Forecast For The Winter: A Blizzard Of Pink SlipsGene Koretz
Disconcerting as the October employment report was, further bad news on the job front probably lies ahead. That's the conclusion of Dan Lacey, editor of Workplace Trends newsletter, which has been keeping track of permanent staff cuts announced by major U.S. corporations since 1988.
"Although the recession supposedly ended last spring," he says, "the number of announcements of staff reductions has skyrocketed in recent months."
Lacey's tabulations indicate that Corporate America in the third quarter unveiled plans to do away with a record 147,507 positions. That's 93% more than in the second quarter and more than three times the number of cuts announced in the third quarter of last year. What's more, the pace accelerated in October to more than 2,700 per business day, compared with 2,200 in the third quarter.
Through Nov. 1 of this year, with two months to go before yearend, Lacey reports that some 300 companies announced a total 399,034 staff cuts, vs. 316,047 cuts announced by 224 corporations in all of 1990. The financial-services industry led the staff-reduction parade in the third quarter, registering 47,431 positions to be eliminated. (That doesn't include cuts generated by the continuing savings-and-loan debacle, which aren't usually picked up by Lacey's tabulation.) The computer industry came in second with 20,565 staff cuts, followed by such industries as chemicals, transportation, aerospace, mass media, and retailing.
Although staff reductions have been concentrated in such East Coast states as Connecticut, Massachusetts, New Jersey, and New York, Lacey says that the geographic epicenter of the staff-cutting trend is shifting westward as more industries and areas join in. A relative newcomer to the list, for example, is the petroleum industry, which announced that it was eliminating 10,368 positions in the third quarter. And California companies generated about 16% of the staff cuts announced through September, compared with 12% in 1990. Lacey notes that the downsizing trend is more than a cyclical phenomenon. "It's part of a permanent effort to lower labor costs," he says, "including such strategies as contracting out more and more work and cutting back such benefits as pensions and health coverage."
What's more, he points out that companies are legally required to announce mass layoffs in advance, and he tabulates such personnel cuts when they're announced rather than when they take effect. "Many of the people affected by this year's cuts," he warns, "won't show up in labor market statistics until 1992."