More Bad News for the Labor Market
More bad news for the labor market.
Nearly 1-in-10 companies are planning layoffs in the next three months. That’s on top of the more than a quarter of US companies that have already let workers go in Q4.
Last month, companies announced tens of thousands of layoffs. Disney announced plans to lay off 28,000 employees. US airlines are poised to let up to 50,000 workers go. Allstate plans to cut around 3,000 jobs. Royal Dutch Shell will eliminate around 9,000 jobs globally. German auto-parts supplier Continental AG announced it will cut or shift some 30,000 jobs worldwide. Halliburton plans to eliminate an entire layer of management. Marathon Oil is set to launch round two of job cuts, shedding another 2,000 jobs. And Goldman Sachs said it will cut its workforce by about 400 jobs.
But that’s not the end of the pain. According to a survey of human resource executives by the Conference Board, 9% of US companies plan layoffs in the fourth quarter. That’s on top of the 29% that have already cut staffing this quarter.
Meanwhile, 13% of firms plan major restructurings this quarter that could include layoffs. That was not counted in the 9%.
Things also look bleak for the millions of unemployed workers looking for jobs. Fifty-seven percent of companies have restricted hiring to “critical roles” this quarter, and another 9% of HR executives say they plan to implement similar restrictions during Q4. Twenty percent have implemented outright hiring freezes.
And for those of you who still have a job, don’t expect to see big pay increases anytime soon. Thirty-one percent of companies have already deferred raises or bonuses this quarter and another 8% say pay deferrals are in the works. Eleven percent of companies have cut pay this quarter. Fifteen percent have slashed bonuses and 11% plan to do so by the end of the year. Fourteen percent of companies have cut work hours in Q4.
Despite talk of a recovery, as ” Conference Board economist Frank Steemers put it, “The pain is not over.”
According to the Bureau of Labor Statistics, the number of job losses categorized as permanent grew by 345,000 to 3.8 million people in September. In other words, nearly 4 million unemployed Americans have no prospects of returning to work.
The growing ranks of the long-term unemployed bear this out. The number of people out of work for 27 weeks or more grew to 2.4 million in September, according to Bureau of Labor Statistics data. That’s the highest number since the beginning of the pandemic. The last time we saw this kind of jump in long-term unemployment was during the Great Recession.
In a recent podcast, Peter Schiff said he thinks a lot of the people who have gone back to work in recent weeks will eventually find themselves in the unemployment line again.
I think a lot of these people who have been recalled, who have come back to work, I think ultimately their employers are going to realize, after the fact, that they don’t really need a lot of these workers, and a lot of these workers are going to be re-fired. Except next time it is going to be permanent, not temporary.”
There is also the looming prospect of more corporate bankruptcies and business closures, putting more pressure on the jobs market. More than 420,000 small businesses have closed their doors permanently since the beginning of the pandemic. That represents a staggering 7.1% of all small businesses. Brookings estimates that the US economy has lost some 4 million jobs in the small business sector “that will only return with the creation of new businesses.” On top of all this, Goldman Sachs projects even more permanent job losses coming down the pike as a wave of mergers, acquisitions and corporate takeovers sweeps through the economy.
The rhetoric of a quick and decisive economic recovery seems to be at odds with realities out there in the real world.