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Job-cuts total 33,000 in one day

The job cuts came heavily Monday – bad news from some of the big names of American commerce.

Caterpillar. Pfizer. Home Depot. Sprint Nextel. General Motors. Texas Instruments.

When it was done, 33,000 more people faced unemployment, soon to be pitched into the worst job market in a quarter-century and an economy that seems to get gloomier by the week.

Monday’s events were the latest sign of how the problems that began in housing have infected the rest of the economy. Now workers from cashiers to software engineers are getting pink slips in a market that doesn’t discriminate.

More than a half-million jobs were cut in each of the past two months nationwide, and January is on a similar pace.

“Businesses are cutting jobs at a rapid pace,” said Sara Johnson, an economist with IHS Global Insight. “They’re reacting perhaps more quickly than in the past, anticipating that this will be a deep and lengthy recession, so there’s less incentive to ride it out by holding onto their workers.”

Johnson co-authored a survey released Monday by the National Association for Business Economics, in which 44 percent of companies reported job cuts in the fourth quarter, and 39 percent expected to cut more in the next six months.

“Clearly, the labor markets will get worse before they get better,” she said.

While there are certainly economic reasons for these mass layoffs, at another level they spring from a kind of herd mentality, said Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School of Business.

“Once you start getting a couple of big layoffs, then these guys feel like, ‘Everybody’s laying off and we’d better, too, or we’ll look like we’re not being efficient,’” he said. “That’s a really bad reason to lay people off.”

But there are fundamental problems driving this too, said Jack Strauss, an economics professor at St. Louis University. The credit crunch has stalled business on several fronts. Confidence is low. And if history is any guide, that bodes poorly for the months to come.

Strauss pointed to research that recessions triggered by crises in the banking sector tend to last longer, and run deeper, than other downturns. This episode is already approaching the two longest since World War II in duration, with no end coming soon.

“It’s going to take several years for us to really turn around,” Strauss said.

The news isn’t all bleak.

Health care companies and schools are still expanding. Johnson’s survey found services companies are still growing. Government agencies, including the Census Bureau and the FBI, have launched recruitment drives.

But Michael Waltman, spokesman for the Missouri Department of Economic Development, said he sees job postings at an “all-time low,” and big cuts such as the ones announced Monday are becoming more and more frequent.

Caterpillar has seen its business socked by the global slowdown, reducing demand for its mining and heavy construction equipment.

Representatives of Sprint Nextel and Home Depot said their job cuts will allow each company to focus on its core business.

or Sprint, that means networks and customer service, a spokesman said. Home Depot will re-emphasize home renovators and construction.

“Our goal is to focus time and resources on our core orange box stores,” said Home Depot spokeswoman Paula Drake.

Home Depot will spend the next two months phasing out its high-end Expo design centers. Most stores employ between 100 and 150 people Drake said, and Home Depot will try to employ them elsewhere in the company.

Outside the Ballwin, Mo., Home Depot Expo store Monday, a handful of customers eyed $90 trash cans, $75 solid brass towel racks and $90 toilet seats. Ron Geiger of Chesterfield, Mo., said he and his wife shopped there for granite countertops, tiles and other items.

“It’s too bad,” he said. “They have a unique selection of goods here that you can’t get anywhere else.”

And that includes, Geiger added, the traditional Home Depot a mile up the street.

But the recession is forcing everyone to get back to basics, Drake said, and the market for big-ticket items has shrunk.

“The economy has certainly not been our friend,” she said. “The Expo business has not performed well financially and it’s not expected to improve any time soon.”

Indeed, Cappelli said, it’s hard to know when things will get better. With Federal Reserve interest rates near zero and lending still sluggish, businesses slashing spending and consumers hunkering down, there aren’t a whole lot of levers left to pull to turn the economy around.

“It’s like you’ve got a patient in the hospital with a raging fever and you’ve been giving him all the antibiotics and he isn’t getting any better,” he said. “Nothing we’re doing is working.”

(c) 2009, Distributed by McClatchy-Tribune Information Services.

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