Layoffs Slow Down Job Growth Corporate Mergers, Other Economic Trends Encourage Cutbacks

Companies are accelerating the pace at which they lay off workers, which is putting the brakes on job growth, according to a report issued last week.

More than 300,000 job cuts were announced in the first nine months of 1995, according to the Challenger Employment Report issued Wednesday by Challenger, Gray & Christmas, Inc., an international outplacement firm that tracks job cuts daily.

There were 33,173 job cuts reported in September, bringing the nine-month total to 302,017.

Eight companies announced layoffs of 1,000 or more, the largest number of four- and five-digit layoffs in six months. The largest of these was AT&T’s announcement that it would eliminate 8,500 positions. The AT&T announcement was the third largest of 1995.

The AT&T layoffs also place the communications industry third in the number of positions eliminated so far in 1995 (29,582 jobs cut), behind only aerospace companies (55,226) and financial institutions (39,596).

The layoffs carry a bitter message for workers. Companies seem to find reasons to reduce their work forces in all economic climates.

“In 1993 and 1994, layoff announcements were fueled largely by the need for immediate cost-cutting,” said James E. Challenger, president of the firm. “Today, downsizing is more likely to be the result of a strategic recombination, a merger or acquisition aimed to meet long-term corporate goals, which makes jobs redundant.

“For employees, however, the result is the same. Ironically, the same industries that were affected in earlier waves of cost-cutting are being hit again,” said Challenger.

The aerospace and communication sectors have been hit hardest by downsizing over the past three years. For companies such as Boeing and Lockheed-Martin, with performance tied to the health of the airline industry and the level of government spending, re-engineering and consolidation have proved necessary for survival. In the communications sector, increased competition has also spurred massive job cuts.

The Challenger report indicates the difficulty the U.S. economy faces in maintaining job growth. Through the first seven months of this year, average monthly increases in non-farm payrolls have averaged 133,000, compared with average monthly increases of 294,000 in 1994 and 235,000 in 1993, the Labor Department said.

Those numbers reflect the net gain in employment. That means far more jobs have been created, many in high-tech and service industries, but they have been partially offset by the huge cutbacks at traditional big businesses.

Markley Roberts, assistant director of economic research with the AFL-CIO, is pessimistic about the chances of near-term improvement in the employment picture.

“I expect continuing downsizings and layoffs to keep the unemployment rate fairly high through the rest of the year,” Roberts said.