Vaccination mandates contributing to workforce supply problems, federal report says

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U.S. employers are experiencing high demand for workers, but labor growth is being hindered by a low supply of workers, in part because of COVID-19 vaccination mandates, the Federal Reserve said Oct. 20.

The Federal Reserve's Beige Book, a report published eight times annually about current economic conditions across the 12 Federal Reserve districts, said businesses widely cited vaccination mandates and childcare issues as contributing to high turnover, along with pandemic-related absences.

"Many firms offered increased training to expand the candidate pool," the Federal Reserve said. "In some cases, firms increased automation to help offset labor shortages. The majority of districts reported robust wage growth. Firms reported increasing starting wages to attract talent and increasing wages for existing workers to retain them. Many also offered signing and retention bonuses, flexible work schedules, or increased vacation time to incentivize workers to remain in their positions."

Regional Fed banks also mentioned vaccination mandates.

The Federal Reserve Bank of Philadelphia said many businesses "reported imposing vaccination mandates with relatively few resignations. Generally, contacts expressed greater concerns about ongoing supply chain disruptions and persistent labor shortages."

But the Federal Reserve Bank of Richmond (Va.) said some employers "expressed concern that federally mandated COVID regulations, such as vaccine requirements, could exacerbate their workforce challenges."

And the Federal Reserve Bank of Atlanta said, "Most employers shared that they would like to implement COVID-19 vaccine mandates but were concerned about losing employees. Worries about employee mental health, burnout, safety and vaccine mandates impacting company culture were mentioned."

The Federal Reserve report comes after President Joe Biden announced in September that his administration's multipronged pandemic approach would require all employers with 100 or more employees to ensure their staff are fully vaccinated or undergo weekly COVID-19 testing. CMS said it would also require COVID-19 vaccinations for more than 17 million healthcare workers at Medicare- and Medicaid-participating hospitals and in other healthcare settings.

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