The high cost of layoffs, for workers and companies

Energy companies lay off thousands of people, but they may not understand or accurately calculate the costs of ramping up employment when business conditions rebound, some experts say.

Just last week, four Houston-based energy companies disclosed some 15,000 job cuts.

“In this country, they think they can fire workers and hire workers, and it will be just the same,” said Eileen Appelbaum, senior economist for the Center for Economic and Policy Research. “We see that it isn’t just the same.”

Companies eventually will need to ramp up to meet demand as energy prices stabilize. Tracking down former workers, engaging executive search firms and trying to lure talent from other industries can be time-consuming and costly.

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Hiring a typical salaried employee, not including C-suite executives, averaged $14,000, or 23 percent of the person’s annual pay, according to its study of California employers completed in 2010.

“They absolutely do not realize how high the cost of turnover is,” Appelbaum said.

Some employees, especially those with transferable skills such as chief financial officers or IT personnel, could find jobs in other industries and choose not to return. They may be weary of the sector’s feast-and-famine cyclical nature.

“Many of them may be lost to the industry forever,” said Stephen Newton, managing director of the Houston and Dallas offices of executive search firm Russell Reynolds Associates.

At, Andrea Rumbaugh introduces us to some of the workers who have been laid off, and they talk about their plans.