SPECIAL REPORT: Facing Pay Cuts, Furloughs to Avoid Layoffs
By Joe Strupp
Published: June 05, 2009 11:00 AM ET
NEW YORK When owners of The Philadelphia Inquirer and Philadelphia Daily News asked guild members last fall to give up a $25-per-week raise, most were agreeable to the idea. Shelly Richards, a member of the Philadelphia Newspaper Guild executive board and an advertising customer services employee, says they all knew the company was in dire straits, with ad revenue and circulation plummeting.
The guild members voted to defer the raise, but they were mostly glad to do it, Richards says. A sense of shared pain for the rank and file pushed the point home. "If you look around the country, people are being asked to sacrifice for the greater good," she notes. "People felt they were doing it in that sense."
But in March, a bombshell dropped. Word spread that company executives had received bonuses of between $150,000 and $300,000, in addition to pay raises. While the raises were eventually returned, the bonuses have not been given back. The fallout was predictably harsh among guild members.
"My reaction was sadness, disappointment and disgust," says guild leader Richards. "People were angered and upset. Based on what happened, we will be very careful to agreeing to anything we surrender." Now, she adds, "There is no sense of comfort with management."
The Philly brass aren't the only ones accused of being disingenuous. Journal Register Company, which has filed for bankruptcy protection, in April heard objections from Pennsylvania and Connecticut state officials to a plan to give its executives $1.7 million in bonuses. The Pennsylvania-based company also owns several Connecticut newspapers.
In short, the mood among newspaper staffs is grim. Already cut to the bone in many cases, newsrooms across the country are now seeing fewer layoffs and more requests to give up some compensation. In just the past few months, the number of newspapers and whole chains instituting unpaid furloughs, salary cuts, and freezes on retirement funds has skyrocketed. Gannett alone has already instituted two rounds of furloughs for this year, while Media General, Advance Publications, Lee Enterprises and various Media News Group outlets have also put them into effect. Belo and Morris Communications are cutting salaries or retirement matches.
In March, the reality of the situation hit harder when The New York Times Company uttered what has become known as the new "F"-word, announcing a 10-day furlough and corresponding 5% pay cut for staffers. In early April, it threatened to shut down The Boston Globe if union members did not agree to concessions. Initial proposals for Globe workers included salary cuts of up to 20%, increased health benefit payments, no sick time and severance cuts for layoff victims, and the loss of lifetime job guarantees that, for some, date back decades. Boston Newspaper Guild President Dan Totten, who declined repeated requests by E&P for comment, issued a statement in April that called the demands "bullying."
In nearly every case, at least where furloughs are concerned, guild members have to approve the unpaid time off in order for it to take effect. Most guilds are going along with the idea, at least for the moment, with many members saying their newsrooms have been cut enough and don't want to have to work in a further depleted office — or worse, lose their jobs.
"It is the best of a terrible range of options," says Tom Spalding, president of the Indianapolis Newspaper Guild and a business reporter at the Gannett-owned Indianapolis Star. "You keep your job, your insurance, and the pay cut is not permanent."
But having experienced two furloughs thus far, Spalding says he wonders how may more will follow: "You don't know if there is going to be a third furlough, a fourth furlough, a sixth furlough."
Steve Swenson, guild president at The Bakersfield Californian — which instituted a 5% pay cut in its last guild contract in March and suspended its 401(k) match — says workers agreed to the changes with the realistic hope of saving jobs: "We think we saved four or five jobs as a result of the cuts." But when the company went on to lay off 26 staffers in late March anyway, hearts sank. "I don't think anyone feels they were lied to, but there is a sense of shock," he says. "Newspapers are doing unheard-of things just to stay in business."
And with the Philadelphia example out there, loyalty among the troops can't always be assumed. "Nobody is happy. There is a lot of fear and uncertainty," says Bernie Lunzer, president of the National Newspaper Guild in Washington, D.C. "You are hearing a lot of concern about what management is doing."
Creating a 'disincentive'?
As an employer option, furloughs are nothing new. In the auto industry and other mass-production businesses, they are commonly used in times of cutbacks. But seeing them implemented on the scale they are today in both newspapers and other sectors, including government jobs, is unusual, labor experts say.
"People work essentially for money, and there is a thought on the part of the employer that you do not want to do anything to destroy that incentive," says Bob Bruno, director of the labor studies program at the University of Illinois, Chicago. "It was always a little worse to ask people to stay employed and not get paid — it creates a disincentive."
But Bruno points out that in many industries, such as newspapers, past layoffs and other job cuts have been so severe that owners feel the need to resort to furloughs and benefits cuts to keep workers on the job because the work force is now so small. "If there is an alternative to layoffs, people look at it because layoffs are so permanent," he says. "Employers all want the flexibility to use labor when they need it."
Dean Singleton, CEO of MediaNews Group and publisher of two of its papers, The Denver Post and The Salt Lake Tribune, notes that furloughs keep enough workers on the job to produce the paper and Web content, while reducing the impact on other workers. "Most newspapers have already cut staff in the past two or three years," he says. "With buyouts, you end up losing people you would rather not lose."
Timothy Kelly, publisher of McClatchy's Lexington (Ky.) Herald-Leader, concurs that cuts have depleted so many newspapers that alternatives that keep people on the job must be considered. "Most newspapers have already gone through previous rounds of layoffs and buyouts," says Kelly, who forged an agreement with his local guild in March that allows the company to implement unpaid time off if it chooses before March 2010. "You want to get through it in a prudent fashion."
While the furloughs have not yet been instituted in Lexington, the guild agreement has included layoffs of 13 union members and a 5% pay cut for staffers making between $25,000 and $100,000 per year. In the spirit of shared pain, most Herald-Leader newspaper executives, including Kelly, took a 10% pay cut, as did many other McClatchy executives.
Some managers admit that furloughs cause disruption at times when people are off the job at critical moments. "We already run lean in newsrooms," says Singleton. He cites a managers' meeting earlier this year in which the head of his sales and marketing division said furloughs had delayed some work. "He looked at me with frustration," Singleton recalls. "He said, 'We are behind because too many people are on furloughs.'"
After the April 3 shootings of 13 people in Binghamton, N.Y., at a local community center, a breaking story covered by the hometown Press & Sun-Bulletin, Executive Editor Calvin Stovall admitted that he was down a few people, including a photographer. Several staffers from other Gannett papers in the state stepped in to lend a hand.
Forced time off has not yet become the standard everywhere. The Washington Post recently offered its second buyout in the past year, but so far has seen no furloughs. Publisher Katharine Weymouth told E&P in late March at the time of the buyout announcement, "Furloughs are a temporary solution. Not a long-term solution. It is not something we are actively considering at this juncture. It is effectively reducing people's salaries."
Furloughs have also been bypassed at The Record in Hackensack, N.J., which stopped matching employee 401(k) contributions several months ago, according to Malcolm Borg, chairman of parent company North Jersey Media. "We chose the 401(k) match suspension instead of furloughs as the latter affects people's income today, not at a later date," he says, noting the other options might eventually be instituted. "Things are still tough, and we need to remain flexible."
Best of a bad situation
Many chains, particularly Gannett, are ordering furloughed employees to stay away from work for what some call a "fur-cation," with no phoning the office or sources allowed, no e-mailing and no blogging, to avoid breaking any labor laws. As a result, many editors are having to stay off the job completely for the first time in years.
"This is the first time since I was 20 years old that I have not drawn a paycheck," says Henry Freeman, editor of The Journal News in White Plains, N.Y., who had to take a weeklong furlough. He points out that the long-term gain is keeping people on the job. "It gives us some time for the economy to come back," he adds.
Among those who likely cannot divorce themselves completely from their beats for days are sportswriters. Even when no games are scheduled, these press-box junkies are often talking trades, stats and other thorough analysis — and blogging about it. Rich Hammond, Los Angeles Kings beat writer for the Los Angeles Daily News, told Yahoo Sports he got around the strict rules by blogging about the team on Facebook: "It worked out well, thanks to some very loyal readers. I don't know how anyone could be a beat reporter and completely disconnect himself or herself for an entire week during the season. I know it would drive me crazy."
At the Knoxville (Tenn.) News Sentinel, which cut salaries 3% this year and froze 401(k) contributions, "We had the option of taking [that deal] or having layoffs, and the membership voted" to approve the monetary cuts, says guild president Rebecca Ferrar. "It is the lesser of two evils." The E.W. Scripps Co. daily is one of several in the chain that saw pay cuts, both for staffers and executives. She acknowledges that the paper began giving staffers free coffee one week after the new contract was approved, but adds, "I still think morale is low."
Gayle Grundtner, a nine-year veteran of the St. Paul Pioneer Press, a MediaNews Group paper that ordered five furlough days in February and froze pension contributions in its last contract, says fellow workers were reluctant to agree to the cuts — but felt it was a better option than no job at all: "There is more reservation at having to go out and find a job."
Then there's Marjie Lundstrom and Sam Stanton, project reporters at The Sacramento Bee who also happen to be married to each other. When they were hit with a 6% salary cut and an end to their 401(k) match in the last year, the impact was a double whammy for their household, which also includes two children — one just a few years away from college. "Both of our incomes are tied to the same plan, both of our incomes are down and 401(k) match is suspended," says Stanton, 49, who often teams up with his wife on projects. "Given what is going on in the world, I would feel more secure if one of us was not in the newspaper business. But it is still better than anything else."
But while many of those affected are willing to give up a little here and there to keep their jobs, the impact of cut salaries, frozen retirement funds and unpaid time off takes a psychological toll. "People come out of this very conflicted," says Jane Halpert, a psychologist who specializes in work-related issues at De Paul University. "They see all of the people who are losing their jobs and they still have a job, but at the same time they are being nickeled and dimed. And the paper tries to present this as a good thing — more days off. But it is not a vacation; it is temporary short-term unemployment."
I'll show you mine
Not everyone is toeing the line as furloughs and other money-squeezes become more common. Newsroom employees are growing increasingly skeptical of their parent companies, with most requiring proof of economic difficulties before they agree to givebacks.
"A lot of the concerns are clear about how management is sharing the pain," says National Newspaper Guild president Lunzer. "People also want to see that there is an end in sight."
Denver Post union members are apparently taking one of the biggest hits, with a 6% to 9% salary cut in its new contract — which includes seven furlough days each year for the next three years. According to Guild Unit Chair Allison Sherry, the deal was struck only after union members made a thorough check of the newspaper's financial records.
"We have a mechanism in the contract that allows us to review the books each quarter, and if they show a cumulative profit over four quarters, we go back to the bargaining table," she says, adding that only seven out of 85 guild members who voted on the contract opposed it. "A lot of us feel lucky to be able to work."
At the Hawaii Newspaper Guild, some 90% of represented employees at The Honolulu Advertiser approved a recent contract with 10% salary cuts. But Hawaii Guild Administrative Officer Wayne Cahill did a similar accounting review. "We brought in a CPA, and he concluded that what the company was telling us was true," he recalls. "They did open their books, and we will review the books twice a year."
Cahill says similar provisions are in place for a renegotiation if profits are determined by the Gannett-owned paper. Since the contract was forged in December, just before Gannett's first furloughs were announced, his members were not affected by the unpaid week off.
"We tried to get them to agree to furloughs," Cahill adds. "But they would not, after the contract was signed."
In April, after the Lexington Newspaper Guild signed off on possibly taking a furlough down the road along with some pay cuts and layoffs, Guild President Brandon Ortiz made clear those actions would not become standard practice. "When this company eventually returns to health, and the guild believes it will, we expect to be rewarded for sacrifices we made for the good of the company," he said at the time.
Ortiz was eventually laid off himself, but gladly took a full-time union job with the American Federation of State, Courts and Municipal Employees. Scott Sloan, who has replaced Ortiz on a temporary basis, says union members are willing to sacrifice, but "we don't want this to become a permanent thing."
The San Jose Mercury News, which was in contract negotiations with the local unit of the California Media Workers in early April, also instituted a one-week furlough, according to Guild unit president Sylvia Ulloa. But she says the paper was also seeking a 15% pay cut, not something the union was willing to concede to just yet, despite agreeing to the furloughs. "We are trying to minimize the damage to take-home pay," she explains. "But we are looking at building in furloughs for two more years."
Ulloa said her members are not as easily convinced as some, claiming the Mercury News as an entity is making money. "They are just trying to get money out of us because of the economic downturn," she says. "They are not losing money. We are not rolling over. I feel like they are taking advantage of the situation."
Joe Strupp (jstrupp@editorandpublisher.com) is a senior editor at E&P.
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