Published on: Jan 7, 2021
Planned job cuts announced by U.S.-based companies jumped to 77,030 in December, up 18.9% from the 64,797 in November, according to a report released Thursday by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
December’s total is 134.5% higher than the 32,843 cuts announced in the final month of last year. In 2020, 2,304,755 job cuts were announced, 289% higher than the 592,556 cuts announced in 2019. It is the highest annual total on record, and 17.8% higher than the previous record high of 1,956,876 cuts recorded in 2001.
Despite the jump in monthly cuts, the fourth quarter saw the fewest job cuts of the year, with 222,493, down 55.3% from the 497,215 tracked in Q3 2020. It is 74.2% higher than the same quarter in 2019, when 127,687 cuts were recorded. With the exception of the quarterly totals in 2020, it is the highest quarterly total since Q3 2011, when 233,258 job cuts were announced.
“In the final months of the year, companies that may have survived the initial impact of the pandemic in March and April determined staffing adjustments based on increasingly difficult market conditions. While some segments were up, such as warehousing, shipping, financial, and some manufacturing segments, many others were hurt considerably, chief among them Hospitality, Entertainment, and Leisure,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
Which Industries Are Cutting?
Indeed, companies in the Entertainment/Leisure sector, which includes hotels, restaurants, amusement parks, and movie theaters, announced the highest number of cuts in 2020 with 866,046, 5,688% higher than the 14,963 announced in all of 2019.
Transportation, which includes shipping companies as well as airlines, announced the second-highest number of cuts this year with 199,599, many of which were due to the downturn in air travel.
Meanwhile, Retail, which has led all industries in job cut announcements in 2017, 2018, and 2019, announced the third-highest number of cuts with 184,886, 139% higher than the 77,475 announced in 2019.
“Retail has been pivoting over the last five to six years, shutting record numbers of brick-and-mortar stores, as consumer behavior shifts online. The pandemic dramatically accelerated this change, with big winners being Retailers with existing online ordering and delivery infrastructure,” said Challenger.
Retail also announced the highest number of hires this year with 1,182,776 of the record 3,190,862 hiring announcements tracked this year. The majority of these hires occurred at grocers in March and April.
According to the Bureau of Economic Analysis, disposable personal income decreased by $218 billion in November and consumer spending decreased 0.4%.
“As the economy continues to shed jobs with hundreds of thousands of initial jobless claims each week, consumer spending will continue to drop. Retail and leisure activities will suffer further, especially before widespread vaccinations give Americans confidence to spend money, and companies the ability to create more jobs,” said Challenger.
Media & News Cuts
The Media sector announced the highest job cuts on record in 2020, according to Challenger tracking. This industry, which includes television and movie production, news, and advertising, announced 30,711 cuts. This is 201% higher than the 10,201 cuts announced in the sector in 2019. It is 6% higher than the last record number of 28,803 announced in 2008. Of the media cuts announced this year, 16,160 occurred in broadcast, digital, and print news.
Why Are Companies Cutting?
Of the 30 industries Challenger tracks, just four have announced fewer job cuts this year than last. The Chemical industry announced 332 cuts in 2020, down 73% from the 1,209 in 2019. Financial firms announced 46% fewer cuts in 2020, with 13,677 compared to 25,148 in 2019. Pharmaceutical companies announced 2,131 cuts in 2020, down 83% from the 12,270 announced in all of 2019. Utilities announced 1,866 cuts in 2020, down 21% from the 2,367 announced in 2019.
Of the 2,304,755 cuts announced this year, 1,109,656 were directly due to COVID-19. Another 445,182 were attributed to market conditions. Demand downturn was the cause of 257,640, while 106,102 were due to closings. Bankruptcy was cited for 15,781 cuts.
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