Massive layoffs

zofieDecember 19, 2004

Have you noticed? Within the last two months, many companies have announced huge layoffs.

My question is this Â- are these late layoffs a direct result of a bad economy? Or, is this just normal practice with companies so they can pay their investors in January 2005? How will these layoffs impact our current economic conditions? And will these late layoffs paint a "skewed" picture of our real economic situation?

Because from what IÂm hearing now -- they say our economy is doing well, and expect to do even better in 2005. But how can that be if companies are having massive layoffs?

I honestly donÂt remember that many company layoffs in 2003, for the 4th quarter.

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Maybe in your community. We're suffering from underemployment here; too many companies competing for the same workers is driving salaries up.

    Bookmark   December 19, 2004 at 12:03PM
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Who says "our economy is doing well"? There probably are as many people with opinions on the state of the economy as there are people. And what is good news to one person ("leaner operating costs" are welcome to stockholders) is bad news to someone else (the person who was just laid off to meet those "leaner operating costs").

I think the layoffs are a result of many factors. Certainly business could be better in lots of places, but I see more of a lack of hiring than laying off. Mergermania still is alive and well, with the attendant layoffs which provide much of the savings expected of the merged company. Many larger companies are outsourcing many of their functions (usually offshore), idling American workers.

While I certainly believe that we can't employ everyone the same way for their entire careers (how many buggy-whip manufacturers does one need nowadays?), I think the layoffs are somewhat ominous. In an economy driven by consumption (and, most recently, kept alive by consumer debt), I don't think it's a good idea to starve the engine by laying off people and/or moving them to jobs that don't pay a living wage. This eventually will come back and bite American business in the backside. But, by then, the CEOs that think this is such a great idea will have parachuted their way to safety ...

    Bookmark   December 20, 2004 at 9:25AM
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The national unemployment rate has basically been steady for the last five months or so, hovering a 5.4 to 5.5 percent, and is slightly lower than the first half of 2004. The employment rate showed an increase of 483,000 in November.

The unemployment rate in 2003 averaged 6 percent, so unemployment is down this year.

You can get all the statistics from the Bureau of Labor Statistics at

    Bookmark   December 20, 2004 at 12:56PM
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Oh yes, fast food and other low-pay service sector jobs are plentiful. The problem with unemployment statistics is that they don't show the fact that we are losing good jobs and replacing them with marginal ones.

    Bookmark   December 21, 2004 at 3:05AM
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Good point Cowboy. Because that is exactly what is happening.

    Bookmark   December 21, 2004 at 9:56AM
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Actually, statistics again bear out that this is NOT "exactly what is happening." Employment in the hospitality grouping of the service sector which includes fast-food jobs showed a .34 percent increase last month, but there were increases in other non-farm employment sectors such as construction, education, and production of goods.

Wages have increased as well, though slowly...average private salary is up $1.25 weekly since last year.

Again, statistics at

There may be "massive layoffs" in your community, but that is not the national trend. The economy for now is slowly improving, though I predict with the soaring deficit and irresponsible government behavior and the quagmire in Iraq, we're in for some very rough times in the near future.

    Bookmark   December 21, 2004 at 10:15AM
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A .34 percent increase in the hospitality sector in a single month is a huge deal, and actually it shows that what people see subjectively is true in actual fact: Good jobs are being replaced with worse ones. A .34 percent increase in a single month equates to more than a 4 percent annualized increase in jobs in that sector. That alone could account for most of the job growth for which our government officials are patting themselves on the back. And since we know that the hospitality sector is heavy with low-paying jobs, it's easy to see that the good jobs are going away and being replaced with marginal ones.

An average weekly salary increase of $1.25 for a year doesn't keep pace with inflation, so that can't be looked upon as a lot of consolation either. Higher energy costs alone this year as compared to last are consuming many times that paltry increase.

No argument with your last paragraph; we're definitely on the same page there.

    Bookmark   December 21, 2004 at 3:06PM
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Monthly increases and decreases are actually not all that helpful. Yes, BLS collects this info every month and it's reported in the news. But there are seasonal effects that can have an impact on lots of sectors of the economy and that vary by sector and by season. So .34 in one month does not necessarily mean 4% over a year by any means. Multi-month trends are more useful.

    Bookmark   December 21, 2004 at 3:15PM
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Greetings, all.

Viet Nam was only partially a four-letter word.

Iraq is a four-letter word.

Oil is only a three-letter word.

How many oil people head the U.S. gov't?

Happy holidays, all.

joyful guy

    Bookmark   December 21, 2004 at 3:35PM
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The .34 increase in service jobs is lower than the growth in most other sectors. Only sectors underperfoming it are farm jobs and heavy manufacturing. Professional services, medical care, education, retail, etc. are all showing faster growth than fast-food. Service jobs do NOT account for the national job growth trend, only a part of it. Higher paying jobs have increased at a faster rate.

While the growth in salaries has been modest, it is still growing, and inflation is about as low as it has been for years.

Again, I think a severe check in the economy is ahead, but at present jobs (and not just cheap jobs) and wages are increasing, stocks are up, and most other economic indicators show some improvement, rather than dire conditions at the moment. My state is suffering from underemployment right now, with the state unemployment average right at 5%. In my metropolitan area, it is 2.8% and in some Tennessee counties it is 2.2%. This is driving up salaries in all classes of jobs, and many businesses are finding it very difficult to attract skilled workers. And no, this is not a seasonal trend, but one we've been under for more than a year.

    Bookmark   December 21, 2004 at 6:08PM
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Don't forget that the ratio of dollar to Euro is pretty pitiful right now. $1 = 1,33 euros. It used to be that the dollar was stonger than the euro. I don't know about anyone else but that shows me that the economy is not as good as we would be led to believe.

    Bookmark   December 23, 2004 at 5:47AM
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I have a few individuals in mind right now. Laid off from very skilled trades (welding, metal fabrication). The price of steel is staggering right now, this precludes a lot of work by patrons who can "get by" or simply can't pay the price to have the work done. The people I'm thinking of have both taken "seasonal" jobs at Orange (where they work with laid of high techies, too!), and another now has an additional part time shift at a restaurant. Their spouses work, and now their teenage kids are chipping in with a portion of their meager paychecks, too. They're doing what they have to to keep things on an even keel.

My point is, you can make statistics say whever you want then to say. That's why I essentially pay no attention to them, whatsoever. I simply keep my eyes and ears open and pay attention to what I see happening all around my area. Statistics don't really give an accurate picture of "underemployment"... I can tick off several people I know who've seen major reductions in their earnings in the past year.

    Bookmark   December 23, 2004 at 7:33AM
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That's true about statistics. Also, from what I can tell, there are not really many good statistics that exist on the trading of high-pay for low-pay jobs. You have a lot of raw numbers that focus on different sectors of the economy, but they do not really get at the issue of job quality.

What I suspect is happening is that you do have some good jobs being created, but they are jobs that demand highly specialized training. What you see vanishing are good paying production, assembly, and manufacturing jobs that provided wages high enough to support a family at a reasonable standard of living. Looking at the different sectors, you do not necessarily see that, because manufacturing jobs are being created. The only problem is, the "new" manufacturing jobs are usually non-union ones with low pay and limited or non-existent benefits. Why keep the sweatshops overseas when we can enjoy them right here at home?

Nookie, the worsening dollar/euro exchange rate is mostly a function of the massive U.S. budget deficit and trade deficit. We're spending ourselves into oblivion, both the government and individuals. However, one silver lining of the current exchange rate is that it makes U.S. goods relatively cheaper to consumers in other countries. So, there is an opportunity for U.S. companies to export more products made here, which could in turn help alleviate the trade deficit. However, one problem we all face is that the the big U.S. companies really aren't U.S. companies at all, but are just multi-national conglomerates that happen to have their headquarters here. They couldn't care less whether they make products here or anywhere else, as long as the profit's there. That means it's up to consumers to look at where things are made and be willing to pay a few dollars extra for the domestically-made product, if one is available.

    Bookmark   December 24, 2004 at 1:39AM
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While statistics have limitations, whether of definitions or sample sizes or whateer, it's incorrect to overgeneralize from personal experience. I happen to know some people who've recently gotten excellent jobs at high salaries. But it would be a mistake for me to conclude that everyone who's finished a graduate degree lately has gotten jobs like theirs.

Similarly, it's incorrect to assume that because one knows a few people whose companies have had layoffs, that there are "massive layoffs" going on around the country.

    Bookmark   December 28, 2004 at 5:50PM
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It used to be that US$1.00 would buy about 1.1 Euros, but now it's the other way around - 1 Euro will buy about US$1.33.

One Euro is worth more than One DollarUS - which you rightly said. But when you wrote it, you had it reversed which, with a little more thinking, I'm sure that you'd have got right.

It used to be that the Canadian Dollar would buy about 67 U.S. cents, but recently it's value has increased till now if I trade a Canadian Dollar, I'll get about 82 U.S. cents.

See? If you'd bought Canadian Dollars a year so ago and traded them back now - you'd have made 20% or so on your money.

But my Canadian Dollar will buy fewer of most other world currencies than a year or two ago, as the relative value of both of our dollars has shrunk.

If you're not producing, you're not earning - and you can't buy.

Unless you go into debt - which is exactly what we're doing, on the part of both governments and individuals.

How long can that last?

I'm glad that I'm (76 before the end of this month).

And that I ain't got no grandkids.

Good wishes to all for a great New Year.

joyful guy

    Bookmark   January 5, 2005 at 4:50PM
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I feel sorry for our grandkids too, but I'm sure glad I have a couple

    Bookmark   January 6, 2005 at 8:49PM
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I feel sorry for all the young people, and this includes our sons and grandchildren. I'm glad we are approaching retirement. My son just lost his job (and we're sure it was due to him filing a worker's compensation claim in the fall. They knew he was still having problems with his hands). He had been with this company 14 years and they never even offered to place him in another position. They let him go one week before Christmas because they never wanted to pay him for the holidays. I told my son it was probably because they had already hired someone else, but they have still not filled his position. He had a $100,000 plus job, now he can't find anything making anywhere near that, so he will be going down to $15-$20 an hour if he is lucky. My granddaughter said "does this mean we are going to be poor?" This is what is sad. It not only affects the workers, but the entire family. My DIL hasn't worked in 9 years and she will be going back to work in two weeks where she will get immediate health coverage, just so they can have insurance for the kids.

I heard the economy/stock market will decline until the middle of the year and then pick back up - but who knows what will happen. Our youngest son is trying to get us to move our 401K plan into another plan that is more secure. These are scary times, but you have to have faith in everything getting better.

    Bookmark   January 6, 2005 at 9:51PM
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I don't understand why people don't see how much we are all controlled by this need for health insurance. People take jobs, leave jobs, and keep jobs in many cases primarily for health insurance reasons. Becoming self-employed is an option that's closed off to many people just because they can't afford to leave a group health plan. If you don't think that's true, try to buy a policy for yourself if you take blood pressure medicine or have any other sort of pre-existing condition. And, let's face it, by the time we're into middle age, most of us do have one or two health issues that we've encountered over the years.

People would have many more opportunities available to them if there were some system in place in which individuals were guaranteed to be admitted to a basic health insurance plan of some type. I think it would actually help our economy in the long run, because right now economic activity is restricted by people's need to make sure that they have health insurance.

    Bookmark   January 7, 2005 at 12:39AM
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I heard on the radio the other day that GM announced - was it at the great Detroit Auto Show - that they doubted that they would be building any more auto manufacturing plants in North America.

Said that their major developing markets were elsewhere.

Neglected to mention that they can pay workers there $20./day (or probably less) rather than $20./hour.

If true - that is one more indication of high-paying, rather stable jobs in our area ...

... quietly disappearing into the night.

Good wishes to all for a great New Year.

joyful guy

P.S. So they build the stuff on the cheap elsewhere, but ...

... where are we supposed to get the money to buy the products?


    Bookmark   January 13, 2005 at 3:40PM
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There is that ... but consider also that very few people want heavy industry like car manufacturing in their community. The cost to even propose (never mind construct) a land-gobbling, noisy, chemical-using (and -producing) plant in North America near water or rail lines must be staggering. Couple that with the incentive of cheaper labor elsewhere and GM's statement is, unfortunately, not a huge surprise.

    Bookmark   January 14, 2005 at 10:49AM
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That's an interesting observation, and it's probably correct. No one has a problem using electric power, but no one wants power lines, power plants, or anything else related to its production. I assume that people will still want to be driving cars even though they won't want the plants that make them anywhere nearby.

I guess in the future what we'll do for jobs is you'll fry my hamburger and I'll fry yours, but the only problem with that is that there won't be too many of us living as we do now if the average wage is the inflation-adjusted equivalent of $6 an hour.

    Bookmark   January 14, 2005 at 4:18PM
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Dare I refer to a somewht different topic?

Speaking of noisy, smelly stuff ...

... how about all of that excess packaging ...

... that we then turn into garbage?

Or the stuff that we buy, then throw out while much useful life remains, because we tire of it?

Out to the street on garbage day.

And, in many jurisdictions, when it arrives on the curb, it becomes the property of the municipality thus it's illegal for someone to take some of it to reuse.

And no one wants one of the facilities that deal with *that stuff* nearby, either!

Anyone want to act as "Doc" to not just diagnose, but offer viable treatment for, a sick society?

Have a great New Year, all.

joyful guy

    Bookmark   January 14, 2005 at 4:59PM
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I think the reason why it's so hard to get companies to stop using all of that packaging is that it's a form of marketing. The package is designed not only to contain the product but to sell it.

As far as useless junk products, I have no clue how to get rid of these. Companies make this crap and the store shelves are filled with it. People must buy it. Have you seen the little battery-operated lollipop spinners for kids? These are a personal favorite of mine as a nominee for world's most worthless product. Instead of using his or her hands to manipulate the lollipop, the child puts it in his or her mouth and pushes a button and a battery-operated motor spins the stick, causing the lollipop to spin around in the mouth. Obviously most of these are probably used a few times and thrown out, creating not only a waste of plastic but also countless additional batteries that will slowly leach their toxins into the environment.

The only real solution is for people to stop buying this type of junk, and to demand products that are packaged for easier recycling. Perhaps mandatory deposits on boxes and plastic packages would help encourage people to turn these things in for recycling.

    Bookmark   January 17, 2005 at 1:04AM
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Perhaps mandatory deposits on boxes and plastic packages would help encourage people to turn these things in for recycling.

Better solution is to not even create this junk to be sold. Unfortunately, the U.S. is hooked on selling more and more stuff, so useless products like this (or small home appliances that do one task like make fajitas) get produced in the hopes that it bolsters the quarterly report.

It would help stem the tide if 1) we paid the "real" cost of the petroleum used to create these plastic wonders; and 2) we assessed recycling/disposal fees for everything -- priced the complete lifecycle of a product.

Surely a country that can force people to buy fashionable jeans and makes pariahs of cigarette smokers can figure out how to make wanton consumption "un-cool."

    Bookmark   January 17, 2005 at 9:56AM
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Just after we returned from Korea in the early '60's, having helped a few of hundreds of thousands of refugees begin to get their lives back in order after that horrible Korean War, I said that if there were any things that we did not need, it was an electric knife ... and an electric (actually, battery-operated) tooth-brush.

My ex-'s family gave us both within a year or so!

(I have later come to recognize some advantages to an electric knife.)

Have a great week, all.

joyful guy

    Bookmark   January 18, 2005 at 1:31PM
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I don't think that the solution for all of these problems can be posted here without a huge battle. LOL
The scariest thing right this minute is the failure of this administration to support the falling dollars. south Korea the fourth largest holder of American Debt will no longer support the dollar and will no longer continue to buy our debt. that leaves China, number one. They are furious because their investment is eroding due to the indifference to the dollar by Bush. They are warning the US they also will no longer support the dollar.

As the dollar goes and crashes so does the global economy, although this is less true than it used to be. At any rate this is currently a very serious and frightening situation.

    Bookmark   February 23, 2005 at 9:42PM
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