March layoffs highest since 1993
Job cuts top 500,000 since Dec. 1, study says
By Kristen Gerencher, CBS.MarketWatch.com
Last Update: 10:00 AM ET Apr 5, 2001
SAN FRANCISCO (CBS.MW) -- March job cut announcements at U.S. companies hit their highest level in eight years and exceeded 100,000 for the fourth consecutive month, according to a report released Thursday.
The March number brings the total since Dec. 1 to more than half a million.
Employers planned 162,867 layoffs last month, a 60 percent increase over February's 101,731 eliminated positions, Chicago outplacement firm Challenger, Gray and Christmas said.
"That is the single heaviest month we've seen since we began tracking these numbers in January 93," firm president John Challenger told CBS.MarketWatch.com.
Watch the interview with John Challenger.
Cuts from December, 2000 through March totaled 540,519 compared with 186,535 announced for the same four-month period a year ago.
Accounting for lag time
As the economy slows, analysts are looking for signs of a recession -- defined as two consecutive quarters of negative growth -- and their search includes scrutinizing the national unemployment numbers for weakness. The U.S. Labor Dept. will release its March report Friday.
The jobless rate -- a count of how many Americans are unemployed, have actively looked for work in the prior four weeks and are available to work -- has been hovering at a relatively low 4.2 percent for the last two months.
Analysts polled by CBS MarketWatch expect Friday's report will show an uptick to 4.3 percent unemployment and that job growth will slow to 67,000 jobs from 135,000 last month. See full story.
The government indicator is known to lag hiring and firing activity, Challenger said.
"In 92, after the recession was over, unemployment six months later hit the highest rate during that period of time at 7.8 percent, almost double what we're seeing today," he said.
Compared with the beginning of the slowdown in mid-2000, so-called new economy sectors are now subjected to cost-cutting moves that once settled in old economy businesses, Challenger said. Layoffs are happening in telecommunications, computers and e-commerce where they used to be concentrated mainly in industrial, automotive, manufacturing, and retail sectors.
Still, some sectors are chugging along with higher job security, Challenger said, naming electrical power, oil and gas, aerospace defense, mortgage banking, health care, and foods as examples.
"There are a number of areas in this economy -- basic industries -- that are going to be fine despite the slowdown," he said.
At the same time companies were canning large numbers of employees, turnover at the top slowed. The number of chief executives leaving their posts dropped to 88 in March, a 26 percent decline from February's 119 CEO departures, Challenger said.
"That is a sign that perhaps companies are beginning to pull back and not just shove the CEO out at the first sign of bad news," he said.
Not so trigger-happy
Despite the perception that employers slash jobs as soon as budgets tighten, many typically delay layoffs, said David Neumark, a labor economist and visiting fellow at the Public Policy Institute.
"There's probably a pretty serious component of fixed costs to hiring and firing workers so you kind of hold onto them until you're sure" there's a slowdown, he said. "Then when you know things are bad, which is usually after they are, you're more inclined to make that decision."
While Challenger's job cuts survey and the unemployment report give some insight into the overall labor market, both give only a partial picture, Neumark said.
Not everyone who loses a job shows up in government surveys or applies for unemployment insurance, and companies don't always end up downsizing through pink slips even when they announce layoffs, he said.
Firms may try to achieve their staffing targets through a combination of methods such as attrition, less hiring, and giving financial incentives to older workers who volunteer to retire early.
An element of psychology may also impact how analysts interpret various unemployment statistics.
Said Neumark: "If you think there's layoffs going on all the time but you start to look for them when you have other signs of an economic downturn, you may find more stories about them."
Kristen |
