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OSHA vaccine-or-test mandate is smart public policy

The Occupational Safety and Health Administration (OSHA) has proposed an emergency temporary standard (ETS) for employers to cope with the health dangers posed by COVID-19. The centerpiece of the ETS is a vaccine-or-test mandate for employees working at firms with over 100 employees to be vaccinated against COVID-19. The mandate is good public policy: it will reduce deaths and hospitalizations, and it will also increase economic growth and reduce the main inflationary pressures facing the U.S. economy.

The proposed ETS has spurred a large legal battle and its eventual fate is uncertain, even though exemptions for religious and health reasons are possible, and a version of these standards is already in effect for federal government employees, government contractors, and health care workers. In early November, the U.S. Court of Appeals for the Fifth Circuit stayed the ETS pending judicial review. However, over this past weekend, the stay was removed by the court with current jurisdiction over the case (the U.S. Court of Appeals for the Sixth Circuit).

The lifting of the ETS stay is welcome news. The vaccine-or-test mandate is a key plank in an effective public health response to the continuing havoc wreaked by COVID-19. For example, a recent paper examining the introduction of vaccine mandates at the provincial level in Canada, France, and Germany found “that the announcement of a mandate is associated with a rapid and significant surge in new vaccinations (more than 60% increase in weekly first doses)…” Higher vaccination rates will contribute meaningfully to reducing deaths and hospitalizations from COVID-19.

Despite broad availability, the United States lags far behind dozens of countries in vaccination rates, and a mandate would likely boost the U.S. rate in a significant way. Recent research examining the international experience of vaccine mandates by Karaivanov et al. (2021) finds large increases in vaccination rates (up to 5 percentage points) driven by mandates.

The mandate would have large economic effects as well, even beyond the considerable economic value of deaths and hospitalizations averted. Overall economic growth over the past year has been largely driven by the fall and rise of COVID-19 cases. In the first six months of this year, as case growth fell sharply, gross domestic product (GDP) rose at a 6.5% annualized rate—an extraordinarily fast pace of growth. However, in the third quarter, as the Delta variant surged in the United States in August and September, GDP growth decelerated to just 2.1%.

Further, from February to July—the six months prior to the Delta variant hitting the U.S. economy—job growth averaged 710,000 per month. However, since August and the rise of the Delta variant, job growth has fallen to a monthly average of 405,000—a respectable pace compared with previous recoveries, but a pronounced slowdown.  

Looking more granularly at state-level data in the major sector most affected by social distancing requirements—leisure and hospitality—we also see that employment growth in the first 10 months of 2021 was positively correlated with a state’s vaccination progress over that time. Figure A below shows that states with higher total vaccination rates in October 2021 also saw faster leisure and hospitality job growth between January and October. These links between faster economic growth, greater job creation, and virus control are generally well-understood. Less well-known, however, is that the economic effects of COVID-19 are by far the largest drivers of the acceleration in U.S. inflation in 2021. Inflation rates are higher than usual because the pandemic has reallocated consumer spending away from services and towards goods, exacerbating supply chain problems.

Leisure and hospitality employment growth in 2021 and vaccination rates: January to October 2021 change in employment and October 2021 COVID-19 vaccination rates

State Vaccination rate Change in employment rate
AL 43.8% 7.2%
AK 51.7% 7.7%
AZ 52.2% 14.4%
AR 46.8% 3.1%
CA 60.2% 36.0%
CO 60.6% 23.6%
CT 69.8% 13.7%
DE 58.9% 6.8%
DC 61.3% 50.5%
FL 58.7% 13.4%
GA 46.9% 5.9%
HI 59.0% 26.0%
ID 42.8% 5.5%
IL 54.8% 26.8%
IN 49.2% 4.9%
IA 54.8% 11.4%
KS 52.3% 8.4%
KY 53.4% 1.5%
LA 46.6% 4.7%
ME 69.5% 5.7%
MD 65.2% 11.0%
MA 68.8% 20.7%
MI 52.9% 29.3%
MN 59.1% 28.4%
MS 44.7% 3.6%
MO 49.0% 9.6%
MT 49.5% 6.4%
NE 55.5% 7.9%
NV 51.9% 12.9%
NH 62.3% 15.4%
NJ 65.5% 10.9%
NM 63.8% 27.5%
NY 65.3% 21.2%
NC 51.5% 8.8%
ND 45.2% 10.6%
OH 51.1% 6.7%
OK 48.9% 2.9%
OR 62.0% 26.9%
PA 59.3% 13.8%
RI 69.7% 12.4%
SC 48.8% 5.3%
SD 52.3% 6.2%
TN 46.7% 7.8%
TX 52.4% 8.5%
UT 52.3% 9.0%
VT 70.4% 21.3%
VA 61.9% 6.0%
WA 62.4% 29.0%
WV 40.8% 10.7%
WI 57.5% 12.1%
WY 42.9% 2.0%
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