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December 23rd, 2008

The 2009 Employment Picture

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By this juncture no one is ignorant of the dire unemployment crisis. The unemployment rate rose to 6.7% in November, and job cuts rose to their highest level in 34 years. Much of the mass layoffs (defined as: 50 or more firings at once from one employer) have been somewhat concentrated in sectors of the economy especially plagued by the financial crisis — financials, construction, and manufacturing. The latest trends are showing layoffs are spreading to a broader base.

Our friend Rebecca Wilder at NewsnEconomics.com says “the next shoe to drop in the labor market” will be mass layoffs in state and local governments. According to Wilder, “federal, state, and local governments executed just 72 mass layoff events, essentially unchanged from the 70 events in November 2007. With surging budget deficits, the pace of government mass layoff events will rise:”

The worst budget crisis in decades is forcing states to cut funding to cash-strapped cities, which already are slashing police, firefighters and other services.

States are facing $30 billion in budget deficits for the current fiscal year, according to the Fiscal Survey of States released this week by the National Governors Association and National Association of State Budget Officers. That figure is likely to grow in the coming months.

What actions are employers taking to avoid mass downsizing and keep their staffs operating for less? One such strategy is utilizing the four-day work week:

A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor.

Considering the alternative, workers may have no other choice but to buy into the limited work week.

John Challenger, CEO of Challenger, Gray & Christmas, warns the unemployment situation may not improve in the new year. The first half of 2009 will be a continuation of mass job cuts, said Challenger. Yet, spring and summer might bring some ease in layoffs, he continued. Challenger said the “bright spots” for 2009 include continued demand for healthcare and education positions.

If you need some advice on employment or unemployment, or just want to learn more about this issue, Challenger, Gray & Christmas will hold their 23rd Annual Job Advice Hotline (312-332-5790) from December 29-30, 9a.m. – 5p.m. CST. Also be sure to check out their “Tips to Find Work In A Recession.”

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2 Responses to “The 2009 Employment Picture”

  1. Rebecca Wilder Says: December 23rd, 2008 at 2:34 pm

    Hi Tim,

    Thanks for the link!

    This is classic labor hoarding – firms try to hold on to labor (furloughs, 4-day workweek) because it is very costly to retrain workers when the labor market turns around. Here is a nice NY Times article on the subject: http://www.nytimes.com/2008/12/22/business/22layoffs.html?_r=1&hp

    Merry Christmas, Tim.

    Rebecca

  2. Tim Manni Says: December 23rd, 2008 at 3:05 pm

    Hey Rebecca,

    No problem, I wasn’t aware “mass layoffs” was as highly documented as it is by the BLS. Labor hoarding was also a concept I wasn’t too familiar with, so thank you. And by the way, I suggest sticking with your original ideas of getting your husband either the HD or the wireless head phones — forget the expensive bike or the “orthopedics.”

    Merry Christmas,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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