Job Cuts Fall To Lowest Monthly Total Since June 1997, Lowest YTD On Record
Published September 2, 2021
U.S.-based employers announced 15,723 job cuts in August, down 17% from the 18,942 cuts announced in July. Last month’s total is the lowest since in June 1997, when 15,091 job cuts were announced, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
August’s total is 86% lower than last August, when 115,762 cuts were announced.
So far this year, employers have announced plans to cut 247,326 jobs from their payrolls, down 87% from the 1,963,458 jobs eliminated through the same period last year. It is the lowest January-August total on record. The second lowest occurred in 1997, when 260,798 cuts were tracked through August.
“Companies are much more concerned about their talent getting poached than with finding ways to cut staff. They are in full retention mode,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
Industries with the most layoffs
August cuts were led by companies in the Health Care/Products sector, which announced 2,259 cuts. This industry includes hospitals and other health care facilities, as well as health care products manufacturers. Hospitals have struggled with costs since the beginning of the pandemic as revenue-generating elective procedures get cancelled. Others are closing down skilled nursing units due to a shortage of talent.
“The ongoing downturn in supply of labor may very well speed up the adoption of robotics for many companies. While care-related positions are not likely to be replaced, any process that is repeatable, routine, and programmable could be automated, and would help alleviate the shortage of talent,” said Challenger.
The Automotive sector announced the second-most cuts in August with 1,665, still plagued by a semiconductor shortages causing plant shutdowns and stoppages. The industry is also dealing with pivots to electric or autonomous vehicles. The Energy sector followed with 1,641 cuts, similarly impacted by shift to renewable, but also the stiff competition and high costs associated with renewable is causing these companies to scale back or shutter.
Reasons for company job cuts
Market conditions were cited for the most cuts this year with 48,103, followed by store, unit, or plant closings, which accounted for 47,142. A downturn in demand caused 45,146 cuts this year, while “restructuring” was cited for 43,407.
Job cuts due to an acquisition or merger are up 75% this year compared to last year. So far in 2021, 11,981 job cuts were announced for this reason, compared to 6,848 through the same period last year. It is up 37% from the 8,755 cuts announced for this reason in all of 2020.
Companies cited bankruptcy for 2,278 cuts in 2021.
Seasonal holiday hiring announcements have begun
While job cuts are at record lows, hiring announcements have picked up. In August, employers announced plans to hire 94,004 workers, 80,000 of whom are seasonal for the holidays. In August, Walmart announced plans to hire 20,000 supply chain positions, Michaels Stores announced plans to hire 20,000, up from 16,000 in 2020, and the United States Postal Service announced it would hire 40,000 new workers for the holidays.
Challenger continues to follow losses in the News industry, which is tracked as a subset of Media cuts. Through August, Newsrooms have announced 1,027 job cuts, with 18 occurring last month. News cuts are down 93% from the 14,626 announced through August last year.
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Turnover is becoming a plague
High quit rates, workers poached: Employers aren’t just having a hard time attracting employees. They’re struggling to hold onto them. “It really is a war for talent.”
Published September 21, 2021
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Turnover is getting worse across certain sectors and types of jobs, with quits rates at record highs in health care and retail. https://t.co/DetKYnx8Qk
— Crain’s Chicago Business (@CrainsChicago) September 23, 2021