Layoff toll shapes up as softer this time
 |
|
||||||||||
The corporate downsizing phenomenon that rattled workplaces in the early 1990s is making a sudden and dramatic comeback, as scores of companies make headlines with seemingly large layoff announcements.
Yet despite the rash of planned job cuts, the actual toll on workers and the economy from the current downsizing wave is so far proving less severe than the early-90s version.
In recent weeks, companies ranging from auto giant DaimlerChrysler to Internet retailer Amazon.com have said they will lay off workers in response to a slackening economy and sharp drops in their stock prices. Announced job reductions in December were the highest in at least eight years, and more are likely as the economy struggles.
U.S. companies announced 133,713 job cuts in December, three times the average of the first 11 months of the year, according to Chicago outplacement firm Challenger, Gray & Christmas.
But the ultimate number of layoffs is likely to be only a portion of the thousands that have been announced, experts say.
In part, some companies may be publicly reporting layoff figures chiefly to send a message to Wall Street that management is serious about cost-cutting.
"One of the surest ways to get your stock up in the past was to announce layoffs. That's what's happening today," said Sung Won Sohn, chief economist at Wells Fargo & Co.
But some of the announced job cuts have amounted to just 2 percent to 3 percent of companies' work forces - roughly the percentage of people who leave each year through normal attrition.
Department-store chain J.C. Penney said last month it will cut 1.9 percent of its work force. The bulk are 5,000 workers at 47 stores set to be closed in the spring. The company said, however, that many workers will get jobs in nearby stores.
Office-supply retailer OfficeMax said last month it would cut 1,200 jobs, or 3 percent of its work force, as it closes 50 poorly performing stores.
But only 569 of the jobs are full-time positions, and the company already has reassigned 137 of those workers to other locations, said spokesman Steve Baisden.
Even at DaimlerChrysler, layoffs are likely to be less severe than the 26,000 job cuts announced last week. Of the 12,300 U.S. factory jobs to cut, the company hopes to accomplish up to half through voluntary buyouts. And due in part to its labor contracts, it says plant workers who are laid off can be rehired within 10 months as other workers leave through attrition.
Thus, in the case of many companies, "your final layoff numbers are generally not anywhere near what's announced in the paper," said Rudy Dew, president of Los Angeles-based outplacement firm Rudolph Dew & Associates.
That's partly because companies spent recent years furiously building up their work forces in a taut labor market, and are reluctant to chop too deeply for fear of renewed shortages if the economy turns around later this year.
Rather than lop off jobs, online brokerage Charles Schwab, for example, has trimmed the pay of top managers and asked employees to take unplanned vacations.
Even those workers who are being laid off today often receive more generous severance packages than in the early 1990s - in some cases, a full year's pay, said Diane Swonk, chief economist at Bank One in Chicago.
"It is a much kinder and gentler form of downsizing than we saw in the past," she said.