Downsizers Chalk Up A Record First HalfGene Koretz
Although payroll jobs hardly rose in June, many economic observers predict that job growth, which grew at a healthy 235,000 clip in April and May, will pick up considerable steam in the months ahead. James E. Challenger, president of Challenger, Gray & Christmas Inc., an outplacement firm that monitors the staff cuts announced by major U.S. corporations, is skeptical, however. "There is no sign yet that layoff announcements by big companies are waning," he says. "Until they do, employment growth is likely to prove disappointing."
According to Challenger's count, the number of job cuts announced by U.S. companies rose sharply, to 38,669 in June from 14,086 in May. Moreover, in the first six months of the year, Corporate America unveiled plans to do away with close to 255,000 jobs, 23% more than in the same period last year, and the largest first-half tally ever.
Not surprisingly, perhaps, the staff-reduction parade is being led by the aerospace industry. Reeling from cutbacks in defense spending and problems affecting airlines, aerospace accounts for roughly a third of the cuts announced so far this year. Not far behind is the retail industry--thanks largely to the 50,000 jobs slated for elimination by Sears, Roebuck & Co.--followed by the computer industry, transportation (mainly airlines), and communications companies, such as American Telephone & Telegraph Co.
On a regional basis, companies headquartered in the Northeast and the West account for well over half of the announced layoffs so far in 1993. And California was the state with the most companies planning layoffs--76 out of 311 unveiling such plans nationwide.
Large companies, of course, have been shedding jobs either through attrition or staff reductions for a number of years, while much of the job growth in the past decade has been generated by small businesses--particularly those employing fewer than 20 workers. What makes the recent pickup in layoff announcements by big companies so ominous to economists are fears that the small-business job creation machine will be adversely affected by coming tax hikes just as many larger companies are implementing their latest layoff plans.