Now that President Biden has abandoned his promise not to impose vaccine mandates on working Americans, Wall Street investment banks are trying to guess how Biden's new mandates for federal workers - and his administration's request that all private employers with more than 100 employees impose a similar requirement - will increase the level of vaccine-induced immunity.
Unfortunately for Biden, a team of analysts at Goldman has run the numbers, and they're saying the impact of Biden's new program will probably be limited: Goldman estimates that the requirements will apply to about 25MM currently unvaccinated individuals, and boost the number of vaccinated individuals by 12MM (or 3.6% of the total population) through March next year.
Ultimately, Goldman expects 82% of the total population (and 90% of adults) to be vaccinated with a first dose by mid-2022.
What's more, Goldman sees some downside employment risk in the near term, as 7MM affected workers report that they will definitely not get the vaccine, while mandates imposed earlier this summer caused some to leave their jobs.
According to Biden's edicts, federal workers have 75 days to comply with the vaccine mandate, and although the DOL rule has not yet been issued, we expect private businesses will be given a similar time period to comply, suggesting the rule could become binding in late-2021 or early-2022. Although the vaccine mandate will likely be challenged in court, the administration appears to believe it falls within OSHA's authority (even if enforcement proves difficult).
Goldman's approach to estimating the impact of Biden's order is based on the impact of French President Emanuel Macron's immunity pass. equires proof of vaccination, immunity, or a negative test to get into restaurants, bars, hospitals, and public transportation or to work at a public venue. Although France’s immunity pass is mostly tied to spending rather than to work, it imposes similar vaccine/testing requirements to engage in normal economic life. The introduction of the vaccine passport in early July led to a sharp re-acceleration in the pace of first dose vaccinations in France, as shown by the chart above.
Goldman's alternate approach to projecting the impact of the order combines data from Census Household Pulse Survey on the shares of working individuals that are unvaccinated and "will probably not get it", that "will definitely not get it," or that are unvaccinated for other reasons, with an adjustment for individuals that misreport their vaccination status.
Coupled with assumptions on the mandate-driven increase in the vaccination for each of these three groups, this approach implies that the requirements will boost the vaccination rate by just over 3pp by March next year. Averaging both approaches, we estimate that the new requirements will boost the number of vaccinated individuals by 12mn, or 3.6% of the total population.
Incorporating these estimates, the recent somewhat faster-than-expected vaccination pace, and assuming that vaccinations for children ages 5-11 are approved in November, we now expect 82% of the total population (and 90% of adults) to be vaccinated with a first dose by mid-2022, as the chart below shows.
As for the order's impact on the labor market, while growing vaccination rates might convince some (at-risk) people that it's finally safe to return to the work force, it's more likely that Biden's edict will lead to at least some employment reallocation this fall as vaccine-resisters search for jobs at smaller companies not subject to the mandate.
Of course there is still a significant amount of uncertainty regarding the implementation of Biden's mandate, including when and how strictly it will be enforced. At the very least, these projections will give us a chance to look back in three months and see how misguided - or perhaps how uncannily correct - they were.