Furloughs: Unemployment by another name
Companies and states are starting to furlough employees to save money. Some furloughs last weeks; others last for months. But, in effect, the people on furlough are like a shadow group of unemployed workers, based on the impact that they have on the economy.
For the most part, workers who are furloughed are unlikely to be consumers and fears that they may not be re-employed can cut their willingness to pay essential bills like mortgages. They act, in essence, like people with part-time jobs or no jobs at all.
According to The New York Times, "As they try to cope with gaping budget deficits, at least 15 states from every region -- like Alabama and Georgia in the South; Arizona, California, and Washington in the West; and Massachusetts, New Hampshire, and New York in the Northeast -- are in various stages of considering or carrying out furloughs." Some of these states are so large that the actions could eventually affect tens of thousands, if not hundreds of thousand of people nationwide.
It is entirely misleading to say that unemployment in the U.S. is between 8 and 9 percent. The point has already been made that 4 or 5 percent of the American population that can work is no longer looking for work, and that a number of people who have part-time jobs are looking for ones that are full-time. Now, the figure is likely to swell again based on the practice of furloughing workers to save money.
Douglas A. McIntyre is an editor at 24/7 Wall St.