NCPA - National Center for Policy Analysis

Take A Second Look At Gloomy Layoff Reports

December 3, 1999

Serious economists find the media's preoccupation with corporate downsizing reprehensible. Reports of five million layoff announcements this decade are rarely followed by news that the booming 1990s economy actually created 21 million new jobs.

Perhaps even more importantly, the new openings occurred at firms with fewer than 5,000 employees.

  • The business research firm Cognetics Inc. figures that firms employing fewer than five workers were responsible for 6.54 million new openings between 1994 and 1998.
  • Companies with 5,000 or more employees actually shed 2.13 million people.
  • Outfits employing between 5 and 99 workers created about 2.95 million positions.
  • Those with 100 to 499 employees added nearly 3.8 million workers over the period.

Critics contend television anchors are particularly guilty of leaving the erroneous impression among viewers that there is an unemployment crisis -- when, in reality, unemployment stood at 4.4 percent in November. This suggests that a crisis, if there is one, is that there are not enough workers to fill all the slots.

This probably explains why 53 percent of those whose jobs were cut and who were then rehired experienced a pay increase -- and 27 percent got a raise of 20 percent or more, according to a survey earlier this decade.

Source: Paul Sperry, "The Myth of the Shafted U.S. Worker," Investor's Business Daily, December 3, 1999.


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