Job cuts and layoffs continue in the New Normal
We’ll be getting some updated unemployment numbers soon, but Reuters warmed up with some decidedly mixed news about big layoffs at American companies:
Employers announced 40,430 job cuts this month, up 24.2 percent from 32,556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc.
But January’s job cuts were down almost the same amount from the same time a year ago, declining 24.4 percent from 53,486 in January 2011. It was the third lowest number of January lay-offs recorded by Challenger going back to 1993.
“The relatively low job-cut totals we have seen for the last couple of months indicate that employers do not foresee a prolonged decline in economic activity,” John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.
Hmm. Big layoffs are up 24 percent from last month, but down 24 percent from last year, and that means employers don’t think there’s going to be a prolonged decline in economic activity? Of course, these numbers and attitudes were compiled before the fourth quarter chugged in with negative growth.
Is losing some jobs while creating others automatically a good thing? That would depend on what sort of jobs are being gained and lost. The news becomes less cheerful if higher-paying professional jobs are vanishing, while low-wage and part-time jobs proliferate:
The financial and retail sectors lost the most workers. Financial firms cut 8,578 workers, while retail companies dropped 6,676 jobs.
But at the same time, the retail industry announced plans to hire 54,000 employees. Overall hiring announcements climbed to 60,585 from 16,266 in December. Such announced plans account for only a small fraction of actual hiring in the economy, the survey said.
Right after the Reuters article appeared, Daimler announced it could be laying off 1,200 people from three plants in the Charlotte, North Carolina area, so we’d better toss them on the pile of vanished career positions, unless the layoffs prove to be as “temporary” as the company hopes.
Rapid movement in the employment sector can be viewed as creative destruction, with resources shifting to exploit new opportunities. But it’s less encouraging when senior, long-term positions are erased, to be replaced with less desirable short-term and part-time jobs. Jobless claims surged last week, after spending a year bouncing above and below a dismal baseline. It remains to be seen what sort of work those people will find when they re-enter the workforce… and how long it takes for some of them to do that. Because the other big problem with an intense cycle of job destruction and creation occurs when a relatively small portion of the workforce is losing and regaining all the jobs.