“I really liked the job,” Alridge, 37, said. “I was able to put away a lot of money over the last two years; we were saving to buy an apartment.”
Source: Matthew Aldridge
When Matthew Aldridge was furloughed in March from his job as a server at La Pizza & La Pasta, an Italian restaurant in Manhattan, he was unhappy but hopeful. At least he wasn’t laid off, he thought, and would eventually get to return to the restaurant. He earned more in the position than he ever had, and it was the first time he’d had employer-sponsored health insurance.
“I really liked the job,” said Aldridge, 37. “I was able to put away a lot of money over the last two years; we were saving to buy an apartment.”
He spent his newly open days binging Netflix, reading and watching his husband paint. At one point, there was talk that the restaurant would re-open, but those discussions soon faded. The future of restaurants sounded precarious. “They said, ‘We’ll contact you when things look better,'” Aldridge said.
As the months dragged on, he’s grown more anxious. “I haven’t been sleeping too good,” Aldridge said. “It’s nerve-racking.”
If the Great Recession was marked by mass layoffs and people walking out of their office buildings with boxes, the pandemic’s recession will trigger memories of people being furloughed and then sitting at home, anxiously awaiting to return to their jobs.
More than 18 million workers were on furlough in April, according to the Bureau of Labor Statistics. Google searches for, “What does furlough mean?” exploded that month. After all, the previous record, in 1982, was 2.5 million. Companies that have furloughed workers include Tesla, GAP, Macy’s, Marriott, Best Buy and Disney. And no kind of worker has been immune; even lawyers and doctors have been placed on temporary absences.
“It’s something companies do when there’s a sudden thing they weren’t prepared for, and that’s certainly this,” said John Sullivan, a professor at San Francisco State University who studies furloughs.
Prior to the public health crisis, furloughs, a term that derives from the dutch word, “verlof,” meaning “leave of absence,” were mostly associated with government shutdowns. In the private sector, they were rarely used. During the Great Recession, fewer than 1% of employees were furloughed, compared to 1 in 5 who were let go, said Sandra Sucher, a professor of management practice at the Harvard Business School.
The recent flood of furloughs could be a positive sign, said Keith Hall, a professor at Georgetown University and a former commissioner of the Bureau of Labor Statistics.
“The expectation in the Great Recession was that it was going to last a very long time, so there weren’t many furloughs,” Hall said. Despite the pandemic, he said, “Companies are hoping to get back in business pretty quickly.” Indeed, the number of furloughed workers has already dropped to 9 million in July, from 18 million in April.
Over the last two months, Hall said, “All of the job growth we’ve had has been furloughed folks getting re-employed.”
And there are clear advantages to a furlough compared to a layoff. Beyond the hope that you’ll return to your job, many employers continue to pay for their workers’ health insurance during their leave. Furloughed workers can also typically receive unemployment benefits.
Lyndsey Hansen Sunderland’s boss last said she’d return from her furllough in October.
Lyndsey Hansen Sunderland is optimistic she’ll be called back to her job as a marketing assistant at the Hartman Arena in Park City, Kansas. “Everything was fine until this happened,” Hansen Sunderland, 34, said. In the five months she’s been on furlough, she hasn’t looked for another job.
“I don’t want to leave them hanging if they need me back,” she said. Her boss last said she may return in October.
“Knowing I have a job to hopefully go back to, I feel like I’m in a better position than millions of other Americans right now,” Hansen Sunderland said.
Yet furloughed workers are often never brought back, Sullivan said, and can put themselves at a disadvantage by staying on the sidelines.
“When you realize after a couple of months that they’re lying to you, guess what? It’s too late. All the laid off people started looking for a job on day one, and they’ve flooded the market,” he said.
Sullivan’s cynicism finds some support in a recent Aon survey. Only 26% of companies expected all of their furloughed employees to return to work within six months.
“Overall, a majority of firms were either unsure about when workers would return or did not expect all workers to return,” said Yanina Koliren, a partner in Aon’s human capital business.
I haven’t been sleeping too good. It’s nerve-racking.
To cut labor costs during the recession, companies are also looking to speed up their automation efforts, said Ravin Jesuthasan, a member of the World Economic Forum’s Steering Committee on Work and Employment.
That may increase the number of furloughs that turn into layoffs.
“Where the job lends itself to some form of automation, I think it’s really questionable if that work returns,” Jesuthasan said.
Furloughed workers in certain industries are probably less likely to return, Sullivan said. “Everybody loved movie theaters, but you have to look at the environment, and ask, ‘Are there some that aren’t going to make it?'” he said. “The furlough title doesn’t mean anything if the industry has gone to hell.”
The pandemic’s pain clearly isn’t evenly distributed: Nearly half of retail companies reported using temporary lay-offs, compared to just 3% of financial services firms, Aon found.
The furlough title doesn’t mean anything if the industry has gone to hell.
a professor at San Francisco State University who studies furloughs
Amanda Collins was furloughed from the John F. Kennedy Center for the Performing Arts for close to four months when she was officially laid off.
“It’s really disappointing; I was quite certain I’d be back to work by now,” Collins, 32, said. As a result, she didn’t bother looking for other I.T. jobs. “I was really, really frustrated. Normally, when I have a lay-off, I can start looking for work.”
Many of the positions that are available now will require taking a large pay cut, she said.
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Even if a furloughed worker tries to find another job, they may run into challenges, Sullivan said. The hiring manager may assume the worker will leave when he or she is called back to their old job.
“Why would I get you up to speed if I know you’re going to leave me?” he said.
At the same time, if someone’s been on furlough for too long, an employer might assume their skills aren’t up to date. “You don’t want to say you’ve been sitting around,” Sullivan said.
Furloughed employees who are called back may find their position has changed, said Josephine Gartrell, a director at Willis Towers Watson. Some workers may be asked to return part-time, or at a lower salary. If the company’s headcount has shrunk, the same job could now come with more tasks.
“They’ll often give employees time to accept that position, and if they don’t, it’s a termination of employment,” Gartrell said.
“Normally, when I have a lay-off, I can’t start looking for work,” Amanda Collins said.
Source: Amanda Collins
Samantha Costanza was furloughed in March by her company, which designs merchandise for Broadway shows. It’s not yet clear when the performances will resume or what theater will look like on the other side of the pandemic.
“It’s incredibly stressful not knowing when I’ll be brought back,” Costanza, 25, said. “In this situation, you have to be both mentally prepared to return to work at a moment’s notice, and to continue watching time go by while you wait for a return date you can’t predict.”
Furloughed workers can often face adverse psychological effects, said Lisa Baranik, assistant professor of management at the University at Albany.
“When people are laid off, there is a sense of closure; they know what the next step is,” Baranik said. “During a furlough, each day brings uncertainty and questions like, ‘Can I go back to work?’ or, ‘Will I lose my job?'”
“Unfortunately, these negative employee reactions can last months beyond the end of the furlough,” she added.
This month, Aldridge learned that he won’t be able to return to La Pizza & La Pasta. “Because of the uncertainty, they won’t be continuing the furlough past Sept. 31,” he said.
“I was very hopeful,” he said. “I definitely felt like I was in less dire straights than many others. I thought, when all this ends, I won’t have to go through trying to get re-hired. That’s why I’m so stressed now.”
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.