November 29, 2023


Business&Finance Specialists

Business group warns of mass layoffs and ‘catastrophic’ supply chain disruptions from Biden’s vaccine mandate

3 min read

“If tens or hundreds of thousands of employees are terminated just two weeks before Christmas…the result could be nothing short of catastrophic for the newly unemployed and their families and for the US economy,” Eric Hoplin, the NAW’s president and CEO, wrote in a Wednesday letter to Biden.

The trade group’s members include grocers, lumber, florists, beer, wine and various other distributors.

The Biden executive order, signed last month, requires employees of contractors that do business with the federal government to get vaccinated against Covid-19, with no option of being regularly tested to opt out. The order, which applies to subcontractors as well, is aimed at preventing the spread of Covid-19.

To avoid a “calamity,” the NAW urged Biden to provide alternatives, including testing, and to consider a “short-term delay” to avoid further disruption to supply chains.

White House pushes back

In response, the White House pointed to comments made this week by Jeff Zients, the administration’s coronavirus response coordinator.

“Vaccination requirements work. They’ve increased vaccination rates by 20-plus percentage points to over 90% in most organizations,” Zients told reporters this week.

Zients pointed out that the first step for employees who do not get vaccinated is a “period of education and counseling,” not termination.

Supply chain stress is intensifying and showing no signs of fading, Moody's Analytics says

“The requirements for federal workers and contractors will not cause disruptions to government services that people depend on,” Zients said. “Agencies have the flexibility necessary to enforce the mandate without impacting critical operations.”

Southwest Airlines (LUV) CEO Gary Kelly also expressed confidence this week that the vaccine mandate will not disrupt travel.

“We want our employees to know that nobody is going to lose their job on December 9 if we’re not perfectly in compliance,” Kelly said on Thursday.

Some workers would rather get fired than vaxed

Supply chains are under extreme stress right now thanks to epic port congestion, a shortage of truck drivers and a lack of storage containers. The crisis is jacking up prices on consumers, limiting options for shoppers and causing significant delays. Biden officials have acknowledged it will take time to ease bottlenecks and the pressure will likely extend into next year.

The NAW stressed that its members are strongly in favor of getting Americans vaccinated, noting that members have offered vaccine bonuses, gift cards, gas cards and vacation days. One company even offered trips to Las Vegas as an incentive.

New executive order aims to alleviate congestion at California's ports

“NAW member companies are also firmly pro-vaccine for their own employees and want their teams to be healthy and safe,” Hoplin wrote. “Their interest in getting their employees vaccinated is greater than the government’s interest.”

Still, the trade group said some employees across the distribution industry “for whatever reason” refuse to get vaccinated, risking the termination of “thousands” of employees just before the holidays. Many of these workers have told employers “directly and unequivocally that they would choose to be fired” if required to get vaccinated, Hoplin said, adding that these workers are disproportionately from communities of color and tend to be lower-income.

“The already compromised supply chain will be under added pressure during the busiest time of the year, and the already tight labor market will make it immeasurably more difficult to replace laid off employees,” Hoplin said.

Many businesses are struggling to find workers right now. A record 4.3 million Americans quit their jobs in August and employers reported a near all-time high in job openings.

“Come December, many companies will be unable to keep products moving through their warehouses and distribution centers to satisfy growing consumer demand if forced to terminate these essential workers,” Hoplin wrote.