Downsizing cuts deep into US work force

Layoff numbers soar in June

By Diane E. Lewis, Globe Staff, 7/6/2001

S workers, reeling from earlier rounds of layoffs, took another hit last month with the loss of 124,852 jobs nationwide, up from 80,140 in May, according to a new survey on job cuts released yesterday.

The federal government also reported yesterday that the number of unemployed who stayed on state jobless rolls for more than five days exceeded 3 million last week for the first time since 1992.

The telecommunications industry led the downsizing trend by laying off more than 27,000 workers in June, bringing the industry's six-month total to 130,442 jobs, according to a monthly report by Challenger, Gray & Christmas, a Chicago outplacement firm that tracks job cuts. Together, the industrial goods and service sectors accounted for 34,161 of last month's cuts.

''The good news for displaced workers, as well as for the economy, is that many of the jobs that are being affected the most by downsizing are still in demand,'' said John A. Challenger, the firm's chief executive. ''This is why the unemployment rate has not increased at nearly the same rate as job cuts.''

Even so, first-time claims for jobless benefits increased to 399,000 last week, up from 392,000 the week before, the Labor Department said.

Federal statistics show that an additional 52,000 people continued to collect benefits last week after receiving initial payments, causing the number of long-term jobless on the nation's unemployment rolls to rise to 3.03 million in June, up from 2.98 million earlier in the month.

In November 1992, during a period marked by economic uncertainty, such claims rose to 3.04 million.

Labor market specialists said unemployment will probably rise in future months even though purchasing orders to US factories climbed higher in May, by 2.5 percent, than at any other time this year.

''The news tends to get worse in labor market terms even when it may be getting better in the rest of the economy,'' said Wayne Ayers, chief economist at FleetBoston Financial Corp. ''We are actually seeing signs in other areas such as manufacturing orders that the worse might be over, but labor market statistics tend to be lagging indicators.''

Another reason layoffs are expected to continue, he said: Wages have not declined or stabilized. ''That gives employers greater incentive to continue to cut costs by eliminating jobs,'' added Ayers.

Frederick Breimyer, chief economist at State Street Global Advisors, said much of the uncertainty stems from deep losses in the high-tech manufacturing sector, which scaled back purchases and production dramatically as corporate consumers sharply reduced orders for computer hardware, personal computers, and some Internet products.

''During the course of this year, we have witnessed an implosion in tech spending that will be with us through this year and maybe into next year,'' he said. ''This is not related to inflation. It's not consumer led. It's business led, with major financial market overtones, and it is global.

''The good news is that we were not in a recession, but we remain on the edge,'' Breimyer added.

Diane E. Lewis can be reached by e-mail at dlewis@globe.com.

http://www.boston.com/dailyglobe2/187/business/Downsizing_cuts_deep_into_US_work_force+.shtml

-- Martin Thompson (mthom1927@aol.com), July 07, 2001