1998 record year for layoffs
In December alone, 103,166 pink slips handed out, Challenger report finds
NEW YORK (CNNfn) - In 1998, a lot of employment records were broken, all of them at the expense of workers, a key employment survey revealed Thursday.
Capping an already grim year, U.S. companies in December laid off a stunning 103,166 employees -- double the number they let go in November and the highest monthly figure for the year, according to employment consulting firm Challenger, Gray & Christmas.
On average, that means 586 workers were let go every hour of an eight-hour day for 22 business days.
The December figure - the highest total since 1994, when 108,946 people lost their jobs -- also brought the 1998 fourth-quarter total to 246,339, the highest since tracking began in 1989.
"The December figure is shocking, given the continuing strength of the economy. Job cuts are clearly the result of the ongoing Asian economic crisis, the severe downturn in oil prices affecting producers as well as myriad oil services companies, and a weakening manufacturing sector as evidenced by purchasing managers reports," said CGC's Chief Executive Officer John A. Challenger.
By industry, 30,040 workers in aerospace/defense companies lost their jobs, while 17,219 in commodities cleaned out their desks. And those in the financial and automotive industries followed, with 11,234 layoffs and 10,573, respectively.
On a regional basis, those in the West/Southwest took the brunt of the bad news, with 53,293 layoffs registered in December. The state of Washington led the way, with the dismissal of 28,040 workers.
A record year of pink slips
For 1998, U.S. companies cut 677,795 jobs in all, which far surpasses the previous decade-high of 615,186 in 1993.
The yearly total surpassed the 1997 figure of 434,350 by 56 percent and the previous decade-high 1993 figure of 615,186 by 10 percent.
"Mergers and acquisitions were a frequent source of job-cut announcements and are likely to continue in 1999. There is an indication that some of the early job-cut estimates following major merger announcements last year were low and will likely be adjusted upward in the coming months," Challenger said.
Among industries, electronics took the biggest hit for the year, registering 84,186 job cuts in 1998. Not far behind were industrial goods companies, which slashed 75,504 jobs.
On a regional basis where companies' headquarters are located, California led the way with 91,920 layoffs. Texas and New York vied for a distant second place, with 66,624 and 65,677, respectively. And Illinois, with 60,443 job cuts, and New Jersey, with 38,490, came in fourth and fifth.
Forty minutes after the report was released, the 30-year Treasury bond was down 1-3/32 for a yield of 5.233 percent.
What's in store for 1999
Despite the sobering statistics from 1998 and the widely held assumption that mega-mergers and their concurrent job cuts are likely to continue into 1999, there also will be a lot of jobs created to counter the trend and there's a good chance the unemployment level will remain around 4.5 percent, Challenger told CNNfn.
When companies let people go in under-performing areas of their business or in sectors as a whole, he said, "they are trying to free up those resources to move them into areas where they can expand, and as they do that, they create jobs. And that formula, which has been working through the '90s and has really been honed now has been an incredible job-creation engine. And hence, you get the 17 million jobs that have been created in the 1990s."
Technology advances also giveth and taketh away, at least in terms of jobs, Challenger said.
"In 1998, we saw the advent of e-commerce. That's going to wreak havoc on how we buy our goods and services. Jobs like retail clerks, travel agents, stock brokers, even grocery store personnel - all those jobs are at risk of becoming more and more obsolete as we change.
At the same time, that creates incredible job growth in technology; in warehouses, as companies pile up their goods there as opposed to retail space; in delivery services as those goods get delivered to people
Among his areas of concern for 1999 are the influences the euro and the Y2K problem will have on employment and the economy overall.
Challenger foresees job loss in small U.S. businesses that, he said, will have to compete unfairly with European businesses. (349K WAV) or (349K AIFF)
He also expects short-term job creation related to Y2K-solutions both on the programming end and in related goods and services. But long-term, he said, the effect may be detrimental for the economy as it uses needed resources in a non-growth area. (492K WAV) or (492K AIFF)