Newspaper article The Christian Science Monitor

Layoffs: Cloud in Silver Economy? Unemployment Is Low, Yet Job Loss Is Reaching Recession-Level Highs

Newspaper article The Christian Science Monitor

Layoffs: Cloud in Silver Economy? Unemployment Is Low, Yet Job Loss Is Reaching Recession-Level Highs

Article excerpt

Like rain drops while the sun shines, the remarkable economic expansion of the 1990s comes packaged with a dreary companion: a persistently high rate of layoffs.

And by at least one measure, job cuts this year are now on pace to reach their highest level nationally since the massive corporate downsizing of the early 1990s.

Firings are one of the seeming paradoxes of this era of prosperity because they're occurring even as the United States experiences healthy job growth and historically low unemployment rates.

The explanation appears to be in the changing economy - with mergers, restructuring, and deregulation - and shifts in employer- employee relationships as unions weaken and employers feel less obligated to use layoffs as a last resort.

While there is no consensus on whether these shifts are a net negative for American workers, there is general agreement that the impact of these changes will be felt most forcefully if the economy begins to sag.

For now, though, the crosscurrents are more a source of curiosity and surprise than immediate worry.

"It's just one of the ironies that in the face of this kind of economic climate there's still over 1 million people getting laid off" annually, says US Bureau of Labor Statistics economist Lewis Siegel.

The churning forces of today's labor market are illustrated dramatically in Silicon Valley, home of the technology revolution that has been a main engine of the economy's growth.

The last few months have been sprinkled with layoff announcements from some of technology's best-known players.

In June, IBM began cutting 1,100 jobs from its disk-drive operation in San Jose, Calif. Silicon Graphics, famous for its work on Jurassic Park several years ago, announced 1,500 layoffs in August. Raychem Corp. and Quantum also announced local job cuts last month.

At the same time, technology companies are crying out for more skilled labor and chances are good many of those laid off will find new work fairly rapidly.

The hiring and firing pattern of each sector of the economy is different. But mergers, restructuring, deregulation, and a changing competitive landscape seem to be exerting similar forces in the private sector that encourage high turnover, say analysts, who see no end to the pattern.

However, no one expects the economic expansion to continue indefinitely, and some worry about the toll of high layoffs without compensating job growth.

Eileen Applebaum, research director for the left-leaning Economic Policy Institute in Washington, says "the reason all this churn hasn't emerged as a huge social problem is because nearly everyone who loses a job is finding a job."

But she believes the net result of this turnover is a slow erosion of the "social contract" between employers and workers, which means in a recession, employees will have far less of a safety net.

Layoff data do not all agree nor have they been tracked consistently and long enough to provide clear-cut contrasts between this expansion and previous economic cycles.

But most evidence points to a rising number of layoffs in recent years, a trend that puzzles many at a time when the economy, by nearly all other measurements, is so robust.

Since 1993, Challenger, Gray and Christmas, a Chicago-based outplacement firm, has tracked monthly the number of announced job layoffs in the private sector. It draws its data from Securities and Exchange Commission filings, public announcements, and plant-closing notifications required by law. …

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