COVID & Unemployment

Will companies choose to rehire laid-off employees or hire new ones?

Erika Beras Dec 23, 2020
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A flight attendant passes out refreshments. Airlines are among the industries that could rehire workers once pandemic relief is distributed. Michael Loccisano/Getty Images
COVID & Unemployment

Will companies choose to rehire laid-off employees or hire new ones?

Erika Beras Dec 23, 2020
Heard on:
A flight attendant passes out refreshments. Airlines are among the industries that could rehire workers once pandemic relief is distributed. Michael Loccisano/Getty Images
HTML EMBED:
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No matter what happens regarding the congressional pandemic relief bill, the indications are that it will offer loans or other assistance to companies to rehire workers who have been furloughed or laid off over the last nine months.

From hard-hit small businesses to airlines and hospitality industries, when employers are ready to rehire, they will have a lot of options.

Lauren Rivera, professor of management and organizations at Northwestern’s Kellogg School of Management, explained that “right now, there’s just so, so many people looking for work.”

That might prompt companies to consider hiring new employees, said Wharton management professor Peter Cappelli.

He suggested they might ask, “Why shouldn’t we use this opportunity to look around a little bit and see if there’s somebody we would rather have? After all, you know, it’s been almost a year now without having him around.”

Legally, employers are free to court other candidates, said Heidi Shierholz, a labor economist at the Economic Policy Institute.

“For the vast majority of workers, there is no legal right of recall, if the employer starts hiring again,” Shierholz said. “The exception to that is for unionized workers,” who often have specific rules about hiring and recall in their bargaining agreements.

The cost of bringing on new employees is also a consideration. It’s usually expensive. Rehiring a worker may mean reissuing equipment and restarting emails. That’s still thousands of dollars cheaper than onboarding and training a new employee. 

Another cost saving in bringing back a former employee, according to Shierholz: “You don’t have to, for example, do reference checks. You already know all about this worker because they were already your worker. You are the best reference.”

Companies also need to think about employee morale. Erin Hatton, a sociology professor at the State University of New York at Buffalo, said that once furloughed employees are hired back, they “may very well harbor ill will and be less likely to commit, to go over and beyond the way they may have before.”

But, Hatton added, right now workers are in a pretty vulnerable position. So if they get called back, chances are good they’ll return.

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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