Layoffs’ Pace Slows in February
The pace of U.S. corporate layoffs--after surging for four months and sparking political fireworks nationally--abruptly slowed in February, a new report showed Wednesday.
Analysts said, however, that last month might turn out to have been just a breather for employers slashing their payrolls. Even though the nation’s biggest employers lately have announced fewer giant layoffs, analysts said job cuts are continuing at a substantial pace throughout the economy, particularly at the many companies that have crafted merger deals over the last year.
The latest monthly layoff report by the Chicago-based outplacement consulting firm Challenger, Gray & Christmas found that U.S. companies announced layoffs of 33,830 workers last month. That was down 65% from January’s total of 97,379, which was a two-year high.
At the same time, the Challenger Gray survey also showed that last month’s layoffs were up 9.3% from the February 1995 level of 30,945.
John A. Challenger, executive vice president of Challenger Gray, speculated that some employers deferred making layoffs in February as a result of growing attention to the issue of job insecurity by both President Clinton and Republican presidential hopefuls, particularly Patrick J. Buchanan. “It could be that some companies have begun to balance job-cutting goals against the potential threat of a consumer backlash,” Challenger said.
“Everyone’s responding to it,” Challenger added, referring to the presidential candidates. “It’s a good campaign issue because everyone agrees layoffs aren’t good.”
Still, Challenger and other analysts say that last year’s record-high number of U.S. corporate mergers will translate into heavy layoffs through much of 1996. Analysts said the newly merged companies will resort to layoffs to realize cost savings needed to make their acquisitions pay off financially.
In California’s banking industry, for example, Wells Fargo & Co. has agreed to buy former rival First Interstate Bancorp in an acquisition expected to eliminate at least 7,000 jobs.
“The layoffs associated with restructuring are far from over and will last a long time,” said Donald H. Straszheim, chief economist of Merrill Lynch & Co.
“Companies don’t lay off people because they enjoy it. They lay off people because they think they must to compete,” he added.
Straszheim, while acknowledging the trauma that layoffs bring to individual workers and companies alike, argued that the steady drumbeat of layoff announcements tells only one side of the employment story. He noted that the nation’s unemployment rate stands at a low 5.8%, the result of new jobs created by growing companies and by the jobs maintained at firms that have taken the necessary measures to compete in an increasingly global economy.
In February, the biggest layoffs came at newly merged drug company Pharmacia & Upjohn Inc., which said it would eliminate 4,000 jobs, and at Mobil Corp., which said it would cut as many as 3,000 workers. The third-biggest layoff announcement came from Anheuser-Busch Cos., the St. Louis-based beer brewer, which said it will fire 1,750 employees.
Those layoffs, however, pale in comparison to AT&T; Corp.’s announcement in January that it would cut 40,000 jobs, the biggest layoff announced in 2 1/2 years.
Challenger said that layoffs often slow in February after beginning with a burst in January, when many companies embark on their strategies for the year. But the layoff total for the first two months of 1996 is up 88% from the same period in 1995 and is only 6% down from the January-February period of 1993. In 1993, layoffs hit an annual record high of 615,186.
Layoffs, after remaining at relatively moderate levels through the first nine months of 1995, took off again in October. They remained high during November and December, defying the traditional taboo against firings during the holiday season.
* BAD FOR WAGE GROWTH
U.S. productivity grew only a modest 1.1% in 1995. D2
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Continuing Cuts
Monthly totals of layoffs announced publicly by U.S. companies, in thousands:
Feb. 1996: 33.8
Note: Layoffs at smaller companies, which rarely publicize their cutbacks, are not included.
Source: Challenger, Gray & Christmas
