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COVID & Unemployment

Temporary furloughs are turning into permanent job losses during the pandemic

David Brancaccio, Rose Conlon, Erika Soderstrom, and Alex Schroeder Sep 1, 2020
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A front desk worker assists a patron with checking in at the reopening of Bellagio hotel-casino on June 4, 2020, in Las Vegas. MGM Grand Resorts has announced it will lay off 18,000 workers who were previously temporarily furloughed. Ronda Churchill/AFP via Getty Images
COVID & Unemployment

Temporary furloughs are turning into permanent job losses during the pandemic

David Brancaccio, Rose Conlon, Erika Soderstrom, and Alex Schroeder Sep 1, 2020
Heard on:
A front desk worker assists a patron with checking in at the reopening of Bellagio hotel-casino on June 4, 2020, in Las Vegas. MGM Grand Resorts has announced it will lay off 18,000 workers who were previously temporarily furloughed. Ronda Churchill/AFP via Getty Images
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It’s the first of the month, and people who got temporarily furloughed because of the pandemic collapse are being told not to come back … ever. For example, 18,000 MGM Grand Resorts employees got that word. There’s a psychological cost to this, morale, and the question of workers getting the skills they need for the next gig, if there’s one to be found.

Steven Davis, professor of economics at the University of Chicago Booth School of Business, spoke with “Marketplace Morning Report” host David Brancaccio about this. The following is an edited transcript of their conversation.

Steven Davis: It’s not just literally reskilling. It’s, people get discouraged when they can’t find a job for a few months. Anything we can do to hasten the economy’s recovery and accelerate the creation of these new job opportunities will help on both the morale front and the skill-building front. Because businesses themselves will have an incentive to help train the employees that they they want to bring on.

David Brancaccio: But I note, in one of your recent papers, you’re not a fan of government policies that encourage companies to keep people on board if there’s a sense they ultimately won’t need them.

Davis: That’s delaying the inevitable at a very high cost. And I think a perfect example of this is our policy toward the airline industries. The Treasury Department decided to spend tens of billions of dollars in subsidies directed to airline companies on the condition that they not lay anybody off. And now we’re seeing that. The airline subsidies that kept people employed are expiring this month actually. And airlines have already made it clear they’re going to be laying off tens of thousands of people. So here we’ve spent tens of billions of dollars to keep people waiting around for jobs that in many cases are not going to come back.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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