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Will the Vaccine Mandate Affect the Labor Shortage? - The Journal. - WSJ Podcasts

🎧 Listen: In today's episode of The Journal podcast, @EricMorath discusses the impact of the Biden administration's vaccine mandate on the labor market, and a manufacturing company president explains what the mandate could mean for his business

9/17/2021 1:50:00 AM

🎧 Listen: In today's episode of The Journal podcast, EricMorath discusses the impact of the Biden administration's vaccine mandate on the labor market, and a manufacturing company president explains what the mandate could mean for his business

Jack Schron has been encouraging his employees to get vaccinated. He also worries a vaccine mandate might cause them to quit. The manufacturing company president explains what the Biden administration's vaccine mandate could mean for him, and WSJ's Eric Morath discusses its impact on the labor market.

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.Ryan Knutson: Last week, the Biden administration announced that companies with 100 or more employees must ensure that their workers are either vaccinated or tested weekly. The plan could affect 80 million private-sector workers. Businesses have had mixed feelings about it. Some say it's a much needed step that will help the country get past the pandemic.

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Speaker 2: The Business Round Table, that includes dozens of America's biggest corporations, welcomes the Biden administration's continued vigilance fighting COVID.Ryan Knutson: Other companies oppose the mandate. They say it could hurt their businesses and exacerbate a problem they're already struggling with. A worker shortage.

Jack Schron: Trying to find new employees for skilled machining is almost impossible.Ryan Knutson: That's Jack Schron, who runs a manufacturing company in Ohio. He's worried that the vaccine mandate will make it even harder to fill jobs. So he's not going to require it. headtopics.com

Jack Schron: Our culture is one in which we would encourage people to make their best individual decisions for themselves, with their families, sit down with their doctor. Even though we would encourage you to do this, we're not going to mandate it.

Ryan Knutson: Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson. it's Thursday, September 16th. Coming up on the show, how one business owner is navigating the vaccine mandate and a labor shortage. Our colleague, Eric Morath, covers the labor market. And he says the pandemic has created a perplexing labor shortage.

Eric Morath: There are more than 10 million unfilled jobs in the US, which is a record high.Ryan Knutson: There's a lot of job openings. And yet, there's also a lot of people who are unemployed.Eric Morath: We saw the Labor Department reported last month that more than eight million people were unemployed, which means they were looking for a job, but didn't have one. And another three million people have dropped out of the labor force. So they're not even trying to find a job since the pandemic began. So right there, that's 11 million people. That's enough to fill every open job. So there's really this mismatch, right? People either don't have the skills or the desire to take jobs that are available. And of course, we also know that many people are still scared of working in a pandemic, and they don't have reliable childcare.

Ryan Knutson: Jack Schron is dealing with this first hand. He runs a company called Jergens.Jack Schron: We're not the hand lotion company. We manufacture machine tool parts, things for aerospace. We manufacture a extremely sophisticated electric screwdriver. And we manufacture threaded inserts for aerospace and applications like that. headtopics.com

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Ryan Knutson: The things they manufacture are both complex and expensive.Jack Schron: Our screwdrivers, for example, are about seven to $8,000 for a screwdriver. So they're not your basic Home Depot.Ryan Knutson: A seven to $8,000 screwdriver?Jack Schron: Yeah. They're pretty sophisticated. They walk and talk and they do the Hoochie-coochie, yeah. So, they're pretty sophisticated.

Ryan Knutson: The equipment Jergens manufactures is used in machines like ventilators, commercial airplanes, and military vehicles, which means it's an essential business. And the manufacturing lines stayed open through the pandemic.Jack Schron: We knew that we couldn't move a two ton machine tool onto somebody's kitchen table. So the poor folks that were in production, had to stay in production. We had to figure out how we were going to do that.

Ryan Knutson: The pandemic still caused the same labor shortages at Jergens that most companies faced. Workers stayed on the sidelines to care for kids or sick relatives, or stayed home to avoid getting sick. So when vaccines were made available earlier this year, Jack was optimistic.

Jack Schron: I got the vaccine as soon as I could. And I got signed up and went to Walgreens and got my two shots. I'm in that age group, I'm over 60. So I said, all right. All the statistics say that I should be getting the shot. So I did. I encouraged people to get the shot. Anybody asked me, I said, hey, I know this is a personal choice. But I made my choice, and here's what I did. headtopics.com

Ryan Knutson: Did you encourage your employees to get vaccinated?Jack Schron: Absolutely. Yeah. And we keep a log of the people, because some of the quarantining is specifically driven by the vaccination status of the individual. So if we find that somebody tested hot and they're in an area where we've got other employees, we can look at that there and say, okay, you four have your vaccinations. It's a different quarantine standard, according to the CDC, than it would be if you were unvaccinated. And so that's part of what we do to try and encourage people to do it.

Ryan Knutson: In what ways were you encouraging employees to get vaccinated?Jack Schron: Well, we have a newsletter, and we put out the newsletter on a regular basis. What's going on, why you should do it, the benefits of it. We have signage that goes on the bulletin boards. We encourage our supervisory staff to talk it up. But we were never twisting their arm and breaking their arm saying you've got to get it done.

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Ryan Knutson: Did you think about requiring it for your employees?Jack Schron: Did we think about mandating the vaccine? Yes. You would go through the analysis, and our coronavirus team said, no, that's not our culture.Ryan Knutson: Jack estimates that about 60% of his employees have gotten the vaccine, but that still leaves a lot of unvaccinated workers at the company.

Jack Schron: Now, we have some people that we know ... because we've had one-on-one conversations. That based on their religious beliefs, do not support vaccines. And some of them have never supported vaccines, period. So it's not a new epiphany that they came to. They've long held that belief.

Ryan Knutson: So when the Biden administration announced last week that it was going to require businesses over 100 employees to either test weekly or mandate vaccinations, what was your immediate reaction?Jack Schron: Well, my immediate reaction was that my beliefs didn't change. That the decision is still that of the individual and their physician to work with to decide what goes in their body. So they would be the ones to make that decision. So I'm still going to encourage people to get the vaccine, but I'm not going to come down on them and say, you've got to do this or I'm going to fire you.

Ryan Knutson: So you're going to require testing rather than mandating vaccinations?Jack Schron: That's correct. Yes.Ryan Knutson: Jack decided that it wasn't in Jergens' company culture to mandate vaccines, but that's not the only reason he's not requiring them. Remember, Jergens is already short on labor. And Jack says he can't afford to lose more workers for any reason, including vaccine hesitancy. He's worried that if he were to mandate shots, some workers might quit. Our colleague, Eric, has been talking to other experts in businesses about this too.

Eric Morath: I've talked to a lot of economists about this. I've talked to some workers about this. There are some people that say, I will not take a job if I'm required to have a vaccine or I'm required to go through a testing routine. But the flip side is, some economists say that there's people out there that are scared to take jobs because they don't know that the person working next to them is vaccinated. And they don't know if it's safe to go into that workplace.

Ryan Knutson: Whether a vaccine mandate will bring people back to work or lead them to quit isn't clear yet. But Jack says his conversations with unvaccinated employees have made him worried. What percentage of your employee base do you think would quit if you had mandated vaccines?

Jack Schron: I would say maybe three to 5%.Ryan Knutson: Jack says that if he did mandate vaccines and his employees refused to comply, there's a lot of other places they could work.Jack Schron: Guess where they're going to go? They're going to go to those companies that are below 100, because they have the same skilled labor shortage that everybody has today. And the majority of manufacturing and small machine shops are 25 person, 50 person. They're all exempt from this. And so they're going to lick their chops if that were to happen.

Ryan Knutson: But how bad would that actually be if three to 5% of your workforce quits? That's after the break. The pandemic has made Jergens' labor problems worse. But Eric says that finding skilled labor has been a problem in American manufacturing for decades.

Eric Morath: Like 50 years ago, manufacturing jobs were viewed as great jobs. They were very stable. They paid middle class wages. Where I grew up in Michigan, that meant you had a nice house in the suburbs, maybe you had a cottage on the lake. You had two cars, you had a boat. Right now, that's not reality for manufacturing, especially not a 15 or $20 an hour manufacturing job. So naturally, everyone from parents to teachers to guidance counselors have sort of geared kids like go and take that healthcare job. Don't go train to be a factory worker.

Ryan Knutson: And Jack agrees. And he's watched the problem get worse.Jack Schron: When I went to school, we had shop class, and you had culinary school class. And you had things of that nature that were part of the core curriculum. Those all got dropped. And they haven't been around for years.

Ryan Knutson: So it's more of a systemic skills gap than a dynamic in the economy right now that's keeping people from working.Jack Schron: Absolutely. Yeah.Ryan Knutson: Jack has been concerned about this skills gap for a long time. So much so, that he and his son decided to open their own school. Around 15 years ago, the Schrons started Tooling University, an online vocational school that teaches the fundamentals of manufacturing.

Speaker 5: With more than 500 online classes, Tooling U SME provides a broad and deep catalog of manufacturing training topics. Our online classes (crosstalk).Ryan Knutson: And last year, there were around 800,000 students taking courses globally.Jack Schron: We've got to bring manufacturing back to the United States. And people are waking up to this.

Ryan Knutson: Jack is also thinking hard about how to recruit people to work for Jergens, and putting videos on YouTube that tout the benefits of a career in manufacturing.Speaker 6: I feel like manufacturing really has become like my best friend. I really don't want to do anything else. Like, I could see myself doing this for 25 plus years. So having this job is a once in a lifetime opportunity and it is a dream come true.

Ryan Knutson: Jack himself appears in some of these videos, talking up Jergens as a great place to work.Jack Schron: I've done well over 10,000 birthday cards. So every single individual here, I walk around, hand deliver a birthday card to each one of them with the $10 in it. Used to be $5, but now we're up to $10. Probably ready to go to 20.

Ryan Knutson: But these are Jack's long term solutions. Right now, he's just trying to hold onto the employees he already has. So rather than risk upsetting, some vaccine hesitant workers, Jack says he's going to do regular testing instead, even though he does think the vaccine would help end the pandemic.

Jack Schron: You get in these tough moral choices, and what do you do? Do what I become the autocrat that slams a fist on the table and says, you will do this?Ryan Knutson: For Jack, it's not just the tough moral choices. It's also practical. If he loses workers, he says his company will be less productive. And he worries that that could affect companies that rely on the complicated machinery Jergens produces.

Jack Schron: If you start cutting out links of that chain, then it makes it that much more difficult for us to produce that screwdriver, to make that part that goes into supporting a medical device out there. When the pandemic hit, we were slammed with people wanting those screwdrivers because the ventilator market. And we could not make them fast enough and get them out to all the people who were going with their backs to the walls to get those ventilators out. And I think that those are unintended consequences that people have not factored in.

Ryan Knutson: But Eric says it's still an open question if the vaccine mandates will drive employees to quit. This is uncharted territory. And some experts he spoke with had more optimistic predictions.Eric Morath: I talked to several economists this week, and they were really mixed on this. There was some that predicted that this could cause a higher level of unemployment because people will quit jobs rather than get vaccinated. Others said the opposite. They thought that some people would be more confident and they would be willing to take jobs. And they viewed it as a chance to improve the health situation in the country. And the best way to improve the economy is to get rid of the virus, right?

Ryan Knutson: The Biden administration's mandate hasn't been finalized yet, which means we could be waiting for a while to find out whether workers will choose to get vaccinated or leave their jobs. Even if it could mean taking a pay cut.Eric Morath: If someone is saying, hey, I'm willing to take $10 an hour less, just to avoid a vaccine ... we don't know how many people that is. Is that going to be a large number of people? I mean, that's a concern. We've seen some of these other places, like a hospital in Houston mandated the vaccine, and a handful of people quit. So it's kind of the question of, is it a significant number in your workforce, or is it the same type of churn? People quit all the time for a lot of different reasons. So it's a little bit uncertain to know ... the vaccine mandate, that's one more layer. But is that worth $10 an hour to you? That creates an interesting disruption in the economy.

Ryan Knutson: That's all for today, Thursday, September 16th. The Journal is a co-production of Gimlet and the Wall Street Journal. Special thanks to Ruth Simon for her help on this episode. And don't forget, on Saturday, we're dropping two more episodes in the Facebook Files. Part three ...

Speaker 8: It wasn't just one small piece of an operation that would be say like, trying to recruit people. The entire ecosystem of a human trafficking ring could exist on Facebook.Ryan Knutson: And part four.Speaker 8: So people inside Facebook started to notice that this was effectively highlighting the very worst kind of content. Stuff that was divisive, really negative, and just kind of represented the worst parts of humanity.

Ryan Knutson: Thanks for listening. See you tomorrow.Looking for more episodes? Find them wherever you listen to podcasts. Read more: The Wall Street Journal »

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