Layoff Pace Accelerates After Pause Sudden Jump Seems At Odds With Economic Conditions
A layoff blitz claimed 15,385 jobs nationwide in one day last week - moves that seem at odds with a strong economy.
“It was a frenzied day,” said John Challenger of Challenger, Gray & Christmas, a Chicago-based firm that tracks nationwide layoffs and workplace trends. And “It’s no blip. Layoffs have been surging since July. We saw a benign first six months of the year, but since then companies have been slashing jobs.”
Through June, Challenger recorded layoffs totalling 185,566 jobs lost, down 31 percent from the first six months of 1996. But from July through October, job losses were slightly ahead of last year’s. Even at the accelerated rate, layoffs are still well behind the highs reached during the recession and downsizing binge of the early ‘90s.
By themselves, the layoff numbers are misleading. Public companies must report significant job cuts, but the flip side of hiring doesn’t get as much attention. For several years, the U.S. economy has been averaging a net gain of about 200,000 jobs a month. That’s partially due to rapid growth in the number of people working more than one job.
“This decade of the ‘90s has seen some of the greatest job creation since the ‘50s but at the same time extraordinary downsizing, the likes of which we’ve never seen,” Challenger said.
However, these layoffs are widespread, from financial services and automotive to Kemet’s Shelby capacitor factory that will lose 750 jobs and 150 Carolinas jobs axed at John Deere. Layoff Tuesday - Nov. 11 - also brought word from the defense secretary that the Pentagon needs a “revolution” that could cut 30,000 jobs.
The layoff trend illustrates the growing pressure on companies to ferret out the best opportunities, jettison poor performers, move quickly and be ever-ready to change - or be harshly punished by a fast-paced, intensely competitive, global economy.
“Free trade, deregulation domestically, mergers and acquisitions, the infusion of technology - all these kinds of forces are putting pressures on companies,” Challenger said. “They mean job cuts despite the fact we have a healthy unemployment picture.”
Recent examples show the varied pressures facing companies and industry sectors.
Bank mergers have cost thousands of jobs. NationsBank’s buyout of Barnett could claim as many as 10,000 jobs. That’s as many as Kodak said Tuesday it would cut in what is 1997’s largest layoff announcement.
If there’s a silver lining for laid-off workers, Challenger said, it’s the tight labor market.
“We have the lowest unemployment we’ve seen in a generation,” he said. “These people are not going to be standing in unemployment lines for long.”