The Coming Pink Slip Epidemic

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Online Real Estate Takes a Hit

Online real estate companies, which have been experiencing growth as home prices decline, say they're forced to cut staff as well. The real estate valuation Web site Zillow announced on Oct. 17 it would cut 25% of its workforce, or 40 positions, citing the recession's impact. "One of the reasons this is so difficult is simply because the business continues to grow," said Rich Barton, Zillow's CEO, in a note posted on the company's Web site.

On Oct. 13, Redfin, an online real estate brokerage, announced a 20% staff reduction as business turned south this month. "October will still be pretty good, then we're headed for a big dip," Redfin President and CEO Glenn Kelman wrote on the Seattle company's blog.

While discount retailers like Wal-Mart Stores (WMT) may ride out the holiday season, specialty stores may not fare as well as consumers facing job losses and lower home equity cut back. Long-ailing Circuit City (CC) is weighing job cuts and the closing of 150 stores to conserve cash, The Wall Street Journal (NWS) reported on Oct. 20.

Consumer Cutbacks on Food

A Circuit City spokesman declined to comment on what he called "rumors." Rival consumer-electronics retailer Best Buy (BBY), which normally adds staff during holiday season, plans to cut seasonal hiring by as many as 10,000 workers this year. Entertainment is also trimming its workforce; Playboy Enterprises (PLA) announced Oct. 15 it would close its DVD division, resulting in the loss of 80 jobs.

Consumers are also cutting back on essentials like food products. On Oct. 14, PepsiCo (PEP), the world's largest snack maker, said it will cut 3,300 jobs after third-quarter profit declines; the company also lowered its forecast for the rest of the year. It's closing as many as six plants and cutting back "overlapping" marketing and sales jobs, Chief Financial Officer Richard Goodman said on a call with analysts. PepsiCo shares are off 25% so far this year.

Industrial and manufacturing firms are also cutting back. Smurfit-Stone Container (SSCC), which makes container board and corrugated packaging, announced on Oct. 20 that it will shut down a pulp mill in Quebec by the end of the month, resulting in the loss of 218 jobs. Danaher (DHR), the maker of Craftsman tools, is closing a dozen plants and laying off 1,000 workers. General Motors (GM) has said it will close plants in Michigan, Wisconsin, and Delaware and cut more than 4,000 jobs. More could be on the way if the company completes a deal to acquire Chrysler.

Health Care Is a Bright Spot

Are there any bright spots on the jobs horizon? "If there are any bulwarks, we can look to health care and energy," says John Challenger, CEO of Chicago outplacement firm Challenger, Gray & Christmas. "Demand won't dissipate." But he says even the outlook for those industries will depend on the effectiveness of various governments' efforts to bolster the economy. In any case, says Challenger, "it's going to get worse before it gets better."

Business Exchange related topics:
Unemployment
Recession Job Search
Wall Street Layoffs
Recession Spending and Investing

Herbst is a reporter for BusinessWeek in New York.