Is the nation’s employment picture really getting any brighter?
Earlier this month we learned that the August unemployment rate held steady at 5.4 percent, down from its recent high of 6.3 percent in June 2003. That same week the Business Roundtable reported that 88 percent of the CEOs it surveyed expect to keep their staffing at the same level or higher in the next six months.
And yesterday, in a survey of 16,000 U.S. employers by Manpower Inc., the employment firm announced that the hiring pace for the fourth quarter will probably remain consistent with the past two quarters.
According to the survey, 28 percent of respondents plan to add staff in the fourth quarter, while 7 percent expect to reduce their payrolls. A majority — 60 percent — expect no change in their staffing levels. Even so, Manpower chairman and chief executive officer Jeffrey A. Joerres asserted in a statement that “hiring plans remain the most upbeat they have been since the hiring boom of the late 1990s that continued into the new millennium.”
Trouble is, there seems to be a disconnect between predictions and reality. In the past week, a slew of large companies have announced thousands of layoffs that feel less like the late 1990s and more like early 2002:
• Electronic Data Systems Corp. announced that it may cut 15,000 to 20,000 jobs. If it follows through, EDS will lop off nearly one-sixth of its workforce over the next two years.
• Financially troubled Delta Air Lines Inc. announced that it would eliminate 6,000 to 7,000 jobs, or about 10 percent of its work force, over the next 18 months and scrap its Dallas hub.
• US Airways, which employs 28,000 people, filed for bankruptcy earlier this week; you can be sure some layoffs will follow.
• A regional, Alaska Airlines, will cut nearly 900 jobs and close its Oakland maintenance facility.
• In another industry indicating a major slowdown in business, Mitsubishi Motors Corp. announced that it will end second-shift production at its only U.S. auto plant and lay off about 1,200 workers.
• Dishware maker Oneida Ltd. will eliminate about 500 jobs.
• Goodyear Tire & Rubber Co. will cut 340 jobs in its engineered products and chemical businesses.
These are real job losses, not theoretical future hires. And the nature of the industries dominating these large layoffs — airlines, autos, industrial products, and chemicals — portend a slowdown of the economy as a whole.
What’s more, when companies like EDS and Delta announce plans for huge layoffs — then add that those layoffs will take place over an extended period — they exacerbate the adverse impact on the economy. These “delayoffs” freeze spending not only by individuals who ultimately lose their jobs, but also by many of their co-workers who believe their jobs are endangered, even though they eventually survive the cuts.
Yesterday we also learned from the Department of Commerce that August retail sales (excluding autos) rose 0.2 percent, in line with analysts’ projections. Retail sales overall, however, fell 0.3 percent, more than the projected decrease of 0.1 percent. Will September bring us another month of pocketbooks pinched tight and wallets tucked away? Stay tuned.