Are Layoffs Threatening the U.S. Economic Recovery?
NEW YORK ( MainStreet) December saw the fewest announced job cuts in 13 years, but January seems to be making up for lost ground . Last year, layoffs were down about 3% from 2012, according to global outplacement consultancy Challenger, Gray & Christmas, Inc. But with 2014 barely underway, many high-profile job layoffs have already been announced.
Retail and technology companies seem to be resorting to the most right-sizing.
Intel has already announced that it will trim 5% of its workforce by the end of the year, totaling some 5,380 workers, while setting aside $200 million for restructuring charges. Hewlett-Packard has admitted that it will be cutting 5,000 jobs on top of the 29,000 layoffs announced last year. The company says it's all a part of an ongoing restructuring program to reduce headcount by 10%.
Dell is on the head reduction radar as well. The Register , a British technology publication, is citing "inside sources" as saying the Austin-based computer company will announce the release of 17,000 or more employees next month. The company has denied any such plans.
Meanwhile, IBM has allocated $1 billion for a "workforce rebalancing charge" in the first quarter, according to CFO Martin Schroeter. This is on top of the $1 billion charge the company took last year to implement massive job cuts.
January is a traditional time for retailers to realign their operations, with 44% of annual store closings since 2010 occurring in the first quarter, according to the International Council of Shopping Centers. JC Penney, Macy's and Target have already announced wide-ranging layoffs and store closings.
JC Penney says it will shutter 33 stores and eliminate 2,000 jobs before the end of May, as well as shift the compensation plans of some 3,000 workers from salary to commissions. Target has yanked healthcare benefits for part-timers and plans to remove 475 workers from the payroll. Sears is shutting down its iconic downtown Chicago flagship store and canning some 1,600 jobs in Canada. On the heels of the company's dismal holiday sales report, retail analysts are expecting more job cuts and store closings from the venerable retailer.
As more of these traditional anchor stores sink, your local mall may be morphing into more of a workout center for walking seniors than a retail hub. Rick Caruso, founder of Caruso Affiliated, one of the largest privately held real estate companies in the country and a top mall developer, says big box business is bleak.
"In 10 to 15 years, the typical U.S. mall, unless reinvented, will be an historical anachronism, a 60-year or so aberration that no longer meets the public's needs, the retailer's needs or the community's needs," he said in a keynote speech at the recent National Retail Federation convention.