ANNUAL JOB CUT ANNOUNCEMENTS UP 28.6 PERCENT YEAR OVER YEAR, HIGHEST TOTAL SINCE 2015
Published: Jan 2, 2019
While December was quieter than the previous three months, as employers at U.S.-based companies announced plans to cut 43,884 workers from their payrolls during the month, the year-to-date total is nearly 29 percent higher than last year and the highest total since 2015, according to a report released Thursday by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.
In 2018, 538,659 job cuts were announced, 28.6 percent higher than the 418,770 announced in 2017. This is the highest annual total since 598,510 cuts were recorded in 2015, and the second-highest total since 2011, when 606,082 cuts were announced.
During the final quarter of the year, employers announced 172,601 job cuts, 42.8 percent higher than the 120,879 recorded in the third quarter and 77.4 percent higher than the 97,292 announced in the same quarter last year. This is the highest quarterly total since the first quarter of 2016, when 180,920 cuts were announced (see Table 5).
Last month’s job cut total is 17.3 percent lower than the 53,073 cuts announced in November and 35.3 percent higher than the 32,423 cuts announced in the same month last year.
“We’ve seen a number of companies responding to changing consumer behavior this year, and with tax savings and a strong economy, making staffing decisions ahead of a potential downturn next year,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
“While December did see some fallout from suppliers, especially in the Midwest after GM’s November decision to cut 14,000 workers and close five plants, the big story this year was in Retail,” he added.
Through December, retailers announced 98,563 cuts, 29.5 percent higher than the 76,084 announced last year. Retail cuts comprise 18.3 percent of all announced cuts this year.
Retailers began closing stores en masse in 2017, leading to large-scale layoff announcements through the end of this year. Challenger tracked 3,886 announced store closures from Retailers in 2018, after 9,801 announced closures in 2017.
Major job cut announcements in Retail came from Toys“R”Us, which closed its doors in March. Challenger tracked 30,000 cuts at that time due to the company’s bankruptcy. Meanwhile, Sears has been steadily cutting jobs and closing stores. Using WARN reports and local news stories, Challenger tracked 10,016 planned cuts at Sears and Kmart stores this year.
“While Retailers have made significant job cuts this year, the industry is also doing the bulk of hiring, albeit seasonally. It remains to be seen if Retailers cut these jobs in the New Year,” said Challenger.
In fact, Retailers have announced 699,560 hiring plans in 2018, 439,000 of which were seasonal. Overall, companies announced 714,000 seasonal hiring plans, the most since Challenger began tracking in 2012.
“2018 saw a number of announcements due to shifting consumer demands brought on by new technologies, such as online shopping and mobile services, as well as from companies that are streamlining to incorporate this new tech,” said Challenger.
Companies in the Computer, Electronics, and Telecommunications industries, which make up Challenger’s Technology sector, have cut a total of 86,341 workers, 124 percent higher than the 38,508 announced in this sector in 2017.
“Shifts in technology are ultimately impacting all other industries, as companies pivot to integrate and benefit from these new tools. We’ve seen it in announcements from the Retail, Automotive, and Finance sectors,” said Challenger.
Impact of Tariffs, Government Regulations, and Natural Disasters
The majority of job cut announcements were due to companies restructuring, with 185,931 cuts were attributed to this reason. Another 145,298 were due to closings. Voluntary severance, such as buyouts or early retirement offers, claimed 48,745.
Challenger tracked 798 announced job cuts specifically due to enacted tariffs. Another 1,565 cuts were blamed on government regulations, either federal or local.
Meanwhile, Hurricane Michael was to blame for 800 cuts in Florida. The recent earthquake in Alaska claimed 40 jobs, while 27 workers were cut due to wildfires.
“It remains to be seen, especially as new trade deals continue to be negotiated and tariffs are lifted or further enforced, what the impact on job cuts will be. The large-scale job cut announcements due to these tariffs have yet to be announced, it seems,” said Challenger.
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