The great American sickout: Omicron is causing "hellacious" worker shortages

A record spike in COVID-19 cases due to the Omicron variant is causing a nationwide worker "sickout," disrupting businesses ranging from grocery stores to airlines.

The past few weeks have been "hellacious," Delta Airlines CEO Ed Bastian said in a Thursday conference call with stock analysts and reporters. The executive said 8,000 of his employees have contracted COVID-19 in the last four weeks alone — about 10% of the carrier's workforce — a toll that contributed to more than 2,200 cancelled Delta flights since December 24.

Although a precise count of the number of employees who are out sick or quarantining is hard to come by, about 5 million Americans could be isolating due to COVID-19 at the peak of Omicron, according to Andrew Hunter, senior U.S. economist at Capital Economics. That could reflect about 2% of the nation's workforce forced to stay home due to illness, he added.

Some employers report taking a harder hit. Stew Leonard Jr., chief executive of supermarket chain Stew Leonard's, said about 8% of his staff was out sick or quarantining last week. That affects what shoppers find on store shelves.

"That's the highest we've ever had," he told CBS MoneyWatch. "What we are doing is the same as every other business — you have to limit your product line."

Leonard added, "Like I talked with my bakery director, and she said, 'I make a great crumb cake, and I also make a great apple crumb cake, but when I'm short on people I'm not able to make the apple crumb cake.' You'll get crumb cake, just not the apple crumb cake."

COVID-19 cases are averaging almost 1 million a day nationally based on a seven-day moving average, the highest number since the pandemic began in early 2020, according to the Johns Hopkins University School of Medicine. That may even be an undercount, given that many people with COVID-19 are taking at-home rapid tests and likely not reporting positive results to their local health authorities.

"We don't know the exact number where cases will peak, but it's looking like it'll already be into the millions to some extent," Hunter said. "That is big enough to have some noticeable impact on the broader economy."

The latest worker shortages are compounding earlier pandemic problems, including supply-chain disruptions and shortages of some services.

During a conference call this week, one CEO of a consumer packaged goods company said the business was cutting production lines by 20% to cope with high numbers of absent workers, according to Andrea Woods, a spokeswoman for the trade group Consumer Brands Association. Because the call was off the record, she said she wasn't able to share details about the company.

About 75% of consumer packaged goods companies in a recent survey said they had experienced an increase in absenteeism due to positive COVID-19 tests or exposure to someone with the virus, Woods added.

"We are still dealing with a massive driver shortage — 80,000 and counting — with one truck available for every 16 loads. Omicron only intensifies that problem," she said. "Absenteeism in warehouses is resulting in late shipments, and retailers don't have the employee base to restock shelves."

That's clear to shoppers across the nation, who are often encountering empty shelves — as well as higher prices due to the highest rate of inflation in nearly 40 years.

"Most people are going to get COVID"

But there are other impacts beyond shortages of bread and other grocery items. Most alarmingly, about 1 in 5 U.S. hospitals are experiencing critical staff shortages, according to Becker's Hospital Review, citing January 9 government data.

Transportation services in cities and regions across the nation have also been disrupted. In New York City, home to the nation's largest mass transit system, three subway lines were suspended earlier this month due to worker illnesses that caused a staffing shortage. School children in Greensboro, North Carolina, also have been directed to take public buses after Omicron caused school bus drivers to call in sick.

"Right now, we need to focus on continuity of operations for hospitals and other essential services as this variant sweeps through the population," Janet Woodcock, acting commissioner of the Food and Drug Administration, said in a Senate hearing on Tuesday. "Most people are going to get COVID," she added.

The surge in employee absences because of the virus strain comes as many businesses are already struggling to find workers. Think of it as a runner recovering from a broken leg who starts jogging slowly again, then sprains their ankle.

"The labor market before Omicron started was incredibly tight — employers had to pull out all the stops to hire," noted Luke Pardue, an economist at payroll services company Gusto. "With employees being unable to work, that is adding to the tightness."

A mass sickout could dent the economic recovery, with consumers fearful of going out to stores, restaurants or bars due to the higher risk of illness. Workers in service-related jobs in some big cities are already seeing a reduction in hours that will impact their families, especially employees who don't get sick pay, according to Gusto.

For instance, the average weekly hours in January for workers in service-sector jobs in New York City is tracking at about 21 hours, down from about 27 hours a year earlier, Gusto found. Nationally, the share of total hours taken as sick leave or paid time off has risen from 0.4% to 5.2% during the past two weeks, according to Gusto's data.

"Uncertainty is spreading across the country," Pardue said.

Some signs suggest the latest COVID-19 wave may be easing, including declining infection rates in Africa, where Omicron was first detected, and in London, where the variant quickly became the dominant strain. That could signal Omicron has already peaked in some parts of the U.S.

Leonard of Stew Leonard's said the percentage of workers out sick at his grocery chain has declined to 6% this week, from 8% last week. Still, he hesitates to predict what things might look like in a few weeks. Last year, after the vaccines were rolled out, he said he believed "it was going to be smooth sailing."

He added, "If you asked me for my prediction, I have been wrong so many times already."

In the meantime, Leonard said his company has changed its policy about unvaccinated workers who have to quarantine, who he said make up the bulk of his absent staff. Starting February 1, those workers won't receive sick pay.

"We said that's fair, because the unvaccinated people in the store end up creating more work for their coworkers," he said.

— With reporting from the Associated Press.