The road to recovery: furloughs, layoffs and job numbers that shade the truth
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Version 0 of 1. The unemployment rate fell to a seven-and-a-half-year low in August. While the number of new jobs created was less than expected, overall the month-to-month numbers have been positive, allowing the Obama administration to tout economic recovery and the Fed to prepare for a potential interest rate hike later this year. Yet, the monthly numbers do not tell the entire story. As certain industries have been adding jobs to keep the unemployment rate steady, others industries like oil and gas have been slashing them by hundreds and thousands. Some workers have been let go with a promise of a job weeks or months down the road. Not fired, just furloughed – but no paycheck feels the same, no matter what you call it. Other workers, in retail and local government, have also been furloughed, with hours shaved from their weekly and monthly schedules. The low unemployment rate provides little comfort to these workers. Irene Coleman worked at her last job, as an HR generalist, for about three months before she was furloughed on 9 July. “They didn’t give us any notice,” Coleman said. “I did go on unemployment briefly but they called me back two weeks later.” This week, however, was Coleman’s last week with the company. “I just gave notice and will begin a new job next week,” said the 61-year-old from Panorama City, California. Initially, when the two-week long furlough started, Coleman had no plan to look for a new job. “But I had a feeling this company is just too unstable; therefore, I sought other employment,” she said. Coleman is not the only one to be called back to work from a weeks-long furlough. Mid-May of this year, Blue Bell ice cream company announced that 1,400 of its employees were going to be placed on a partially paid furlough. “They were paid a substantial portion of their pay, with the expectation that they would return to work when needed,” a company spokesperson told the Guardian. “At this time, we’ve brought back approximately 360 furloughed workers. We will continue to bring back more workers in phases as production and distribution expands.” One of those workers was Sean Cooper, who told his local CBS station that he was grateful because he could have been laid off. While he was furloughed, Blue Bell paid him for 30 hours’ work each week, which while helpful was less than he was used to. To make ends meet in the meantime, he found a part-time job at a local resale shop. “[The part-time job] has allowed me to get back to living a normal life,” he said. “It pays the bills. It helps me and my family to survive.” Blue Bell hoped to bring back more workers in the coming week, but has no specific dates as of yet. “We are happy to be bringing back more and more furloughed employees, and look forward to the day that all of our furloughed employees are back working at Blue Bell,” the spokesperson told the Guardian. Blue Bell is not the only firm whose employees have been looking for new jobs this summer, either temporary or permanent. Related: Shell cuts 6,500 jobs as oil price slump continues Brenham, Texas – where Blue Bell closed one of its factories and laid off 250 workers, in addition to the 300 it had furloughed – saw 160 people laid off by agricultural equipment manufacturer Valmont Industries, 64 by machining manufacturer MIC Group, and 47 by Stanpac, which handled Blue Bell’s packaging. Texas also has seen jobs disappear in the oil and gas sector, a trend across the entire country. Over the past year, the number of unemployed workers in mining, quarrying and oil and gas extraction more than doubled, reaching 79,000 in July. That’s up from 34,000 last July. During that same period, the unemployment rate in the sector climber to 8.1%, up from 3% a year ago. According to Swift, which tracks layoffs in oil and gas industry, 176,162 jobs were lost globally in the field this year. Continental Resources, an Oklahoma oil company that track layoffs, found the US has cut at least 91,000 jobs in the energy industry since last summer. Jamie Dandar, chapter president of Oilfield Helping Hands’ Rocky Mountain chapter, which covers Colorado, Wyoming and Utah, said they have seen an uptick in oil field families in need of assistance, having encountered a financial crisis through no fault of their own, said Dandar. “Every one of our board members was affected by layoffs,” she said. “The last downturn we had was in 2008. It’s cyclical. I know some of the people who have been in the business for a long time, they have gone through this before. It’s the nature of a commodity, prices of which fluctuate. It will go down for a while and then it will invariably come up. Nobody really has the crystal ball to say when that will happen. But we know that it will.” The increase in layoffs have come at the time when crude oil prices in US have hit their lowest point since 2009. Slowdown in the energy sector has affected other sectors as well – such as railroads and freight train operators. In July, Union Pacific railroad CEO Lance Fritz said 1,200 workers had been furloughed and that the number was expected to grow as the company entered into third quarter. “The slowdown in coal right now is being driven by a couple of things,” he told Bloomberg. “First is we came into this year with a pretty big inventories at the utility plants. Natural gas prices are clearly driving more of electricity production than natural gas and the weather was not all that good in the second quarter for coal burn.” Not even a month later, Union Pacific announced that in the coming months the company would have to eliminate several hundred management jobs. Long-term furloughs, which can last months and during which workers go without pay, “are a more like a layoff”, according to Elise Gould, senior economist at the Economic Policy Institute. “Furloughs would then have an impact on local economy that layoffs would have on a local economy – it’s no different,” she said. “People lost their income, therefore they don’t have money to spend.” Those who actively look for other jobs while furloughed might be counted as unemployed, but Gould said they could also be counted as simply out of the labor force for that period. Traditionally, when people think about furloughs, they think of employees’ schedules being cut by “a day here or there”, she explained. “In that case, if it’s a day here or there – ‘Oh, we don’t have enough work for you today, come back tomorrow’ or ‘Don’t come back tomorrow, come back the next day’ – that’s different from layoffs. It’s not for a long period of time.” Such furloughs will go into effect in Jackson, Mississippi, in October and are scheduled to last for two years. City workers will be furloughed the last Friday of each month and docked eight hours’ pay from their checks. “We are facing one of the toughest budget seasons our city has experienced but the furlough will prevent layoffs and major reductions in city services,” Jackson mayor Tony Yarber said in a statement. According to Gould, furloughs are similar to what is known in the retail industry as just-in-time employment. For example, Walmart, which earlier this year increased pay for half a million of its workers, has recently reduced hours for a number of its employees. In retail, “it’s not called a furlough. It’s just called scheduling – putting less people on the schedule,” explained Gould. “For people, who don’t get their schedule till the same day or just a couple days before, employers implicitly schedule them for fewer hours or schedule them more in Christmas time.” The people for whom furloughs mean working a day less a week or a month – like the city employees in Jackson or a store cashier whose hours have been reduced –are counted as employed, explained Gould. As such, these type of furloughs do not affect the unemployment rate. “They are counted as employed in both of the major government surveys: the payroll survey, because they would have been on payroll for that period even if it was for less hours, fewer days; and the household survey. Did you work in this period? Yes, but you didn’t work as much as you should’ve. You might show up in hours, but you are not going to show up in unemployed [numbers].” If a furlough or schedule adjustment doesn’t show up on the unemployment report, did it happen? |