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Saving jobs by vacationing

Employers slash costs through unpaid leave.

Home for the holidays means a pay cut for Johnnie Hurt, who works for Chrysler. The firm is idling its North American plants until at least Jan. 19.
Home for the holidays means a pay cut for Johnnie Hurt, who works for Chrysler. The firm is idling its North American plants until at least Jan. 19.Read moreTONY DEJAK / Associated Press

NEW YORK - Here's the vacation no one wants, courtesy of the recession: Forced time off without pay.

Financially struggling universities, factories and even hospitals are requiring employees to take unpaid furloughs - temporary layoffs that amount to onetime pay cuts for workers and a cost savings for employers. This year, the number of temporarily laid-off workers hit a 17-year high.

"If they do it once, I think it's easier for them to try to do it again," said Carrie Swartout, who researches traumatic brain injuries at the University of Maryland Medical Center. Maryland is requiring unpaid time off for 67,000 of its 80,000 employees as it struggles with a budget crisis. The state says the furloughs will save an estimated $34 million during the fiscal year.

State governments, facing lower revenue but stymied by the long process required to cut public-sector jobs, are using furloughs as a quick way to trim payroll costs. Private-sector businesses - from automakers to small businesses - are shutting down factories and offices as sales drop.

The temporary layoffs are "kind of employment purgatory, but it's better than the alternative," said Carl Van Horn, a professor of public policy at Rutgers University. They are a typical response to decreasing demand in a recession, although this round is slightly worse than past bad recessions, Van Horn said.

Of 10.3 million unemployed workers in November, roughly 12 percent were unemployed because of temporary layoffs, according to the Bureau of Labor Statistics. The last time this many workers fell into the category was February 1991, when 1.4 million workers were unemployed because of temporary layoffs. As a proportion of the total workforce, workers on temporary layoff are roughly 1 percent, nearly the same now as 17 years ago.

Swartout, the 28-year-old Maryland researcher, could lose as much as $800 in pay, or nearly 2 percent of her salary, depending on how long she's furloughed. "That's a huge chunk," she said.

At state-funded Winthrop University in South Carolina, workers are being asked to stagger days of unpaid leave as the state's sales-tax revenue declines. Professors were told to take nine furlough days without canceling classes or office hours, missing meetings or interfering with any other university responsibility. They are required to take the days before June 30, when the university's fiscal year ends.

"Most faculty I know will end up taking few if any of those furlough days off - they'll just go about doing the good jobs they normally do for less money," said education professor Nakia Pope. "I'm grateful to be working at all, considering I live in the state with the third-highest unemployment in the nation."

This month, RV-maker Winnebago Industries Inc. said that all its workers, including chief executive officer Bob Olson, would take an unpaid week off during the current quarter, along with a two-week production shutdown during the holidays.

3M Co. said early this month that it had ordered some workers to take vacation or unpaid time for the last two weeks of the year. Computer-maker Dell Inc. in November asked employees to consider taking unpaid vacation days during the fourth quarter.