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Unspeaked
Jan 26, 2009, 02:29 PM
Bloody Monday: More Than 50,000 Layoffs in One Day (http://finance.yahoo.com/news/Tens-of-thousands-more-apf-14154507.html)

Tens of Thousands More Layoffs Are Announced

WASHINGTON (AP) -- It's already been a lousy year for workers less than a month into 2009 and there's no relief in sight. Tens of thousands of fresh layoffs were announced Monday and more companies are expected to cut payrolls in the months ahead.

A new survey by the National Association for Business Economics depicts the worst business conditions in the U.S. since the report's inception in 1982.

Thirty-nine percent of NABE's forecasters predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.

The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing.

"Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further," said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.

Thousands more jobs cuts were announced Monday. Pharmaceutical giant Pfizer Inc., which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, said they each will slash 8,000 jobs. Home Depot Inc., the biggest home improvement retailer in the U.S., will get rid of 7,000 jobs, and General Motors Corp. said it will cut 2,000 jobs at plants in Michigan and Ohio due to slow sales.

Caterpillar Inc., the world's largest maker of mining and construction equipment, announced 5,000 new layoffs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. An additional 2,500 workers already have accepted buyout offers, and ties have been severed with about 8,000 contract workers worldwide. In addition, about 4,000 full-time factory workers already have been let go.

Just last week, Microsoft Corp. said it will slash up to 5,000 jobs over the next 18 months. Intel Corp. said it will cut up to 6,000 manufacturing jobs and United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year.

The NABE survey of 105 forecasters was taken Dec. 17 through Jan. 8.

Also in the survey, 52 percent said they expected gross domestic product to fall by more than 1 percent this year. GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic fitness. The last time GDP fell for a full year was in 1991, a tiny 0.2 percent dip. The economy shrank by 1.9 percent in 1982, when the country was suffering through a severe recession.

Forecasters have grown more pessimistic about the outlook. In the October survey, no forecaster thought GDP would fall by more than 1 percent.

In terms of business conditions, more reported customer demand dropping, capital spending reductions and shrinking profit margins.

Peoria, Ill.-based Caterpillar also reported Monday that its fourth-quarter profit plunged 32 percent. The company expects sharply lower results this year as global economic problems cut into its business.

Altogether the NABE report "depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," Johnson said.

Many analysts predict the economy will have contracted at a pace of 5.4 percent in the fourth quarter when the government releases that report on Friday. If they are correct, that would mark the worst performance since a 6.4 percent drop in the first quarter of 1982. The economy is still contracting now -- at a pace of around 4 percent, according to some projections.

Abstract
Jan 26, 2009, 03:10 PM
Is it possible for employers to just cut worker hours rather than fire people?

dmr727
Jan 26, 2009, 03:13 PM
Is it possible for employers to just cut worker hours rather than fire people?

In some cases yes, but one CEO once explained to me that it's generally considered most effective to let go of employees from underperforming units, or let go of underperforming employees - rather than cut hours or wages across the board.

GoCubsGo
Jan 26, 2009, 03:16 PM
Is it possible for employers to just cut worker hours rather than fire people?

Yes, but in addition to that companies would most likely have to alter the payroll significantly because many people are salaried, benefits eligibility would probably change and overall it's an administrative nightmare.

zelmo
Jan 26, 2009, 03:17 PM
Is it possible for employers to just cut worker hours rather than fire people?

We took a secret poll of our staff a couple of years back, asking people if they'd rather we cut their hours by 10% or have a RIF. Virtually everyone opted for the RIF, betting that their performance would keep them safe.
From a management perspective, it's not as easy to restrict hours as you'd think, unless you have a very steady and predictable volume of work to produce. Our business [printing] is not one that is conducive to micro-management of hours. Also, the morale hit is terrible when everyone is expected to perform at the same level of productivity but knows they are taking essentially a 10% pay cut. Better to keep your best personnel whole and try to ride it out, I think.

Unspeaked
Jan 26, 2009, 03:35 PM
Is it possible for employers to just cut worker hours rather than fire people?

That's exactly what a lot of companies have begun doing in recent weeks.

The technical term is "furlough" and it's becoming increasingly popular.

On the downside, it helps companies "hide" layoffs and workforce reductions, since there's no real way to measure furloughs other than a complicated and approximate breakdown of productivity numbers.

dmr727
Jan 26, 2009, 03:38 PM
The technical term is "furlough" and it's becoming increasingly popular.


Ugh. I wish the airlines would use that definition. My wife will likely get furloughed soon, and the only difference between it and getting laid off is that she might get called back to work in a few years when times are good. :(

Unspeaked
Jan 26, 2009, 03:53 PM
Ugh. I wish the airlines would use that definition. My wife will likely get furloughed soon, and the only difference between it and getting laid off is that she might get called back to work in a few years when times are good. :(

I'm sorry to hear that.

You're right - it is a very vague term. All it really means is that the company isn't letting the worker go. The reduction in hours could be one less day a week or it could be their entire shift indefinitely. As you say, the real difference is that it's supposed to be a temporary reduction.

dmr727
Jan 26, 2009, 04:48 PM
I'm sorry to hear that.

You're right - it is a very vague term. All it really means is that the company isn't letting the worker go. The reduction in hours could be one less day a week or it could be their entire shift indefinitely. As you say, the real difference is that it's supposed to be a temporary reduction.

Yeah, it sucks. Nature of the business, unfortunately. Hopefully I'll be able to find something else for her to do while she waits to be recalled.

3rdpath
Jan 26, 2009, 10:27 PM
Is it possible for employers to just cut worker hours rather than fire people?

many firms did just that during the great depression. kellogg cut their employees to a 6 hr day and eliminated bonuses and breaks. but they gave the employees an across the board pay increase so they were only down about 15% in actual wages.

here's the kicker-employee satisfaction and productivity skyrocketed. kellogg got a lot of press for their efforts and became the #1 cereal company-besting long-time rival Post cereal brands.

other companies went to a 4 day week and enjoyed similar successes.

slashing and burning the payroll is poor business strategy. it cuts company morale, diminishes product image and quite often leads to mistakes and poor performance by overworked/stressed employees. many financial experts also believe that by the time most cost cutting measures pay off, the recession is over with and the company is understaffed for the increase in business.

on the upside, many companies were founded during poor economic times...GE, Disney, HP and microsoft. innovation will always sell.

MacRy
Jan 27, 2009, 01:34 AM
I like to be ahead of the game.....which is why I was made redundant last Friday after 9 years with my firm :(

Dagless
Jan 27, 2009, 08:39 AM
Given there was no massacre is it a good idea to call it "bloody" Monday?

Redline13
Jan 27, 2009, 11:54 AM
Given there was no massacre is it a good idea to call it "bloody" Monday?

It was pretty bloody if your one of the people who lost a job.

gkarris
Jan 27, 2009, 03:54 PM
In some cases yes, but one CEO once explained to me that it's generally considered most effective to let go of employees from underperforming units, or let go of underperforming employees - rather than cut hours or wages across the board.

Right - sometimes just reducing hours means they still have benefits, which is very costly...

BTW - love your Avatar...