NCPA - National Center for Policy Analysis

Back To Downsizing?

February 16, 1998

Until recently, data showed that the layoff wave which roiled labor markets in the 1990s was receding. But recent information shows that downsizing may be returning.

  • Job-cut announcements in the fourth quarter of 1997 were up 33 percent over their year-earlier level, according to the outplacement firm Challenger, Gray & Christmas Inc.
  • The recently released January figures -- which show a total 72,193 jobs were cut -- were the highest monthly numbers in two years.
  • But of the 41 percent of companies reporting job cuts in the latest American Management Association survey, over one-third hired enough people in other capacities to realize net growth in their workforces.
  • Only 19 percent of companies overall wound up with reduced payrolls -- while 54 percent posted net increases.

Experts attribute the latest pickup in layoffs to a developing profit squeeze, exacerbated by financial problems in Asia -- and heightened competition coupled with rising labor costs.

Laid-off employees are reported to be less traumatized this go-around than before, because they can find jobs more easily in today's labor-short economy.

Source: Gene Koretz, "Will Downsizing Ever Let Up?" Business Week, February 16, 1998.


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