When economies take downward turns, pawn shops typically feel the impact early, particularly their inventories, which traditionally will grow as more and more of the unemployed and economically distressed come in to part ways with those things they can do without in exchange for a little cash: laptops and Xboxes, big screens and Blu-Rays, diamond earrings, shotguns and all those other belongings that tend to turn into items of luxury once money gets tight and times get tough.
“About a month ago, we started seeing a rush of people coming in to sell, saying they’d just lost their job in the oilfield,” says Michelle May, a co-owner of Pinhook Pawn, located on the outskirts between Lafayette and Broussard in an area saturated with local companies whose futures are tied to the industry’s well-being.
But is this a trend?
“It’s actually hard to judge [right] now, because we just started our busiest season of the year: tax season,” explains May (full disclosure: Michelle May is ABiz Co-Publisher Steve May’s sister in law). “We’ve been so swamped with people just getting their returns back wanting to buy that I haven’t had time to notice if oil company layoffs are having an impact on the pawn side of our business.”
Yet, the signs of an out-of-work labor force are stirring, as at least 10 people have come in over the last two months in hopes of pawning high-dollar items due to the industry’s recent downturn — workers who, according to May, had just been let go from the likes of oil giants Halliburton, Schlumberger and Baker Hughes, which since December have announced plans for a combined 21,000 in global layoffs. The New York Times reported Jan. 31 that one of the first casualties of the oil price drop was a late December layoff of “several hundred people working for land companies in Lafayette.”
Just as this story was going to press, word hit of impending layoffs from Houston-based Parker Drilling; The Daily Advertiser reported a notice was sent to the Louisiana Workforce Commission announcing plans to cut between 50 and 300 workers from its operation at the Port of Iberia.
“Of the workers I’ve talked to, I’d say it’s about 50-50 between people who were laid off and people who just had their hours drastically reduced,” says May. “Mostly these folks are coming in with household items and a lot of guns. I did have one man say, ‘I worked 13 years for them and they just laid me off.’ That gentleman had come in to sell his wife’s jewelry. That just broke my heart to hear.”
May adds that some of these workers are saying they’re having to seriously reconsider their futures in the industry.
“I’ve heard people say they’re having to sell because of [reduced] hours,” recalls May. “One gentleman told me he wasn’t making any money because his offshore rotation had recently gone from third in line down to 15th. And there was another guy from Baton Rouge saying he just couldn’t do it anymore, that he’d gone from making $1,500 a week to nothing. He said he was going to try and get on with a chemical company instead.”
On the other side of town, at Bayou State Pawn’s Johnston Street location near UL Lafayette, owner and longtime pawn broker Jeff Raggio says he too has seen “a little” impact from the current situation facing the industry.
“I’ve definitely had a few people come in saying they needed to pawn something because they’d just been laid off [from an oil and gas company],” says Raggio. “But it’s nothing major. I’ve been in this business for 27 years, and I can tell you it’s nowhere near as bad as it’s been in the past.”
Not all of the local pawn shops are seeing the beginnings of this potential trend — at least not yet.
Not far away from Raggio’s shop on Johnston, pawn broker Travis Nicko sits inside his Able Pawn & Jewelry along North University Avenue on a slow weekday afternoon. According to Nicko, he’s yet to make a purchase from a customer impacted by the industry downturn. In fact, it’s been just the opposite.
“I’ve been seeing an increase on the sales side,” says Nicko. “But that’s because it’s tax season. We’re always pretty much busy at this time of year. But as far as the oilfield issues, I haven’t noticed any effect on our business.”
It may only be a matter of time.
According to the most recent data from the Louisiana Workforce Commission released Jan. 30, the state’s mining/logging sector — which includes the oil and gas industry — incurred the “biggest over-the-year private-sector loss,” dropping by 600 jobs between December 2013 and 2014. Yet without any data showing what’s happened since the price of oil went from a year high of $107 a barrel in June to just under $70 a barrel in December, it remains to be seen just how much of an impact the price drop has had (or will have) on the industry’s workforce in Louisiana. And despite what seemed like the beginnings of a rebound in early February, the price has since dropped even more, sitting right under $48 a barrel on the day this story went to press.
So if what we’ve seen so far through the pawn shop barometer is any real indication of what’s to come, it may be safe to say that the pawning business could very well be seeing an upswing in its inventory in the near future. And for Louisiana’s considerable force of oil and gas industry workers — an estimated 52,900 employed at the close of December 2014 — it’s hard to say exactly what the future holds. For now, at least one thing’s for sure: Belts will start tightening even more in Acadiana.