‘Dot-Com’ Job Losses Increase 19%
Job cuts at Internet companies rose 19% in December as young start-up firms were forced to cut costs or even shut down, according to a monthly survey by a private job-placement firm.
Internet job losses rose to 10,459 this month from 8,789 in November, said Challenger, Gray & Christmas Inc. That took total “dot-com” job cuts to 41,515 since last December, when the Chicago-based firm started keeping count.
Since then, more than 100 Internet companies have closed--including Garden.com, Furniture.com, MotherNature.com and Pets.com--as their stocks collapsed and the flow of capital keeping them afloat dried up.
“The two halves of 2000 were like night and day for dot-commers,” Chief Executive John Challenger said in the report. “In the first six months, all you heard about were job fairs, lavish recruiting parties and after-hours mixers where would-be entrepreneurs hoped to meet free-spending venture capitalists. Now, pink-slip parties are the rage.”
From January through June of this year, the Internet sector cut 5,097 jobs. From July through December, 36,177 reductions were made.
It’s not certain those getting fired now will find jobs easily, even though the nation’s unemployment rate sits at 4%, close to a 30-year low.
“You’re probably not going to see companies willy-nilly expand,” said Steven Ricchiuto, chief economist at ABN Amro Inc. in New York. He said retailers competing with Internet start-ups may be hesitant to invest further in their own online operations.
That would leave job hunters with Internet skills with more traditional options, and some may simply opt to leave the labor force and go back to school. “A lot of them were pulled out of schools in the first place,” Ricchiuto said.
They also will be a little more cautious in their job choice this time, Challenger said. “Many ex-Internet workers may purposely avoid jobs with entrepreneurial start-up firms,” he said.
Challenger reported that most of the cuts this year have come from dot-com companies specializing in services such as consulting, finance and information. Job losses in these areas totaled 19,535. Internet retailers followed as the second-biggest job cutters, totaling 9,523 losses. The numbers are based on layoff notices and on corporate filings such as 10-Q documents.
Although December marked the seventh consecutive month in which Internet job cuts rose over the previous month, the rate of retrenchment has slowed, the group said.
The number of layoffs in November represented a 55% increase from October, when the sector cut 5,677 jobs.
But Challenger said he was pessimistic that Internet companies would stop losing jobs any time soon.
“My guess is there’s more pain to come,” he said. “As we hit January and February, they’re going to sit down with their investors and post-mortem what happened. I think more are going to decide to close their doors.”
Recent casualties included news site Salon.com, which reduced its staff by 20%, or 25 jobs, in its second round of staff reductions this year. The company fired 13 people in June.
“We had hoped the job reductions in June would be enough, but the market didn’t improve. In fact, it just got worse,” Salon.com Chief Executive Michael O’Donnell said last week.
