Unpaid furloughs a trend for U.S. white-collar jobs

CINCINNATI Wed Feb 25, 2009 9:34am EST

Governor Edmond G. ''Pat'' Brown's state office building is shown in San Francisco, California in this January 29, 2009 file photo. REUTERS/Robert Galbraith

Governor Edmond G. ''Pat'' Brown's state office building is shown in San Francisco, California in this January 29, 2009 file photo.

Credit: Reuters/Robert Galbraith

CINCINNATI (Reuters) - U.S. newspapers have done it. California police have too. Governments in California, New Jersey and Ohio say it will save the budget. Forcing workers to take unpaid time off is a new version of the American layoff.

The involuntary furlough, once a staple of boom-and-bust blue-collar industries like mining or automaking, is making its way into white-collar workplaces across the United States as employers try to cut costs quickly amid a deepening recession.

With some 2.5 million jobs lost in the past six months, few furloughed workers are complaining about the unpaid time off.

"I think some people are more comforted by the furlough because they believe there is less risk of layoff," said Dennis Hoffman, an economics professor at Arizona State University who has been told he has to take 15 unpaid days off by July.

Hoffman isn't complaining about the pay cut, figuring it is better than losing more staff at the 114-year-old university. But like consumers across America, Hoffman views the forced time off as another reason to cut back on spending, a trend that is delaying a general recovery.

"It just doesn't feel comfortable to be out there spending ... you wonder when the next shoe will drop," said Hoffman. "Between this and the stock market, it is quite a bump in the pathway toward saving for retirement."

At the Gannett newspaper chain, which publishes USA Today as well as dozens of other dailies across the country, journalists are also ambivalent about news they all have to take a week off -- unpaid -- before the end of March.

ROUNDS OF LAYOFFS

"People are looking at this as: 'If I can try to save my job and the other jobs around me, I'm willing to do it.' I haven't heard any grumbling about it," said one Gannett journalist who declined to be identified because she feared she could lose her job.

"I've gone through several rounds of layoffs, and those were much worse," said the 20-year veteran writer. "Once you've seen your friend laid off, you'd much rather do the furlough."

At Arizona State University, staff were required to take between nine and 15 days off by midyear, usually a day at a time spread out over 20 weeks. At Gannett, workers are being furloughed for an entire week before the end of March.

Other workplaces are experimenting with a week off every month, three-day weekends, and even simply cutting pay and letting workers choose when they lose the hours.

But while workers may be grateful they are not being laid off, experts say the spread of the unpaid furlough through state governments, universities, publishing firms and chemical companies is not the result of corporate altruism -- it's simply the best, fastest, way to cut payroll costs.

"Obviously companies are under a lot of economic pressure and (furloughs) are something that can be done relatively quickly. The alternative is layoffs -- and that can take months or even years," said Francine Blau, a professor of industrial relations at Cornell University.

There are other benefits to employers.

"Companies are also experienced with -- and much more wary of -- the damage layoffs can cause, and the risks to their ability to rebound when the economy turns around if they cut too deeply," said John Challenger, chief executive of outplacement consulting firm Challenger, Gray & Christmas.

TO WORK OR NOT TO WORK

Whether furloughs can be implemented smoothly is an open question. Unlike an assembly line that can be shut down, the workload in many professional workplaces doesn't really stop at the end of a shift. Workers bring work home, answer e-mails at night and cram for big projects to meet deadlines.

Some furloughed workers have been forbidden from doing any work-related activities while they are off -- leaving clients, sources, buyers and colleagues confused or annoyed.

Others have simply opted to continue to put in the same amount of hours even though they will be unpaid.

"If I sit at home doing nothing, the workday is that much harder," said economics professor Hoffman. "A lot of us have the same attitude: the work is the work."

Nor are furloughs a guarantee against future layoffs. At Gannett, the forced time off follows the loss of some 3,000 jobs in 2008, and workers are expecting more furloughs in the second quarter -- possibly followed by more layoffs.

"This is a way of experiencing a smaller workforce without actually doing it -- management can say, 'The paper still came out every day ... we still have some fat left to cut,'" said Jim Hopkins, a former Gannett journalist who now writes a blog about the company.

Cornell's Blau agreed furloughs could offer employers a way to experiment with lower staffing while they're waiting for the economy to determine how much further they'll have to cut.

"Still, I don't think firms would turn to this in a long-term situation, because all the incentives would be to pare the workforce down to the size they want in the long run," said Blau. "To me, furloughs are actually optimistic because employers think they may need the workers pretty soon."

(Reporting by Andrea Hopkins; Editing by David Storey)

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