Expansionary Institute

Michael Zey
futurist3000@aol.com

By ADAM GELLER
.c The Associated Press

 
NEW YORK (AP) - 'Tis the week before Christmas, but some employers are hardly delivering messages of good cheer to their workers this year.

Instead, a growing number of firms are cutting jobs with unnerving zest, evidence that a national economic engine that once seemed unstoppable is beginning to cough and sputter a bit.

Aetna Inc. and The Gillette Co. on Monday joined a growing list of companies that have announced layoffs in recent weeks. The two firms said they will pare 5,000 and 2,700 jobs, respectively, from their payrolls, rattling their ranks just before the holidays.

But there's much more going on here than the trimming and tucking many companies often save for the fourth quarter. The pink slips are the first sign that the nation's red-hot job market is starting to cool along with the economy that fueled it to a three-decade low.

``I wouldn't say that this market has gone soft,'' said Mallika Ishwaran, an economist at the Levy Institute Forecasting Center, said Monday. ``But it's definitely a turning point.''

The evidence, Ishwaran and other observers say, are job cuts across a range of industries. Companies including General Motors, Motorola Inc., Unisys Corp. and Whirlpool all have outlined plans for mass layoffs, citing a tougher marketplace.

``As the economy slows there are going to be companies that are lagging or losing market share, where profitability numbers are dropping sharply,'' said John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. ``Companies are jumping in to make decisions to get their costs in line now and not wait.''

Challenger cites statistics showing monthly layoffs have risen to about 51,000 during the second half of this year, up from about 37,000 a month through June. The cuts have been deepest in the auto, retail, industrial goods and financial services industries, he said.

To be fair, it helps to keep things in perspective. Layoffs have been a constant throughout this decade's economic expansion as companies remade themselves.

Unemployment is still only 4 percent - just off its 30-year-low - and even layoffs should leave the jobless rate in coming months at levels so low that only a few years ago they would have been nearly unimaginable.

``A layoff in one company doesn't mean these people can't find jobs new jobs relatively quickly,'' said Joel Naroff of Naroff Economic Advisors. ``The economy is still adding workers.''

But that is none too reassuring for workers at the companies cutting back.

``It's like 'Merry Christmas. You're laid off,''' said Dave, an employee at Gillette's South Boston shipping and receiving docks who asked that his last name not be used. ``We heard this was coming months ago. They tell you not to listen to the rumors, and now they're all turning out to be true.''

Elaine Korisianos, a 22-year-old Northeastern University student about to complete an internship at the company, agreed.

``Everyone's morale is going to be affected,'' she said. ``This is going to be hard to take.''

Economists, meanwhile, differ on just what the layoffs will mean for workers and the economy.

Naroff cautions that past layoff announcements have often overstated the number of people who will actually lose their jobs, often signaling positions that will go unfilled or hiring plans put on hold.

A number of industries, particularly those rooted in technology, are still strapped for workers and are looking to expand, said Sophia Koropeckyj, senior economist at Economy.com, a consultantcy based in West Chester, Pa.

But many of the layoffs in recent years came as the same companies added people in businesses that were doing well, which doesn't appear to be happening now, Koropeckyj says.

Many recent job cuts, such as the up to 6,000 positions set to be eliminated at Whirlpool, come as companies look for ways to pay higher energy prices and other costs without raising their prices to customers, and to cope with higher interest rates, said David Huether, director of economic analysis for the National Association of Manufacturers

Many analysts say the layoffs are in line with their projections of a ``soft landing'' for the economy early next year bringing slower, but sustained growth with minimal inflation. But others see signs of danger.

``As a snapshot, it is not bad. But if you look at it in the longer term, as the economy slows even further, yes, this is definitely going to become a much bigger problem,'' said Ishwaran, who forecasts a recession by the middle of next year.

AP-NY-12-19-00 0012EST

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