If most layoffs become permanent, the severe recession the economy has slid into would likely last longer, the recovery would be slower and the toll on laid-off workers would be harsher, economists say. Unemployment soared to 14.7% in April – the highest rate since the Great Depression – and analysts predict it will rise still further in May. It could remain in double-digits into next year.
“For a lot of those furloughed workers, a non-trivial number will have no job to go back to, because the company they worked for will have failed or will need fewer workers than they used to,” said Claudia Sahm, a former Federal Reserve economist who is now director of macroeconomic policy at the Washington Center for Equitable Growth.
In March, MGM Resorts let go 63,000 employees and described them as furloughed, meaning temporarily laid off. Yet this week, the company acknowledged that many of those people will become permanently laid off by Aug. 31. The hotel and casino operator didn’t provide precise figures.