Ranks of local underemployed growing

Even though Doug Snow has felt the pinch of working just two weeks a month at Medford Fabrication, he feels more fortunate than some of his friends.

"A lot of them are worse off — they've lost their jobs," said the 48-year-old Eagle Point father of two, who has been with the company for 30 years.

The state-of-the-art, 135,000-square-foot metal fabrication shop has 26 employees who work two weeks at a time, then get two weeks off, receiving partial compensation from the state employment office for the lost hours.

Amid the clang and bang of heavy machinery that bends and grinds steel into finished products, Snow, like many of his co-workers, says he understands the steps the company has taken and appreciates the efforts it's made to retain as many people as it can.

Snow, who does maintenance work and was repairing the hydraulics on a crane this week, is just one of a growing number of Jackson County workers who have seen their hours slashed as they nervously watch unemployment numbers rise and businesses go through round after round of layoffs.

"It's scary," he said. "I've always worked a lot of hours over the years."

Snow falls into a category of worker known as the underemployed, the furloughed, or in the jargon of employment analysts: "part-time by reason of the economy."

In Oregon, the unemployment rate was 10.8 percent as of February, compared to 5 percent at the beginning of 2007. The unemployment rate in Jackson County was 11.8 percent in January, but could rise even higher when the county's numbers for February are announced next week.

A broader indicator of unemployment that factors in both the underemployed and so-called discouraged workers (those no longer looking for work) pegs the rate at 18.9 percent in Jackson County, according to a rough estimate by the Oregon Employment Department. This estimate is based on extrapolating national data, which has estimated the broader unemployment rate at 13.9 percent.

Guy Tauer, a regional economist, said local businesses are taking all sorts of steps to keep going during a down economy.

"Lots of companies have gone to four-day work weeks," he said. "That's one of the ways employers try to cut back on expenses without laying off people."

He said some restaurants, hit by higher food costs, fewer customers and an increase in the minimum wage in January, have reduced employee hours, and now "the owners are cleaning tables and taking over many of the duties they used to oversee as managers."

Companies throughout Jackson County are scaling back, laying off workers, cutting hours, freezing salaries, reducing benefits or, in the case of Medford Fabrication, asking employees to work two weeks and then take two off.

Snow and his fellow workers are scrimping to pay their bills. Ever since gas prices rose dramatically last summer, Snow has cut back on eating out, and he drives less. He also canceled his subscriptions to the newspaper and cable TV.

A co-worker, Chris Dietrich, sat down with his family members in December and told them exactly what was going to happen.

It's a little tight right now," he said, "but thankfully I'm still employed."

The 59-year-old Grants Pass resident said he's fortunate his family's van was paid off several years ago, and his wife keeps a tight rein on their budget, looks for sales and other bargains. He hitches a ride to work with a friend to save gas money.

When the economy was booming, Dietrich, Snow and their co-workers often put in 50 hours or more a week at Medford Fabrication. It wasn't unusual for employees to work 60 hours, sometimes seven days a week.

Orders started tapering off in 2007 as the recession hit hard and fast. Staff levels at Medford Fabrication dropped from a high of 190 several years ago to just 50 today, including office staff.

Despite the dramatic change, Dietrich, who works in shipping and receiving and has been with the company since 1984, said he's not as nervous about his situation as he thought he would be.

"I don't waste time worrying about things that haven't happened," he said.

According to Kirby Renfro, executive vice president, Medford Fabrication has put some workers on part-time status and others on reduced wages. Some have had weeks cut out of their work schedule, and still others that have been laid off.

Renfro said he and some of the full-time staffers have taken 10 percent pay cuts.

"Everybody was impacted at some level," he said.

At the same time, the company is still providing a health-insurance package for an individual or family where Medford Fabrication pays 80 percent and the worker pays 20 percent.

Even though most workers put a brave face on, Renfro said many are hurting financially. He's heard of two instances where workers are losing their homes.

"These guys are giving you half the picture," said Renfro. "They're struggling — they're proud people."

Renfro said he has trouble sleeping at night because he's constantly thinking about new ways to retain employees and cut expenses, while at the same time maintaining health insurance. He's noticed many employees have cut back dramatically on their retirement contributions because they are earning less.

Many of the workers have been cross-trained, so they can do welding and other duties as necessary, he said

Bill Thorndike Jr., president of Medford Fabrication, said the reduced schedule is difficult for employees who developed a lifestyle based on working a lot of overtime during the decade before the downturn.

"It's a double whammy for people in manufacturing," he said.

Thorndike said that when the economy was booming it was difficult to find enough qualified workers, which was one of the reasons his employees put in the extra hours.

Once the economy turns around, Thorndike said that he will hopefully still have a core group remaining so he doesn't have a problem finding qualified workers. He said he hopes the economy is near the bottom now.

Medford Fabrication has made arrangements with state officials for employees to automatically receive their unemployment benefits each month.

In addition, the company has offered to retain employee health benefits in return for giving up accruing vacation time, Thorndike said.

He said Medford Fabrication has a small backlog of orders, but it is not deep enough to give him much encouragement. He said there is still a fair amount of jobs to bid, but many of his competitors are willing to take tiny profits on competitive projects.

"How long, if you are a struggling company, can you do that?" he said.

Thorndike, who spent two three-year terms on the board of the Portland branch of the Federal Reserve Bank of San Francisco, said cutting back employee hours has been one more unfortunate aspect of the recession in Jackson County.

He said he's talked to other local business owners who are in the same boat. He's heard of a local doctor who takes a week off so there is enough work left for his partners.

"This is a downturn that has not left anyone untouched," he said.

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