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Mass layoffs surge in 2008, continue at rapid pace

Thursday, January 29, 2009 , Posted by Linda at 11:06 AM

WASHINGTON – Mass layoffs involving 50 or more workers increased sharply last year, and large job cuts appear to be accelerating in 2009 at a furious pace.

Boeing, Pfizer, Home Depot and other U.S. corporate titans have announced tens of thousands of job cuts this week alone.

Peggy Hillman of National Career Fairs guides job seekers as they queue up for a Peggy Hillman of National Career Fairs guides job seekers as they queue up for a job fair Tuesday

The economy is likely to continue to shed jobs for the rest of this year, even if an economic stimulus bill pushed by President Barack Obama is approved, economists said.

The Labor Department reported Wednesday that 21,137 mass layoffs took place last year, up from 15,493 in 2007. That's the highest annual total since 2001, the last time the economy was in recession, and the second-highest since the department began tracking mass layoffs in 1995.

More than 2.1 million workers were fired as a result of last year's mass layoffs, the department said.

Large corporations continued to hemorrhage jobs Wednesday, as Boeing Co. said it would cut 5,500 positions, on top of 4,500 layoffs announced earlier this month. Airlines are ordering fewer planes as air travel declines due to the global economic slowdown.

Time Warner Inc.'s AOL division said Wednesday that it is cutting up to 700 jobs, or about 10 percent of the online unit's work force. IBM Corp., meanwhile, has cut thousands of jobs in its sales, software and hardware divisions in the past week, without announcing specific numbers.

Home Depot Inc., Pfizer Inc. and General Motors Corp. also have announced plans to lay off thousands of workers this week. Companies have announced more than 125,000 layoffs in January, according to an Associated Press tally.

The financial markets, meanwhile, rose Wednesday on news that the government may take additional steps to assist the nation's ailing banks. The Dow Jones Industrial average rose nearly 201 points, or about 2.5 percent, to 8,375.45.

Still, the current recession, which began in December 2007, likely will result in greater job losses than any downturn since the late 1950s, said Adam York, an economic analyst at Wachovia Corp.

Total employment will drop by 3.5 percent by the end of this year, a sharper decline than the 3.1 percent fall that took place during the steep 1981-1982 recession, York said. Employers cut 2.6 million jobs last year and will likely eliminate more than 2 million this year, he said.

One indication job cuts will continue is that some companies this week have said they will lay off workers without providing additional details.

Government contractor Halliburton Co. said it will reduce its work force, but didn't provide more information. And Target Corp. said it will cut 500 workers sometime later this year when it closes a distribution center.

President Barack Obama sought to use the mounting employment losses to ramp up support for his $825 billion economic stimulus package, which the House is expected to vote on later Wednesday.

"These businesses that are shedding jobs to stay afloat — they cannot afford inaction or delay," Obama said Wednesday. "The workers who are returning home to tell their husbands and wives and children that they no longer have a job, and all those who live in fear that theirs will be the next job cut, they need help now."

Meanwhile, the Federal Reserve acknowledged Wednesday that the economy is continuing to deteriorate and signaled it would use unconventional tools, such as buying longer-term Treasury securities, to cushion the fallout. Such a move could help drive down mortgage rates and provide help to the stricken housing market, economists said.

The Fed also kept the key interest rate it controls at nearly zero and said it would remain at that level for "some time."

Illustrating the worldwide pain being felt during the recession, the International Monetary Fund said Wednesday the global economy will grow by only 0.5 percent this year, the slowest since World War II and a sharp reduction from its projection of 2.2 percent growth in November.

The world economy is hamstrung by potential credit losses of $2.2 trillion stemming from U.S. mortgages and other loans, the IMF said.

"A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit makers are unclogged," the IMF said.

The Labor Department said that, on a seasonally-adjusted basis, mass layoffs did drop slightly in December, to 2,275 from 2,328 in November. Mass layoffs are job cuts of 50 or more by a single employer.

But on a nonseasonally-adjusted basis, mass layoffs soared in December to 3,377, up from 2,167 a year earlier, costing 351,305 people their jobs. The government seasonally adjusts many economic indicators to smooth out fluctuations resulting from weather changes, holidays and other predictable factors.

Twelve industries reported record high levels of job losses, the Labor Department said, including construction, mining, manufacturing, transportation services and financial services.

On Tuesday, specialty glass company Corning Inc. said it would cut 3,500 jobs, or 13 percent of its work force, as demand slumped for glass used in flat-screen televisions and computers.

On Monday alone, roughly 40,000 more U.S. workers got the grim news, including 5,000 workers at heavy equipment maker Caterpillar Inc. Pharmaceutical giant Pfizer, which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, each said they will slash 8,000 jobs.

The government will provide another snapshot of the labor market Thursday when it reports how many people filed first-time claims for jobless benefits last week.

Economists forecast that about 575,000 initial claims were filed, down from 589,000 the previous week. Last week's figure matched a 26-year high reached in November, though the labor force has grown by about half since then.

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