Published January 28, 2009

More sectors of US economy hit by layoffs

Nearly a dozen top companies cut more than 75,000 jobs

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(WASHINGTON) Furloughs, wage reductions, hiring freezes and shorter hours simply did not do enough. A year into this recession, companies across the board are resorting to mass job cuts.

Axing giants: Sprint is eliminating 8,000 jobs, or 14 per cent of its workforce, while Home Depot says it will cut 7,000 jobs, or 2 per cent of its staff

Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced on Monday they would cut more than 75,000 jobs in the United States and around the world - a gloomy start to the week for employees anxious about holding their own as the economy sinks.

Caterpillar, the maker of the heavy equipment, is slashing its payrolls by 16 per cent. Texas Instruments said that it would eliminate 3,400 jobs, 12 per cent of its workforce.

While yesterday, Corning Inc posted weaker-than-expected quarterly results and outlook due to a significant decline in demand for glass for televisions and computer monitors, and said it would eliminate 3,500 workers, or about 13 per cent of its workforce, by the end of the year, and left the door open for more reductions if necessary. In addition, it is also cutting more than 1,400 temporary workers.

Jobs began disappearing in home-building and mortgage operations early in the recession, then across finance and banking more generally. Now the axe is falling across large swaths of manufacturing, retailing and information technology, eliminating jobs from New York to Seattle.

The latest round of job cuts means more pain for states, as unemployment insurance claims rise and deplete state budgets.

Just last week, Microsoft announced its first-ever significant job cuts. Monday's parade of negative news comes after several months of announcements from other prominent companies, such as Citigroup, General Electric, Nokia and Harley-Davidson.

Today, the tally of layoffs for December will be released by the Bureau of Labor Statistics. Already, the bureau says the US economy has shed at least 2.55 million jobs since the recession began, pushing the unemployment rate up to 7.2 per cent last month.

The latest round of job cuts means more pain for states, as unemployment insurance claims rise and deplete state budgets.

Congress has proposed setting aside US$43 billion to assist the states and provide for new and current recipients of unemployment cheques. That money is intended to increase the weekly benefit amounts; to extend how long those unemployed can collect payments; to cover more types of workers, such as part-timers; and to help states distribute benefits more quickly.

The proposal is based largely on an estimate that the unemployment rate will rise to 8-9 per cent this year even with enactment of a broad economic stimulus package now under consideration by Congress, according to the proposal summary from the House Appropriations Committee.

But if unemployment soars into the double digits, as some economists expect, the financing will almost certainly not be enough, economists say.

'The economy is deteriorating at a faster clip than even the most dreary forecasts had expected,' said Joseph Brusuelas, an economist who, bucking the current job market trend, will soon start a new job at Moody's Economy.com. 'At the current trend, US$43 billion will not be sufficient, should we breach 9 per cent unemployment and maybe reach into the double digits.'

President Barack Obama cited the layoff announcements in remarks on Monday morning urging Congress to approve an US$825 billion economic stimulus package of tax cuts, emergency benefits and public spending projects. 'These are not just numbers on a page,' Mr Obama said. 'As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold.'

While stimulus spending on public works may take some time to get going, some companies could bring back displaced workers relatively quickly if the government initiative generates new business orders.

Many companies, though, may not rush to increase staff even if business begins to pick up. Andrew Stettner, deputy director of the National Employment Law Project, said downturns often motivate firms to restructure business models permanently, meaning jobs they cut now are unlikely to be replaced.

Sprint Nextel, which said on Monday it was eliminating 8,000 jobs, or roughly 14 per cent of its work force, is similarly facing some tough restructuring decisions as it continues to haemorrhage subscribers.

Home Depot, the nation's largest home improvement retailer, said on Monday it would cut 7,000 jobs, or 2 per cent of its workers. -- NYT, Reuters