Downsizings return to pre-recession levels
The pace of downsizing by U.S. companies was virtually unchanged in May, as employers announced plans to cut 38,810 jobs from their payrolls during the month, according to a report by Challenger, Gray & Christmas Inc.
The number of announced job cuts was 1.3 percent higher than the four-year low of 38,326 job cuts announced in April, but 65 percent lower than May 2009, when planned job cuts totaled 111,862, according to the outplacement consulting firm.
“Announced job cuts have, for all intents and purposes, returned to pre-recession levels,” said John Challenger, the company’s CEO, in a press release. “What makes the low job-cut totals we have seen this spring particularly remarkable is that we still have not reached what is the slowest downsizing period of the year, which typically occurs during the summer months.”
However, monthly job cuts may continue to fall during the summer, when many businesses hold off on making dramatic staffing changes, Challenger said.
The one area of the economy that may not follow the typical pattern of a summer slowdown is the government and nonprofit sector, which announced 16,697 job cuts in May, 12 percent more than April’s 14,973. May’s job cuts brought the year-to-date total for the struggling sector to 93,470, which is more than two-and-a-half times more than the second-ranked pharmaceutical industry’s 34,157 job cuts this year.
“High unemployment and falling home ownership are taking a significant toll on tax revenues. And, with many states in an election year, politicians are reluctant to raise income taxes and sales taxes, so as not to punish voters. However, this leaves them with no other choice but to make drastic cuts in public programs and the jobs that go with them,” Challenger said.