Companies Choose Furloughs Over Layoffs to Manage Coronavirus Slowdown
When meat orders from restaurants, hotels and other food-service clients dried up at two of Hormel Foods Corp. ’s plants in April, finance chief Jim Sheehan chose to furlough roughly 350 workers, but didn’t lay them off. These furloughed employees didn’t receive pay but got benefits such as health care.
It was a careful calculus. After years of effort to secure talent in a tight labor market, many finance chiefs responding to the shock of the coronavirus pandemic have so far preferred to furlough workers instead of severing ties completely, even if it means spending a little more.
“Our employees are long-term investments for us and they’re a precious resource, so we needed to do what we could,” Mr. Sheehan said.
Other finance chiefs made a similar choice as the coronavirus pandemic shut down businesses across the country. Of the 87 firms in the S&P 500 to announce staff reductions from early March through the end of June, 65 chose to furlough workers, according to an analysis of securities filings by data provider MyLogicIQ.
In June, 10.6 million workers were temporarily laid off, meaning they expected to be recalled to their jobs, down from a peak of 18.1 million in April, according to the U.S. Labor Department. The jobless rate fell to 11.1% from 13.3% a month earlier, the department said.
“Think about the uncertainty that was hitting everybody. Unemployment was going through the roof,” Mr. Sheehan said. He wouldn’t give exact figures, but said ...
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