Layoffs Up 45%; More Holiday Cuts Are Feared

With more and more employers flouting the longtime taboo against firing workers during the holiday season, corporate layoffs are mounting, adding to concerns about a slowing economy.

U.S. employers announced 41,293 layoffs in November, up 45% from the same month last year, according to a survey released Wednesday by a Chicago-based employment consulting firm. It marked the second straight month of heavy layoffs--October’s total was almost identical with November’s--and the cuts have continued in recent days.

The new burst of pink slips also has dashed hopes that the corporate downsizing trend was slowing. The biggest cutback announcements in November came at Minnesota Mining & Manufacturing, which disclosed plans to slash 5,000 positions, and at Edison Brothers Stores, which is eliminating 3,960 jobs.

What’s more, the layoff total for November doesn’t include ongoing cuts at big corporations, such as AT&T;, which announced last month that it is offering buyouts to 77,800 managers.

Even though many cost-conscious employers now have fewer inhibitions about holiday season firings, the number of layoffs generally still tails off after Thanksgiving. All the same, growing signs of weakness in the economy and the brisk pace of layoffs recently is leading many analysts to believe that December will bring bad news for thousands of additional workers.

“Companies are under intense pressure from stockholders to report [higher] earnings, and we’re in a period where despite the economic expansion, many companies have not been able to raise their prices,” said John A. Challenger, executive vice president of Challenger, Gray & Christmas Inc., which conducts the monthly layoff surveys. “So, their earnings gains are coming out of cost cuts.”

Audrey Freedman, a New York labor economist, agreed. “Many companies close their books on Dec. 31, and they want to show their shareholders that they’re being stringent,” she said.

In another worrisome economic development, the federal government reported Wednesday that its chief forecasting gauge fell in October for the seventh time this year. The 0.5% drop in the index of leading economic indicators prompted some analysts to call on the Federal Reserve Board to try to bolster the economy by reducing interest rates.

Abrupt cutbacks during the holiday season, while inflicting pain on workers, also sometimes backfires on the employers.

Challenger contends, for instance, that some firms simply are cutting too many staffers.

“Companies are losing their corporate memories,” he said. “They’re losing people who knew where the mistakes were made in the past because there is so much turnover.”

All the same, the drumbeat of layoffs continues. This week’s biggest layoff announcement came from Rubbermaid Inc., the Ohio-based household products company, which says it will slash up to 1,260 workers worldwide. San Francisco-based Chevron on Wednesday announced its second cutback in two weeks, saying it would slash another 130 positions.

For many employers, experts say, the thought of spoiling someone’s holidays no longer is reason enough to delay a layoff.

Chevron spokesman Jim Hendon said: “My feeling is that policies we’ve had in place, and try to use, reflect a commitment to sensitivity, but it’s fair to say that restructurings are business decisions--they’re not driven by things such as the Christmas season.”

Hendon said his company tries to minimize layoffs by offering early retirement packages and transferring “surplus” workers from shrinking divisions to divisions that have job openings. Along those lines, he said, some company staffers are expected to be transferred from Northern California to Chevron’s Orange County office in La Habra as part of the latest reorganization.

Some employment specialists argue that it’s actually more humane to announce layoffs as soon as the decisions are made--even if it means delivering bad news during the holiday season. That way, the argument goes, employees have an early warning that they might need to curb their holiday spending. Also, it could give them a head start on finding a new job.

David H. Hendon, (no relation to Chevron’s Hendon) manager of the federally funded Verdugo Center for Jobs and Retraining in Burbank, laments the holiday season firings but says it’s often easier to get a job interview when business slows down around this time of year. Also, he said, hiring managers may be willing to spend more time with job candidates.

Besides, Verdugo’s Hendon added: “So many people slack off [in their job searches] this time of year, the ones who don’t reap the benefits.”

That, however, is little consolation for Douglas Ernesto Marmol, who lost his job as a restaurant cashier at Los Angeles International Airport two days after Thanksgiving. “I was going to send money back to my mother in El Salvador [for Christmas], but now I don’t think I’m going to be able to do it,” he said.

Marmol, 29, one of a group of union employees laid off when the restaurant began remodeling, said he thought it would be easy to find a new job, but so far he has had no luck. “I’ve been looking five days a week,” he said.

Employment specialists called the holiday season firings another reflection of the weakening ties between employers and employees.

“Human resources executives used to say they represented employees,” Freedman said. “Now they don’t go that far. Instead, they say they’re trying to maintain the integrity of the company.”

Moreover, she said, the worries engendered by layoff announcements “affect everyone at a company. Everyone is now on edge.”

Until the October and November figures came in, Challenger said he believed that employers had moved away from big layoffs in favor of more selective “pruning.” For the first 11 months of this year, layoffs still are down 21% from the same period in 1994. They also are down 34% from 1993 when, by the Challenger firm’s reckoning, corporate layoffs hit a record high.

Challenger cautioned that his firm’s figures are not a precise reflection of what is occurring in the labor market. He noted that many corporate cutbacks, particularly those by privately held companies, go unannounced and thus do not show up in his firm’s figures.

All the same, his firm’s statistics are regarded as a good indicator of general layoff trends.

For November, the figures showed the largest number of layoffs were announced in the retailing industry, followed by industrial goods, transportation, utilities, insurance and financial.

The biggest individual layoffs, after those announced at Minnesota Mining & Manufacturing and Edison Brothers Stores, came at Union Pacific, Prudential Insurance and Bethlehem Steel.

* SLOWER ECONOMY: Tumble in U.S. indicators sparks calls for Fed easing. D1

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More Pink Slips

Layoffs in November soared 45% over November of last year, according to the consulting firm that tallies the monthly figures.

Announced Job Cuts

January 1994: 108,946

December 1994: 27,516

January 1995: 38,962

November 1995: 41,293

Source: Challenger, Gray and Christmas Inc.