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Dip in August 2011 Job Cuts Snaps Three-Month Streak of Increases

By SHRM Online staff  9/1/2011
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U.S.-based employers’ announcement that they would trim 51,114 workers from the payrolls in August was a 23 percent decline from July 2011, according to a report released Aug. 31, 2011, by global outplacement consultancy Challenger, Gray & Christmas, Inc. 

The August 2011 decline follows three consecutive increases in the monthly job-cut total that saw layoffs rise from 36,490 in April 2011 to the July 2011 peak of 66, 414—a 16-month high. The August 2011 total, however, was up 47 percent from August 2010, when employers announced just 34,768 job cuts during the month.

Employers have now announced 363,334 planned layoffs so far this year. That is only 2.9 percent below a 2010 eight-month job-cut total of 374,121. The gap between 2010 and 2011 year-to-date job cuts has steadily fallen over the last few months. In March 2011, year-to-date job cuts were 28 percent behind March 2010. By June 2011, the difference dropped to 17 percent. Now, less than 3 percent separates 2011 and 2010 year-to-date job cut totals.

“July job cuts spiked as a result of a handful of surprisingly large job-cut announcements in the private sector,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., in a statement about the data. “It is too soon to tell whether those cuts were an anomaly, but they appeared to be driven by industry- and company-specific trends, as opposed to larger economic ones. In August 2011, the private sector once again took a backseat to the government sector, which saw job cuts surge to the second highest monthly total this year.”

Industry Sectors Hit Hardest

In August 2011, government agencies announced plans to cut 18,426 workers from their payrolls. That is nearly double the 9,389 job cuts announced in the sector in July 2011 and not far behind March 2011, the largest government job-cut month of the year with 19,099 job cuts.

The government sector has now announced 105,406 job cuts this year. The next closest sector is retail, which has announced 40,173, including 5,901 in August 2011.

Top Five Industries Cutting Jobs (Year-to-Date)

 2011                                                      2010

Government/Nonprofit*                              105, 406                                              112,378

Retail                                                              40,173                                                30,805

Aerospace/Defense                                         28,431                                               10,538

Financial                                                          22,846                                               17,220

Pharmaceutical                                               18,386                                                37,265

*Through June 2011, education and nonprofit job cuts were included in the category

Government/Nonprofit. Henceforth, job cuts in these categories will be reported separately. 

Copyright 2011. Challenger, Gray & Christmas, Inc.

“Unlike previous months, the government job cut announcements in August 2011 were not dominated by state and local agencies,” noted Challenger. “Instead, the federal level led the way with heavy reductions among the civilian and officer ranks across three branches of the military.”

Challenger said that more workforce reductions at the federal level are undoubtedly coming down the road, with Congress and the White House under immense pressure to cut federal budgets. “While the heaviest cuts are due [to come] in 2014, we will probably begin seeing some fallout starting this year and into 2012,” he said.

“Furthermore, while state and local agencies saw fewer cuts in August 2011, they are not exactly out of the woods in terms of the budget issues they face,” Challenger added. “Many states are still struggling with high unemployment and falling home ownership, which are taking a huge bite out of tax revenues for states and cities. And most can expect fewer federal dollars that are needed to prop up their finances.

 “Meanwhile the private sector is still being hampered by low consumer and business spending,” Challenger said. “While we do not see any indication of a sudden resurgence in private-sector job cuts, conditions definitely are not ideal for hiring. We expect hiring to remain slow through the end of [2011] and into 2012.”

That is not to say there is no hiring, he conceded. “Government surveys of employers show that they are hiring more than 4 million new workers per month. It just so happens that employers are losing about 4 million workers each month to layoffs, terminations, retirements, and other voluntary and involuntary departures. As a result, the net change in employment is not very impressive.”

Quick Links:

More Layoffs, Slow Hiring Expected at Close of Third-Quarter 2011, SHRM Online Staffing Management discipline, Sept. 1, 2011

Layoffs Rise, Hiring Expected to Decline in August, SHRM Online Staffing Management discipline, Aug. 4, 2011

Federal Debt Deal to Affect U.S. Employers Eventually, HR News, Aug. 3, 2011

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