Layoffs run over 10,000 mark in Austin area

Glenn Trent Special To The Austin Business Journal

Close to 10,000 people in the Austin area learned the meaning of the word layoff firsthand in the first quarter of the year.

It's a number set to jump considerably because of layoff announcements in April and May by Dell Computer Corp. [up to 4,000], BMC Software Inc. [440] and Zilog Inc. [100]. The toll will hit 15,000 before 2001 reaches its midpoint.

The actual unemployment rate is rising slowly, but inexorably. The March unemployment rate for the Austin-San Marcos area's civilian labor force moved to 2.5 percent; this is in comparison to a rate of 2 percent at the same time last year.

The rates equal 19,221 people out of work by March 31, with 14,458 for the same quarter in 2000. For Austin itself, the rate for the city stands at 2.8 percent, compared with 2.2 percent in March 2000; 11,407 people this year, 8,414 in 2000.

Although a laid off employee can file for unemployment any time after leaving the company, unemployment claims aren't paid, or appear as initial claims data, until severance packages run out.

With severance packages of four weeks to two months, many of the workers laid off in the first two months of the year are only now reaching for unemployment applications or receiving checks -- 1,800 in January, 4,732 in February according to TWC layoff statistics.

"We are seeing a rise in the initial claims for unemployment and in the continued claims for unemployment," says Robert Crawley, economist for the TWC.

"We will see a surge in the initial claims for unemployment claims as soon as severance pay packages start to run out," Crawley says. "How many is still unknown."

Initial claims have already more than doubled when compared with the same period last year -- 5,995 in 2000 and 12,975 this year.

Initial claims for April have jumped -- March had 4,615 initial claims; April had 5,246 of these first time claims for unemployment benefits.

"Even though some of the unemployment claims are from seasonal help, comparatively it is still higher than last year's initial claims in the first quarter. Even the continued claims have shown to be higher than last year," Crawley says.

"March is when the layoffs have started to impact the unemployment rate. Normally, we see the unemployment rate go down; instead we are seeing it go up."

The Austin-San Marcos MSA hasn't seen more than 19,000 unemployed workers since August 1998. The unemployment rate that month was 2.8 percent, with a total labor force of 684,987. Labor force for March this year is shown at 759,972.

What happens next? In the days ahead, the focus will shift from who is laying off to what is Austin doing to help absorb these people back into the workforce.

"We have developed centers to help unemployed people find jobs. One of these would be the Rapid Response Work Group," Crawley says.

"We have special programs to help people to get back to work as soon as possible, so employers do not have to pay higher unemployment insurance premiums," says Bruce Davis, business assistant specialist for the Capital Area Workforce Development Board.

"The sooner people get back to work, the less employers pay in insurance," Davis says.

"We are holding job fairs for experienced workers," says Susan Davenport, director of economic development at the Greater Austin Chamber of Commerce. "The Chamber of Commerce has been inviting the companies that the Austin-based companies outsource from to come to the fairs and help with job placement.

"We are hoping that the workforce will be able to re-absorb the laid off workers," Davenport says.

When will the impact hit? One of the area's largest employers, Dell, has also announced the largest number of local layoffs. Its Feb. 15 announcement of 1,700 employee layoffs was followed this week with the news that 4,000 more employees in Central Texas will lose their jobs.

According to Mike Maher, a Dell spokesman, the average severance package for an employee who was laid off in February was two months of pay and benefits.

"We supplied them with full placement and career counseling. Bonus and profit sharing was given where applicable. Additional weeks pay were based on service, if they signed waivers," Maher says.

"If the layoffs in Austin continue at the magnitude they are going, it will affect the economy. Up until now the layoffs were not significant enough," Crawley says.

"Basically, we will see the digital divide between salary and the price of housing and rent close," Crawley says.

For some companies the layoffs have brought new business. Attorney Dan Castro, who was once corporate counsel to GTE, has had people calling to see what their rights are and ask if there is anything that can be done.

"One has to know how these companies work before you can tell an ex-employee if he has any rights or not," Castro says.

He normally only sees about five cases per year locally and turns away 80 to 90 a year. This year in the first quarter alone he says he has settled two cases out of court, is working on four active cases and considering four more.

"I have dealt with more cases in the first three months of the year than I normally deal with in an entire year," Castro says.

Glenn Trent was the Austin Business Journal spring term news intern from Southwest Texas State University in San Marcos.

http://austin.bcentral.com/austin/stories/2001/05/14/daily.html

-- Martin Thompson (mthom1927@aol.com), May 14, 2001