Worry About a New Wave of Layoffs
Not again. That is the plea of many Americans fearful about their jobs as the economy falters.
“I don’t have any more savings or anything like that,” said Terrance Myricks, 21, who was dismissed for the second time in less than three years on Sept. 1. “I’ll probably have to rely on unemployment, which I’d really rather not do. And that’s assuming I can even get it.”
Job growth halted entirely in the nation last month. And as Europe’s debtcrisis acts as a drag on global growth and Washington debates another jobs bill, the possibility of a second recession is increasing in the United States along with the prospects of corresponding layoffs. Mr. Myricks’s tale of pain the second time around, economists fear, could become all too familiar.
With headlines like the 30,000 layoffs planned at Bank of America and the United States Postal Service asking Congress to cut 120,000 workers, it is perhaps not surprising that workers’ concerns about job security are near the peak they reached during the last recession, according to a recent Gallup survey. At least one anecdotal study found that layoff announcements were greater in August than a year earlier.
The last workers in the door are often the first out the door. That could make the Americans who have already depleted their support networks and unemployment benefits most vulnerable to layoffs.
“Employers are likely to target the employees who are more junior, as they usually do,” said Daniel S. Hamermesh, an economics professor at the University of Texas, Austin. “If you’ve already exhausted your benefits for that benefit year—and Congress has said they want to shorten the duration of benefits—you’re up the creek. That’s one of the most severe worries about all this.”
Right before Labor Day, Mr. Myricks, of La Palma, Calif., near Los Angeles, lost his position as a factory machine operator, a job hard-won after a long spell without work.
That painful loss was an echo of July 2009, when a supermarket eliminated his position as an assistant manager. Mr. Myricks joined the 28 percent of teenage men in the work force—39.7 percent of black teenage men—who were idle and looking for a job then. He spent over a year looking for work, and moved into a cheaper home with his wife, Briana, 20, to help make ends meet. After a few months delivering pizzas part time for Pizza Hut, he finally secured a full-time job in April 2010 at a box factory where his brother is an assistant manager.
“It is a very, very dangerous job,” Mr. Myricks said of his work at Georgia-Pacific. “There are operators in my plant who are missing fingers, or missing legs. They’re still working there, though.” (James Malone, a spokesman for Georgia-Pacific, said that the plant adhered to all federal and state safety regulations.)
Still, the young worker felt lucky to find a job that paid $14.34 an hour (plus benefits), enough to pay the bills and help support his father, who is battling leukemia.
One reason he took the job was that so little else was available in California and across the country. There are still more than four workers for every job opening, according to United States Department of Labor data, and in some areas the competition is even stiffer.
“It used to be that you’d be compared against a few résumés, but now you’re competing with a thousand applicants for that one job,” said Teresa Cannady, 53, of Fountain Inn, S.C. She lost her job as an office manager for an Allstate insurance agency in May 2009, and spent 15 months looking for work. Then in September 2010, when the economy seemed to be turning, her old boss asked her to come back—only to lay her off again on Sept. 9.
During Mr. Myricks’s first month at Georgia-Pacific, he worked 12 hours a day, seven days a week. Then he pulled back to five- and six-day weeks. The work, he said, was not only dangerous, but exhausting: He spent his days lifting 50-pound to 100-pound wooden slabs with razors that cut shapes into cardboard, as well as giant printing plates used to stamp the cardboard.
An old back injury flared up, and he developed sharp pains in his shoulder and ankles. He began looking for other work, but was unsuccessful. Over the summer his doctor told him to cut back on his hours. Soon after, the company gave him no choice. When customer orders started to drop off, Georgia-Pacific began announcing furlough days in August.
Other companies appear to be cutting back as well. The average workweek has not recovered to the level before the last recession, and in the last four months it has either been flat or fallen. The decline, which suggests employers do not have enough work for their existing employees, has led economists to worry that broader layoffs may be next.
At Mr. Myricks’s factory, 26 employees out of 187 were let go at the beginning of the month, according to Mr. Malone, the Georgia-Pacific spokesman. Under the union agreement, the layoffs were aimed at workers with the least seniority—including Mr. Myricks.
Such practices are common even in companies that are not unionized, economists say.
“If you’ve invested 10 years in a worker, you’re going to be reluctant to lay him off,” said Robert Shimer, an economics professor at the University of Chicago. “But if there’s a new guy who hasn’t been there that long, and you haven’t had as much time to invest in him, it’s less costly to let him go.”
Though he was told that he would be recalled in about five weeks, Mr. Myricks is doubtful.
“My father worked in this business for 42 years,” he said. “He used to get told he’d be laid off for a few weeks and then he’d be off for half a year.”
Because he has been earning wages for the last year, Mr. Myricks is receiving unemploymentbenefits nearly equal to his pay at Georgia-Pacific. The money could be a lifeline for the young couple, because his wife, lost her job as a social media coordinator in January. Their only other income comes from the freelance blog posts she writes for personal finance sites, at $20 a post.
"It’s really competitive,” she said. “Some of these sites can find somebody in the Philippines who may be willing to work for a third of what I may be asking for.”
The road ahead for both of them could be steep. Many employers prefer—or even require—job applicants to already be employed. A second bout of unemployment could be a bigger stigma.
“Everyone knows that in a bad recession like this there’s a lot of unemployment,” said Harry J. Holzer, an economist at Georgetown University and the Urban Institute. “You’d think employers would take that into consideration, but they don’t always.”
The Myricks want to get bachelor’s degrees to help give them better job opportunities. But the poor health of Mr. Myricks’s father and Ms. Myricks’s mother’s heart problems led them to interrupt their schooling to help support their parents. Now that Mr. Myricks’s father is on the mend, they were hoping to return to college in the coming year.
“I haven’t talked to her specifically about that yet,” said Mr. Myricks about whether they can afford to return to college.
For now he is trying to appreciate having a break—even if it’s mostly unpaid—from a year and a half of strenuous labor. He says he has been spending his newfound free time hunting for a job, visiting with family and doing work around the house.
“I even got a chance to play some video games,” he said. “I hadn’t done that in a really long time.”