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January Job Layoffs Highest in 2 Years

Employment: Figure casts doubt on the theory that weather was mostly to blame for last month's jump in the jobless rate.


America's employers began 1996 with the biggest one-month binge of layoffs in two years, announcing the elimination of 97,379 jobs, a consulting firm reported Tuesday.

The layoff total deepened concerns that the job market is significantly weakening and isn't just suffering the short-term effects of the frigid winter across much of the country. Last week the government reported that the U.S. unemployment rate rose to 5.8% in January from 5.6% in December, but many analysts initially placed most of the blame on the weather.

Economists in general still downplay the possibility of the nation falling into recession, noting that one of the usual precursors--rapid inflation--has not emerged. Still, "I'm betting that we'll see slower growth, with unemployment continuing to rise," said Dean Baker, an economist with the Economic Policy Institute, a liberal think thank in Washington.

The biggest layoff included in January's total was the 40,000-job cutback at AT&T Corp., the nation's largest corporate retrenchment in 2 1/2 years. Even without AT&T, the January total would have exceeded December's tally of 55,237.

At the same time, layoffs have generally been rising since the summer.

Recent layoffs "represent long-term decision making, and they do create a lot of consternation about what is happening with employment and downsizing," said John A. Challenger, executive vice president of Challenger, Gray & Christmas Inc. His Chicago-based outplacement firm compiles the monthly layoff figures.

Challenger noted that two industries expected to enjoy rapid employment growth in coming years--telecommunications and computers--turned out to be the layoff leaders last month. Along with the AT&T cutbacks, the figures include the announced layoffs of 7,900 workers at Unisys Corp., 2,250 at Quantum Corp. and 1,300 at Apple Computer Inc.

Challenger said many big telecom companies are cutting jobs as they prepare for industrywide deregulation. Although he expects emerging, entrepreneurial telecom firms to pick up the slack in employment, Challenger said many of the new jobs will be more demanding, and will offer lower pay and benefits, than the positions eliminated at established telecom giants.

The heavy computer layoffs were blamed on the continuing volatility in a fast-changing industry where companies' fortunes hinge on their latest products. Another major source of layoffs was the retailing industry, which suffered through its worst holiday shopping season in years.

The layoffs announced in January figure to drag down the job market for months, even years, to come. Many firms carry out layoffs over a long period instead of abruptly making all of their cuts at once. AT&T, for instance, plans to carry out its 40,000 layoffs over three years.

Last month's layoff total was 2 1/2 times higher than January 1995's tally of 38,962. It was the highest level since January 1994, when 108,946 cuts were announced. More than 1 million layoffs have been announced since January 1994.

The news is bad even for workers who hang on to their jobs because their bargaining position will be undermined. "As the labor market weakens, the opportunity for workers to get wage gains is going to dwindle rapidly," Baker said.

The Challenger figures, compiled from announcements made by large companies, are thought to significantly understate the overall toll of layoffs in the economy. In practice, many big companies wind up eliminating more jobs than they initially anticipate.

In addition, the Challenger survey does not pick up layoffs at small and mid-size firms, which typically do not publicly disclose their job-cutting plans.


Labor Secretary Robert Reich proposes rewarding good "corporate citizenship" with tax breaks. D2


Grim January

Layoffs announced by big companies in January were the highest since January 1994. Layoffs announced over the last two years total 1.05 million. Announced layoffs*, in thousands:

Jan. 1994: 108.9

Jan. 1996: 97.4

* Do not include small and mid-size firms.

Source: Challenger, Gray & Christmas Inc.

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