Human Capital & Careers

Jobs: Gone, Baby, Gone

More than half a million Americans joined the unemployment line in December, and the jobless rate hit its highest level in 15 years.
Stephen TaubJanuary 9, 2009

The already-bleak national jobs picture has grown much bleaker in the past week, with the issuance of a trio of ominous reports.

On Wednesday ADP reported that nonfarm employment decreased 693,000 from November to December on a seasonally adjusted basis. That was the steepest monthly decline since records began in 2001, according to Bloomberg.

On Thursday the Labor Department reported that the number of people continuing to claim jobless benefits jumped unexpectedly by 101,000 to 4.61 million, according to the Associated Press.

And on Friday, in a much-anticipated report, the Labor Department said the December unemployment rate jumped to 7.2 percent from 6.8 percent the previous month, rising to its highest level since January 1993.

The government said 524,000 people lost their job in December, pushing the full-year number to 2.6 million, the most since 1945. About 1.9 million jobs were lost in the past four months alone. On the somewhat brighter side, the number of job eliminations trailed most analysts’ expectations.

Altogether, 11 million Americans are without jobs, the highest number since 1983.

Layoff announcements in the first full week of January continued to send shock waves. Still, the number of companies announcing large layoffs was noticeably fewer than in the weeks before the holidays.

The most stunning news of the week came from Alcoa, which said it would reduce head count by 13,500, or 13 percent of its global workforce, as part of a sweeping restructuring.

“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets,” said Alcoa president and CEO Klaus Kleinfeld. “We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in today’s challenging markets while also emerging even stronger when the economy recovers.”

Cigna, meanwhile, said it will cut 1,100 jobs, or around 4 percent of its employees. The insurance giant said it expects to complete the job eliminations by midyear, and all those affected by the actions will be eligible for severance benefits and outplacement support.

Walgreen Co. said it will pare 1,000 jobs, or about 9 percent of those currently employed in corporate and field management, by the combination of voluntary and involuntary programs. Store personnel will not be affected.

The company elaborated that eligible employees can voluntarily resign or retire with both severance pay and benefits coverage based on years of service and retirement eligibility. The program is being offered before it begins firing people in February.

Walgreen added that under the voluntary program, eligible employees can receive more weeks of severance pay and continuation of retiree medical benefits if they meet age and service requirements.

Schlumberger, the multinational oil-field company, said it will lay off up to 1,000 of its 19,000 North American employees.

The McGraw-Hill Cos. said it has reduced its workforce by about 375 companywide. As a result, it incurred a restructuring charge in the fourth quarter of $26.3 million, pretax, consisting mostly of employee severance costs.

Specialty apparel retailer New York & Co. said it eliminated about 260 management-level positions and 50 corporate office positions, consisting of salaried managers and support professionals. The company expects to incur a pretax charge of approximately $3 million during the fourth quarter of fiscal year 2008 in connection with these reductions. The company added that the cutbacks are expected to result in pretax savings of about $12 million per year beginning in fiscal year 2009.

Ethan Allen Interiors said it will consolidate a Pennsylvania upholstery manufacturing plant and several of its retail service centers, which will result in the elimination of 350 employees.

Boat maker Brunswick Corp. said it will cut up to 275 jobs and idle about 300 production and support positions as part of an overall restructuring and consolidation.

Intermec Inc., which makes electronic devices for tracking inventory, said it will reduce its workforce by about 150 of its 2,100 employees worldwide. A majority of the cuts will be made in the United States.

Some smaller companies are cutting only dozens of jobs, which doesn’t seem like much but can represent a big percentage of their overall payroll. For example, Ambassadors Group Inc., which organizes educational travel programs, said it plans to cut 15 percent to 20 percent of its roughly 270 employees. The planned reductions are expected to be completed by the end of the month.