By Timothy Aeppel and Ben Klayman

(Reuters) – Kevin Kelly is hitting his anti-vax workers where it may hurt them most: their paychecks.

On Sept. 1, when regular raises go through for the 250 workers at Emerald Packaging Inc.’s plastic bag factory outside San Francisco, those fully vaccinated will get a 3% bump, while those who resisted vaccination will get only half, 1.5%.

“With the Delta variant spreading quickly and likely to hit the unvaccinated here, and thus put everyone at risk for sickness, it likely is my last best shot to get people jabbed,” said Kelly, chief executive of the family-owned manufacturing operation.

Kelly plans to tell workers on Aug. 1, to give them time to get vaccinated if they want the larger raise.

A national vaccination campaign spearheaded by the Biden administration peaked at 3.3 million doses a day in mid-April and has been limping along at a daily pace of just over 500,000 since the Fourth of July holiday. At the current pace, most models show the country won’t reach the lowest threshold for herd immunity – around 70% – until late this year.

Now, with those government efforts having stalled, companies like Kelly’s have taken on the task of cajoling reluctant workers to get the vaccine.

Unlike large swaths of the service sector – which can keep many workers remote in the face of a renewed virus wave – manufacturers and many other front-line businesses don’t have that option, so some are getting creative in pushing people to take the vaccine. With order books bulging as the economy continues its recovery and labor supply already thin, many are fearful of losing staff time to the illness.

COVID-19 infections are increasing across the country, according to Reuters data, with some 40,000 infections reported on average every day. That’s 16% of the daily peak seen during the pandemic in January, but the fast-spreading Delta variant is now making headway, especially in many traditionally industrial Midwestern states where vaccination rates are lower than in coastal regions and major cities.

FROM ‘STRONGLY ENCOURAGING’ TO HERE’S $50

German carmaker Daimler AG has opened pop-up vaccine clinics at its larger U.S. sites and adjusted work schedules so that employees, and in many cases their dependents, can get shots conveniently. Deere & Co, the Moline, Illinois-based tractor maker, said it has no requirements that workers get the shots. But employees, as well as suppliers and other visitors to its locations, who are not vaccinated must continue to wear masks.

Forcing action on any medical issue is a delicate dance for employers. Even offering incentives must be done carefully, to avoid running afoul of workplace regulations protecting employee rights.

“We’re not mandating – but we’re strongly encouraging” our workers to get the vaccine, said Jay Baker, chief executive of Jamestown Plastics Inc., a 150-employee firm in upstate New York. He also refuses to offer any incentives – like free food or raffles – and worries peer pressure among workers could devolve into “unhealthy” pressure. “People saying – I got my turkey, why don’t you have your turkey? It sounds like middle school.”

Bob Roth, co-owner of RoMan Manufacturing, a small producer of transformers and glass-molding equipment in Grand Rapids, Michigan, has offered workers a crisp $50 bill as a “thank you gift” for getting the shot. The company kept it small and called it a thank you, not a formal incentive, he said, because of the vagaries of federal labor law.

The cash has had limited impact. Only slightly more than half of Roth’s workforce has gotten the vaccine, and Roth is flummoxed by the attitude of many of his anti-vax workers. Most of the reasoning he’s heard is “bizarre,” he said, including worries about the vaccines causing sterility or being produced too quickly. “No facts to back any of that crap up,” he said.

Many companies fret that a wave of sickness could make it harder to keep up with already overflowing order books. Roth estimates his backlog of business is three times larger than a year ago, as the shutdown delayed work and strong economic growth is now fueling demand.

At Emerald Packaging, which makes plastic bags used to package fresh produce like pre-cut lettuce, business has boomed during the pandemic and Kelly, the CEO, said the last thing he needs is another wave of workers having to stay away from work because of new infections. He estimates about 80% of his workers are vaccinated, while the remainder are roughly divided between people who are scared of vaccines and “the other 10% that are just hardcore” opposed.

“Everyone loved me during the pandemic, when I was doing all these things to keep people safe,” he said. “Now the anti-vax people all think I’m an asshole.”

He knows he won’t ever get to 100%, but would like to get closer to 90%. “We just need our own little herd immunity,” he said.

(This story corrects spelling error in 11th paragraph)

(Reporting by Timothy Aeppel and Ben Klayman; Additional reporting by Rajesh Kumar Singh; Editing by Dan Burns and Andrea Ricci)

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