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COVID & Unemployment

Furloughs turning into permanent layoffs as pandemic drags on

Kristin Schwab Sep 8, 2020
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Every month a worker is on temporary unemployment, they have about a 10% to 15% chance of transitioning to a permanent separation, according to one labor economist. Spencer Platt/Getty Images
COVID & Unemployment

Furloughs turning into permanent layoffs as pandemic drags on

Kristin Schwab Sep 8, 2020
Heard on:
Every month a worker is on temporary unemployment, they have about a 10% to 15% chance of transitioning to a permanent separation, according to one labor economist. Spencer Platt/Getty Images
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The jobs numbers we got last week for August show some people are getting back to work, with jobs like retail, leisure and hospitality seeing some of the biggest gains.

But in the last week, more and more companies in those very industries have started warning that many of their furloughed employees will turn into permanent layoffs — among them United Airlines, MGM Resorts and Bed Bath & Beyond. What does this mean for job losses as we move into fall?

Cameron Tabrizi, a preschool teacher in Seattle, was on furlough all summer. And here’s how he described his job outlook from start to finish:

“Pragmatically grim to growing into existential despair,” he said.

The pandemic dragged on, and he knew he had health issues that could prevent him from going back to work if his employer wanted him back. In August, after five months of furlough, he got the call.

“They said ‘we can either lay you off or you can come into work,'” Tabrizi said. “They gave this as a mass option to everyone that had been furloughed.”

Tabrizi took the layoff — and he was sort of prepared for it. The longer the pandemic lasted, the more he figured he would not be able to go back to work.  

And this matches up with reality, according to Matt Notowidigdo, a labor economist at the University of Chicago.

“A worker that’s on temporary unemployment, every month they have about a 10 to 15% chance of transitioning to a permanent separation,” he said.

Let’s see … we’re almost entering month seven of the pandemic. So it makes sense that many furloughs are now becoming layoffs. But Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, said we’re at a new turning point. Job losses are spreading from industries decimated by lockdowns — like hospitality and tourism — and into others that weren’t initially as sensitive.

“Businesses that maybe thought they were going to be fine, unaffected by any social distancing measures are looking up and saying ‘Yeah, we didn’t have a problem then, but now we’re just seeing demand for goods and services has just been depressed,'” Shierholz said.

She said at this point in the pandemic, minimizing job loss is about boosting spending — something that became more difficult for families once that extra $600-a-week in unemployment benefits went away.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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