A round of more than 15,000 layoffs announced Thursday by AT&T Inc., DuPont and Viacom Inc. suggests a yearlong wave of job cuts is accelerating, just as the government is expected to report a higher unemployment rate for November today.
Swiss bank Credit Suisse Group also announced 5,300 job cuts, although it’s unclear how many will be in the United States.
The latest layoffs coincided with a government report showing the proportion of workers continuing to receive jobless benefits has matched a level last reached in September 1992. The deepening recession is pressuring companies to slash costs, and payroll is typically the quickest and most efficient way to do it.
Thursday’s announced job cuts spanned an array of economic sectors, hitting telecom workers, bankers, salespeople and chemical manufacturers. The breadth of the layoffs suggests the pain of the recession will be felt broadly and well into 2009.
Dallas-based AT&T plans to cut 12,000 jobs, about 4 percent of its work force. The nation’s biggest telecommunications company said the job cuts will begin this month and continue throughout 2009.
Wilmington, Del.-based chemical company Dupont will cut 2,500 jobs and cut back hours for remaining workers. It also plans to eliminate 4,000 contractors this month, with more contractor cuts in 2009.
New York-based media conglomerate Viacom will cut about 850 jobs, or 7 percent of its work force.
Credit Suisse’s 5,300 planned job cuts worldwide represents about 11 percent of its work force.
The layoffs announced Thursday follow others earlier this week. JPMorgan Chase & Co. said it plans to cut 9,200 positions at Washington Mutual, which it acquired. Jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., laid off about 350 employees across the country Wednesday, the same day software maker Adobe Systems Inc. said it will cut 600 jobs, or about 8 percent of its work force.
“What we have seen is not just that the cuts are deep; it’s that they are happening everywhere,” said Andrew Gledhill, an economist with Moody’s Economy.com. “It just tells you that there are very few people in any industry who can say, ‘I feel safe.’ ”
Growing job insecurity dampens the economy in ways that go beyond those laid off, Gledhill noted. Anxious families, even those with jobs, rein in their spending. Because consumer spending accounts for roughly 70 percent of U.S. economic activity, a pullback in spending typically leads companies to cut even more workers to trim costs.
“The prospect of losing your job is what scares people,” said George Whalin, president of Retail Management Consultants in San Marcos, Calif.
For the thousands of newly laid-off, the timing of the latest job cuts, just a few weeks before the holiday season, is compounding the pain.
“It’s kind of unusual – companies don’t like to lay off people at Christmastime,” said Robert Whelan, senior economist with the ECONorthwest consulting firm in Portland, Ore. “What’s happened is that too many companies have been caught short. They can’t get credit, business has fallen, and they don’t have a choice.”
Shedding workers this month will allow companies to write off big costs associated with the layoffs during a financial quarter that will likely be one of the worst in years. AT&T plans to take a charge of about $600 million in the fourth quarter to pay for severance costs. Viacom plans to take a restructuring charge of $400 million to $450 million before taxes in the fourth quarter.
The government reported Thursday that new claims for jobless benefits fell unexpectedly last week. But the four-week average of initial claims, which smoothes out fluctuations, increased to 524,500, also the highest level since December 1982.
Most economists expect the nation’s unemployment rate, which hit a 14-year peak of 6.5 percent in October, to be higher for November when the Labor Department releases the figure today. Economists project that the department will report that the rate rose to 6.8 percent in November and that the economy suffered a net reduction of about 320,000 jobs.
The jobless rate is widely expected to rise further through much of 2009. By this time next year, the unemployment rate could hit 8 percent, said Gledhill with Economy.com.