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Despite Seasonal Hiring, 2011 Job Cuts Outpace 2010 Totals

By Theresa Minton-Eversole  12/2/2011
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The number of planned layoffs announced in November 2011 remained virtually unchanged from October 2011, as U.S.-based employers reported job cuts totaling 42,474, according to the latest report on downsizing activity from global outplacement firm Challenger, Gray & Christmas, Inc.

November 2011 job cuts were down 13 percent from November 2010, when employers announced plans to cut 48,711 jobs from their payrolls. November 2011 marks the second consecutive month of lower job cuts after surging to a 28-month high of 115,730 in September 2011. Still, with one month remaining in 2011, job cuts for the year total 564,297, surpassing the 2010 year-end total of 529,973. The 11-month total is 13 percent higher than the 497,969 job cuts announced over the same period in 2010.

Government, Financial-Sector Downsizings

November 2011 job cuts were once again dominated by government-sector job-cut announcements, which totaled 18,508 or 44 percent of all job cuts during the month. It is the eighth time in 2011 that this sector led all others in monthly job cuts. Government agencies have announced 180,881 job cuts in 2011—30 percent more than the 138,979 job cuts announced by these employers through November 2010. A significant percentage of these governmental job cuts were made to U.S. armed forces civilian staff, and more are expected in the coming months because of draw downs in Afghanistan and Iraq.

“Over the past six months, we definitely have seen a shift away from the heavy government job cuts at the state and local level toward increased job cuts at the federal level,” said John A. Challenger, CEO of Challenger, Gray & Christmas. “The worst may be yet to come, as cutbacks spread from the military to every other agency in Washington. They will all be targets for cost-cutting,” he added.

The other sector still at risk for heavy downsizing activity is the financial services industry, according to Challenger. Financial firms announced 1,681 job cuts in November 2011, bringing the year-to-date total for the sector to 56,191. That is up 162 percent from 21,430 financial cuts by this point in 2010.

“Job cuts in the financial sector are still well below the recession high of 260,110, which was the year-end total in 2008,” said Challenger. “However, even as other sectors begin to enjoy the fruits of the recovery, these firms remain on very thin ice. The ongoing threat from the European financial [crisis] looms large over Wall Street, while retail banks continue to struggle in the wake of the housing market collapse,” said Challenger.

Uptick in Retail Hiring

Retail is the next largest job-cutting sector in 2011, with 48,338 announced layoffs to date. That is up from 33,814 a year ago. These employers announced 2,285 job cuts in November 2011, down from 4,264 in October 2011. 

“The end of the year is typically when we see much lower retail downsizing, since this is when these businesses are actually hiring in droves, as they bulk up their staffs for the holiday season,” Challenger said. “We are expecting holiday retail hiring to be about the same as [in 2010], when employment in the sector grew by about 627,000.”

Between Sept. 1 and Nov. 15, 2011, retailers placed more than 72,000 new online job ads for salespersons and sales managers, according to the business intelligence firm WANTED Analytics. Online ad volume for this sector increased 44 percent compared to the same time period in 2010 and 38 percent vs. 2009. However, hiring is still below pre-recession demand, down 11 percent from the same time period in 2007 when more than 81,000 jobs were advertised online during this Sept. 1-Nov. 15 time period.

According to the National Retail Federation, brick-and-mortar retail stores saw a 7 percent increase in Black Friday sales in November 2011 compared to November 2010, hitting a record high $11.4 billion. Meanwhile, IBM reported that the average amount of money spent per consumer on Cyber Monday increased a whopping 33 percent. As holiday hiring continues and companies grow more optimistic about the sales season, job ads for seasonal and temporary positions are up 17 percent compared to the same time period during 2010.

Theresa Minton-Eversole is an online editor/manager for SHRM.

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