Many Furloughs Are Turning Into Layoffs - COVID-19 Clinical Trial
General Information | COVID-19

Many Furloughs Are Turning Into Layoffs

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    Job loss can occur in a few different forms. Unlike a layoff, which is usually permanent, a furlough is a “temporary layoff” or unpaid leave of absence. In most cases, furloughed employees can expect to be rehired after a short period of time. Some furloughed employees even remain eligible for benefits, including health insurance.  

    Employers most often furlough workers in response to economic downturns or seasonal business cycles. This makes it easier to reinstate trained workers as soon as possible, rather than hiring and training replacements. The COVID-19 crisis and ensuing economic shutdown forced companies of all sizes to suddenly furlough employees until further notice.  

    However, many of those furloughs are now turning into permanent layoffs. A working paper from University of Chicago’s Becker Friedman Institute goes so far as to predict that 42% of the recent layoffs, including furloughs, will result in permanent job losses “because of reduced demand and concerns around further transmission of the infectious disease.” 

    Travel Destinations Predict Long-Term Furloughs 

    Travel destinations like MGM Resorts International responded to the coronavirus travel restrictions by furloughing employees. In fact, MGM furloughed nearly 63,000 of its 70,000 full-time and part-time domestic employees in March. But it’s now reported that many of those employees may shift from furlough to layoff status at the end of August.  

    In a legal notice sent to employees in May, MGM warned that layoffs may last more than six months or become permanent, depending on the trends of coronavirus recovery. As a result, furloughed employees are feeling confused and frustrated. 

    “How am I supposed to plan my future when I don’t know how I am going to survive?” said MGM employee Joseph Guerrero. “There’s no definite return-to-work date and we are kept in the dark.” 

    Bankrupted Retailers Close Their Doors For Good 

    Sears, JCPenney, and Neiman Marcus were once giants of the American retail industry, but they may not be able to overcome the coronavirus crisis.  

    On May 7, Neiman Marcus filed for Chapter 11 bankruptcy, citing “inexorable pressure” from the challenges presented by COVID-19. According to the company’s CEO, Geoffroy van Raemdonck, Neiman Marcus Group was “making solid progress on our journey to long-term profitability and sustainable growth” before the coronavirus pandemic emerged.  

    “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” he continued. As a result, it’s unclear which stores will remain closed, or for how long, leaving furloughed employees without a clear path forward.  

    JCPenney also questions its ability to survive the coronavirus and evolving shopper behavior. The retailer recently confirmed it will close 136 locations nationwide, with going-out-of-business sales starting in mid-June.  

    Many other hard-hit retailers are expected to follow suit, including Tuesday Morning, J.Crew, and Palais Royal. Stage Stores, which owns Palais Royal, reported that coronavirus-related closures exacerbated a “challenging market environment.”  


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