass exodus.

It's a legitimate fear. The labor market is very tight, with a record number of job openings and not enough job candidates. And among unvaccinated workers asked what they would do if their employer instituted a mandate, 50% said they'd leave their job, according to a June survey by health policy think tank KFF.

"It puts you at risk of alienating the staff, if not losing them to a competitor," said Smith, who has run the family-owned Best of Care since 2013. "No one can afford to do that. That is why any employer in our industry is so reluctant to impose a mandate."

The meeting of the labor market challenge and public health crisis puts employers in a tough spot: The worker shortage means employer mandates are not likely to be the answer to raising the nation's vaccination rate. But a higher inoculation rate is exactly what experts say we need to end the pandemic.

Difficulty finding workers

The Equal Employment Opportunity Commission has given guidance to employers that they have the right to impose a vaccine mandate as long as there are exceptions for employees with health conditions that pose a risk or legitimate religious objections.

Yet "employers in a labor shortage environment don't want to create any barrier for employment, let alone any cause for people to go elsewhere," said Julia Pollak, chief economist for job site Ziprecruiter.

It's not clear how many employers are taking that step. A June survey from the Society of Human Resource Management showed 29% of workers say their employers are requiring vaccines. A Gartner survey from the end of July found only 9% doing so.

Even among hospitals, most employers don't have vaccine mandates: The American Hospital Association said only 2,100 hospitals, about a third of the nation's total, require vaccines. And many are in places where state laws or executive orders mandate them.

Brian Kropp, chief of research at consulting firm Gartner's HR practice, says he believes that figure will remain a minority -— even as household-name companies have begun implementing mandates in response to the Delta variant surge of Covid cases.

They're most common at major tech companies such as Google (GOOG) and Facebook (FB), or Wall Street banks such as Goldman Sachs (GS) and Morgan Stanley (MS). But there's a critical difference here: These employers offer high-paying jobs, benefits and other advantages that inspire workers to stick around.

For the many small businesses and other employers who depend on hourly workers to fill most positions, there's greater fear about losing vaccine-hesitant employees and not being able to find vaccinated workers to replace them.

"If you run a restaurant or a store and you have employees who are vaccine-hesitant, they are going to quit and go to the store or restaurant next door," said Kropp. "It's a whole lot easier for people to switch jobs, particularly in today's labor market."

Even some employers with stable workforces are reluctant to impose a vaccine mandate. While United Airlines (UAL) recent ordered all US employees to be vaccinated, rivals American (AAL), Delta (DAL) and Southwest (LUV) have yet to do so.

'Divisive' moral arguments and partial rules

Further complicating matters is opposition to mandates, even from employees who have gotten vaccinated themselves. The KFF survey in June found that even among those who are vaccinated, 42% said they don't want it mandated by their employer, while only 43% want a vaccine required.

"In general we find that vaccine mandates are very divisive," said Liz Hamel, vice president and director of public opinion and survey research at KFF. "There's a sense that getting a vaccine is personal choice."

Attitudes may be changing with the recent surge in cases, however: Recent polls conducted by Axios/Ipos and Gallup found a slight majority of Americans favoring employer vaccine mandates. That compares to KFF's June survey that found only 28% wanted an employer mandate and 61% opposed the idea.

Seven states — Arizona, Arkansas, Montana, New Hampshire, North Dakota and Tennessee — have passed laws banning vaccine mandates for at least some employers, according to the National Academy for State Health Policy. Similar legislation has been introduced in 39 other states, all but Maine, Massachusetts, Nevada and West Virginia.

Another complex issue is differing rules for white-collar vs. blue-collar employees. Major employers including Walmart (WMT) and UPS (UPS) are requiring vaccines for corporate office staff, but not for those on the front lines, working in stores or driving trucks.

Neither company would comment on whether the labor crunch for hourly workers is the driving force of the different rules.

"Those office environments are very different than our operating facilities, which have been safely staffed in-person since the beginning and throughout the pandemic," said a statement from UPS.

Some employers are following the lead of President Joe Biden's order for federal workers, giving them the choice of vaccination or the more stringent testing and masking, said Amber Clayton, director of SHRM's HR Knowledge Center.

"That's probably what we'll see more of than full vaccine mandates," she said.

A plea to government leaders

Smith, the CEO of the home health care agency in Massachusetts, wants more than just a model from the government: He would prefer a mandate at the state or federal level to require everyone in his industry to get vaccinated. It would level the playing field among all employers in the sector, he explained, and would help protect the health of his employees and clients.

"From a pure safety standpoint, it would make me feel better if it were required," he said. "And it would take the pressure off me."

Smith's wish is hardly unique, Kropp said.

Many other employers are worried unvaccinated workers could spread the virus even to inoculated coworkers and cause high absenteeism. And some workers, especially those with young children at home or other vulnerable family members, won't want to return to the office unless they know everyone else is vaccinated, he said.

"What almost every employer wants is either the governors or some other government body to say vaccines are required," Kropp said. "Then they get what they want, and they don't get any of the blame or frustration."