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News: Analysis & Commentary: Downsizing
Go Ahead, Lay Me Off
Losing a job is no big worry in today's growing economy
Are companies toting up big earnings gains through layoffs? That would seem to be the case, according to a widely watched survey by outplacement consultants Challenger, Gray & Christmas Inc. Its latest report showed announced layoffs up 42% in the first six months and, if the pace keeps up, layoffs will exceed 700,000, setting a record for this decade. "The rate of churning will intensify as Corporate America responds with increasing speed to new product introductions, global competition, and Wall Street's emphasis on quarterly profits," says Jeffrey A. Joerres, chief executive of temporary help firm Manpower Inc.
It's no picnic for workers, but the restructuring helps profits and ultimately the economy. And companies still hire. Only, as they strive to become more efficient and globally competitive, they look for workers with different skills. And with unemployment at just 4.3%, the displaced are easily reemployed--93% at the same or better compensation. The Bureau of Labor Statistics reports that the average number of weeks a worker remains unemployed has dropped to an annualized 13.6 through June, compared to 14.5 in 1998. "Job creation and job destruction are one of the upsides of the U.S. economy," says Ezra D. Greenberg, senior economist at Standard & Poor's DRI.
What's more, multinationals, such as Procter & Gamble and Gillette Co., have been increasingly inclined to do their layoffs overseas. So U.S. companies reap the profits and Americans keep the jobs.By Richard A. Melcher in ChicagoReturn to top
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