40,000 U.S. jobs get axed in one day
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| Tue, 01-27-2009 - 5:11pm |

http://seattlepi.nwsource.com/business/397602_economy27.html

40,000 U.S. jobs get axed in one day
Layoffs spread to more sectors of economy
Tuesday, January 27, 2009
Last updated 12:01 a.m. PT
By CATHERINE RAMPELL
THE NEW YORK TIMES
Furloughs, wage reductions, hiring freezes and shorter hours simply did not do enough. A year into this recession, companies across the board are resorting to mass job cuts.
Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced Monday they would cut more than 75,000 jobs in the United States and around the world -- a gloomy start to the workweek for employees anxious about holding their own as the economy sinks.
In the U.S. alone, more than 40,000 workers got the grim news Monday.
Caterpillar, the maker of the heavy equipment, is slashing its payrolls by 16 percent. Texas Instruments said late in the day Monday that it would eliminate 3,400 jobs, 12 percent of its work force.
Jobs began disappearing in home building and mortgage operations early in the recession, then across finance and banking more generally. Now the ax is falling across large swaths of manufacturing, retailing and information technology, eliminating jobs from New York to Seattle.
Just last week, Microsoft Corp. announced its first-ever significant job cuts. A day later, a Seattle analyst predicted that Starbucks Corp., which reports quarterly earnings Wednesday, is likely to announce large layoffs soon. The Boeing Co., which also reports earnings Wednesday, has said it expects to shed about 4,500 jobs in its commercial airplane operations this year.
Because companies such as Microsoft have invested in their workers' skills and knowledge, they usually delay major work force reductions as long as they can.
But with orders for new products and services drying up and financing tight, employers are looking to shrink their costs drastically and are slashing their payrolls, anticipating a protracted decline for business in 2009.
Monday's parade of negative news comes after several months of announcements from other prominent companies such as Citigroup, General Electric, Nokia and Harley-Davidson.
On Wednesday, the tally of layoffs for December will be released by the Bureau of Labor Statistics. Already, the bureau says the U.S. economy has shed at least 2.55 million jobs since the recession began, pushing the national unemployment rate up to 7.2 percent last month.
Washington state's was not far behind, at 7.1 percent.
The latest round of job cuts means more pain for states, as unemployment insurance claims rise and deplete state budgets.
Congress has proposed setting aside $43 billion to assist the states and provide for new and current recipients of unemployment checks. That money is intended to increase the weekly benefit amounts; to extend how long those unemployed can collect payments; to cover more types of workers, such as part-timers; and to help states distribute benefits more quickly.
The proposal is based largely on an estimate that the unemployment rate will rise to 8 or 9 percent this year even with enactment of a broad economic stimulus package now under consideration by Congress, according to the proposal summary from the House Appropriations Committee. But if unemployment soars into the double digits, as some economists expect, the financing will almost certainly not be enough, economists say.
"The economy is deteriorating at a faster clip than even the most dreary forecasts had expected," said Joseph Brusuelas, an economist who, bucking the current job market trend, will soon start a new job at Moody's Economy.com. "At the current trend, $43 billion will not be sufficient, should we breach 9 percent unemployment and maybe reach into the double digits."
President Barack Obama cited the layoff announcements in remarks Monday morning urging Congress to approve an $825 billion economic stimulus package of tax cuts, emergency benefits and public spending projects.
Caterpillar on Monday said a total of 15,000 permanent and temporary jobs, out of about 125,000, will have been eliminated by the end of this week, and it will trim 5,000 more by the end of the first quarter. Should orders for earthmovers and other heavy equipment improve, which some expect as countries around the world start building bridges, highways and other public works to help create jobs, Caterpillar can recall some displaced workers quickly.
Many companies, though, may not rush to increase their staffs even if business begins to pick up. Andrew Stettner, deputy director of the National Employment Law Project, said downturns often motivate companies to restructure business models permanently, meaning jobs they cut now are unlikely to be replaced.
"Structural change is put into overdrive because of the recession," he said, "so who knows for sure how a company like Microsoft will fare?"
Pharmaceutical giant Pfizer Inc. and Sprint Nextel Corp., the country's third-largest wireless provider, said they each will slash 8,000 jobs.
Home Depot Inc., the biggest home improvement retailer in the U.S., will get rid of 7,000 jobs, and General Motors Corp. said it will cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.
After the worst holiday shopping season in decades, retailers are eliminating jobs in droves. More than 66,600 retailing jobs were shed in December, the worst period since the late 1930s.
Home Depot said Monday that about 5,000 of its 7,000 cuts will come through store closings, largely of its upscale Expo chain; the rest will come from corporate support, many at its Atlanta headquarters.
Carol Tome, Home Depot's chief financial officer, said the company had explored ways to save Expo, but "as we kept looking at alternatives, the business kept getting softer and softer."
This report includes information from P-I and Associated Press staff.
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