As employers grapple with the tricky issue of a vaccine mandate for workers, and the federal government issues its vaccine mandate rule, the White House is making the case in economic terms. If businesses want the economy to grow and GDP to pick up again after the slowdown to 2% in the third quarter, they should take a look at the correlation between Covid caseloads and growth.
The trajectory of Covid caseloads, and the most recent up and down in the Delta variant — which is now down about 60% off its peak during the summer — shows that the GDP growth rate is linked to the virus.
“The connection between a strong economy and vaccinations and the trajectory of the caseload is extremely clear to me and in fact, quite elastic,” said White House Council of Economic Advisers member Jared Bernstein at the CNBC Workforce Executive Council summit on Wednesday. “It happens very quickly.”
He cited the 6.5% annualized GDP in the first half of this year before the Delta variant spiked. “That is rocket fuel, GDP growth, and helped us build the strongest GDP recovery among the advanced economies. Last I checked we were the only one whose level of GDP is back to its pre pandemic peak,” Bernstein said. He added that the GDP decline to 2% in Q3 was “where you saw that curve tick up.”
“The curve is coming down again, the caseload curve, and those forecasts are for 4.5% to 6%,” Bernstein said of Q4 GDP projections.
White House Council of Economic Advisors member Jared Bernstein speaks during a press briefing on February 5, 2021, in the Brady Briefing Room of the White House in Washington, DC.
Brendan Smialowski | AFP | Getty Images
The White House economic adviser stressed that he cannot speak for individual companies but he said, “I can tell you, from the perspective of economic analysis … and I’ve looked at really almost every important variable I can find … that does certainly make the case that vaccines and economic progress, strong growth, revenue growth, income growth, wage growth, jobs, GDP, industrial production, every variable I look at seems highly and positively elastic to these wiggles in the caseloads. That’s certainly the implication of what we’re seeing.”
The Biden administration rule issued on Thursday by the Occupational Safety and Health Administration under the Labor Department requires businesses to ensure their employees are vaccinated against Covid-19 or regularly tested for Covid-19 by Jan. 4. The newly released rules state all unvaccinated workers must begin wearing masks by Dec. 5 and provide a negative Covid test on a weekly basis after the January deadline. Companies are not required to pay for the tests unless required by law or union contract.
The mandate is expected to cover 130,000 businesses and two-thirds of the private sector workforce. Republican attorneys general in many states have threatened to sue over the mandate.
The White House already issued a separate vaccine-enforcement guidelines for federal contractors. On Thursday the administration pushed back the deadline for federal contractor from Dec. 8 to Jan. 4 to match the deadline set for other private companies and health-care providers.
President Biden recently made the case himself in a national address, saying “Every day, we see more businesses implementing vaccination requirements, and the mounting data shows that they work.”
Ford said this week it would impose a vaccine mandate for its 32,000 salaried workers, which does not include unionized factory workers.
Vaccine mandates are becoming more common in job listings, but employers and industry trade groups like the U.S. Chamber of Commerce are concerned employees may quit during a tight labor market and amid difficulty hiring workers. Some Republican politicians have linked the vaccine mandate to industries suffering from acute worker crises, such as freight trucking, with Sen. Cynthia Lummis of Wyoming writing in a letter to Biden this week that the mandate should be ditched for truckers.
The U.S. still has not regained about 5 million jobs since before the pandemic and yet workers are quitting jobs at high rates, but Bernstein cited a pace of job gains that has averaged 600,000 jobs per month, and almost 5 million jobs in all since Biden became president.
“It’s not at all controversial to argue that the labor market is strong,” Bernstein said.
Private sector job growth in October tracked by ADP came in at 571,000 jobs added, the best month since June and with pandemic-sensitive sectors like leisure and hospitality leading gains. The government’s nonfarm payroll report to be released on Friday is expected to show a gain of 450,000 jobs.
“As long as the pandemic remains contained, more big job gains are likely in coming months,” Mark Zandi, chief economist at Moody’s Analytics, recently told CNBC.
To join the CNBC Workforce Executive Council, apply at cnbccouncils.com/wec.
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