Announced cuts in payrolls up 26% from previous month
The Atlanta Journal-Constitution
Published on: 02/03/04
The number of job cuts announced nationwide in January jumped dramatically from the previous month, raising new concerns about how much the job market is improving.
However, January is often payroll-trimming time, and the month produced about 11 percent fewer cuts than it did a year ago, according to outplacement firm Challenger, Gray & Christmas Inc., which compiles the data.
Many economy-watchers view planned layoffs as a flawed but noteworthy indicator that may show which way the labor market is headed. But it is rarely viewed as a real-time snapshot.
Layoffs announced in January are often carried out much later — or sometimes not at all. And Challenger can only count cuts that are publicly announced.
"It is too early to tell if we are going to have another year of heavy job-cutting," said John Challenger, chief executive officer of the outplacement firm.
One of January's job casualties was Dianne Edwards of Kennesaw.
When she was let go from her vice president's position at Baan Co. on Jan. 6, she was unprepared. Tickets to Hong Kong were sitting on her counter, part of plans to attend marketing meetings in Asia a few days later.
If she had known it was coming, she might not have done so much skiing and restaurant-hopping when she visited her daughter in Colorado over the holidays, she said.
Softening the blow was a severance package — a lot more than when she was laid off in 2001, she said.
"I was just short of putting a for-sale sign in front of my house when I got this job," she said.
An Alabama native who came to Atlanta in 1996, she surrendered weekends and vacations to her job, she said. "I've really given up my life for work, and my family's perspective is, look where it got you."
Now she works the Internet and phone, searching for the right job. It shouldn't take too long, but she is picky, she said.
"I am not going to take the first job opportunity just because I am hungry. I am not hungry, yet."
Much of the recent news about the economy has been upbeat — profits are way up, and surveys show orders for manufacturing goods at 20-year highs. Only the job data seem out of step.
Payrolls, for example, barely grew in December. November was just a bit better.
Expectations are high, but market pressure keeps many companies — especially those with global business — focused on costs, said economist Campbell Harvey at Duke University's Fuqua School of Business. Unable to raise prices, they keep payrolls lean, he said.
"The primary disadvantage that U.S. firms face is wage costs — it's obvious," he said. "So they are hesitant to hire back in large numbers."
Dorsey Farr, senior analyst and economist at Balentine & Co. in Atlanta, agreed that there seems to be no dramatic shift in corporate hiring attitudes. But he is convinced that the transition is imminent because many companies will want to exploit tax benefits set to expire this year.
"Investment spending will lead to job growth," Farr said.
According to Challenger, consumer products companies led the layoffs last month, followed by the financial sector — perhaps a sign that the plunge in refinancing has been translated to layoffs at banks and mortgage companies.
In January 2003, retailers accounted for most of the cuts. This year, retail came in third.
Challenger said a key factor will be how many American companies move jobs to "countries such as India, China and the Philippines." But Farr dismissed the notion that the labor market's main ailment is an export of jobs overseas.
"Everybody's talking about that, but it's trivial compared to the size of the labor market," he said.
More accurate than the Challenger data for assessing the economy are filings for jobless claims, he said. Those weekly reports have been hovering around 350,000 — far below last summer's levels.
"That suggests that layoffs are coming down, not going up," Farr said.
The recently unemployed Edwards says she sees signs that the job market is improving. She has had several job interviews, turning down one offer because she was overqualified for the position.
Her urgency has been tempered by time and experience, she said.
"The sun still rises and sets. There's another job. And it's always a blessing in disguise."