In 2009, we tracked a previously-obscure jobs statistic: mass layoffs. Those peaked in the autumn months following the Porkulus bill’s passage and then began to subside as the job destruction cycle slowed. Since then, we have mainly looked at the job creation numbers, which have remained in positive but anemic territory on a month-to-month basis.
Putting pressure on an already lousy job market, the mass layoff is making a comeback. In the past week, Cisco, Lockheed Martin and Borders announced a combined 23,000 in job cuts. (See:Another Retailer Bites the Dust: Borders Doomed by Amazon Deal, Davidowitz Says)
Those announcements follow 41,432 in planned cuts in June, up 11.6% from May and 5.3% vs. a year earlier, according to Challenger, Gray & Christmas.
Meanwhile, state and local governments have cut 142,000 jobs this year, The WSJ reports, and Wall Street is braced for another round of cutbacks. This week, Goldman Sachs announced plans to let go 1000 fixed-income traders.
If these trends continue, we may soon be talking about losses in the monthly employment data — not just disappointing growth, says Howard Davidowitz, CEO of Davidowitz & Associates[.]
The Bureau of Labor Statistics has kept the mass-layoff series in place, of course, which gets reported around mid-month. June figures are due soon, but May saw a slight uptick in events, although a slight decrease in the number of resulting claims:
Employers took 1,599 mass layoff actions in May involving 143,540 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today. Each mass layoff involved at least 50 workers from a single employer. The number of mass layoff events in May increased by 35, or 2 percent, from April, while the number of associated initial claims decreased by 387, or less than 1 percent. In May, 373 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 38,673 initial claims; both figures increased over the month.
This note on manufacturing doesn’t look like a sign of good things to come:
The manufacturing sector accounted for 20 percent of all mass layoff events and 21 percent of initial claims filed in May. A year earlier, manufacturing made up 16 percent of events and initial claims. Within this sector, the number of claimants in May 2011 was greatest in the food and transportation equipment subsectors. Twelve of the 21 manufacturing subsectors experienced over-the-year increases in initial claims, with the largest increases occurring in food and in transportation equipment.
The BLS lists the ten industries most impacted by mass layoffs in May, which is an interesting table. Four of those industries (food service contractors, full-service restaurants, commercial plumbing/HVAC contractors, and casino hotels) had their peak in mass-layoff events in 2009, which is predictable. But four others (day care, colleges/universities, junior colleges, and “other individual and family services”) have had their peak in mass-layoff events in 2010 or 2011.
In looking at the historical table, which only goes back as far as mid-2007, the levels have begun rising again. In March of this year, mass layoff events slowed to 1,286, the lowest figure since October 2007, just before the recession started. In two months, the level bounced upward 24.3%, back to a level more consistent with 2010’s mass-layoff levels. The number of claimants from these events jumped by 21.1%.
So the problem we face at the moment is not just a lack of job creation. We are beginning to see job destruction again, as demand falls and consumer confidence plummets. Businesses react to this in rational ways, which is to shed excess labor and curtail expansion. Don’t be surprised to see low job-addition numbers over the next few months — or possibly negative numbers — unless you work for Reuters.
Update: The June numbers have replaced the May numbers today after I posted this. June events totaled 1,532, which is a drop of 4% from May but still a 19.1% increase over February. The number of claims from these events barely budged, still up 21% over February — and of course, these are all new layoffs.