January Job Cuts Point to Changing Employment Marketplace

A recent report from outplacement consultancy Challenger, Gray & Christmas shows an uptick of job cuts in January compared to December. The total remains lower than the same month a year ago.

Source: AndreyPopov / iStock / Getty

However, it is where the job cuts are taking place that has implications going forward.

Lots of Layoffs

The nation’s employers announced plans to cut 44,653 jobs in January, 37.7 percent more than the 32,423 cuts announced in December, according to the Challenger firm.
While January cuts were up from the previous month, they were 2.8 percent lower than the same month one year ago, when 45,934 cuts were announced.

Reading the Tea Leaves

But these numbers don’t suggest an economic downturn.
“Many companies are enjoying relative financial health and a strong economy right now. The good news for those who are finding themselves separated from their previous companies is that employers are scrambling to find talent,” said John Challenger, chief executive officer of Challenger, Gray & Christmas.

Changing Workplace

Nevertheless, change is afoot in several industries.
The retail industry leads all sectors with 15,378 job cuts, 34.4 percent of the announced cuts last month. Retailers cut 31.6 percent fewer jobs last month than in January 2017, when 22,491 were recorded. Last January, retailers saw the highest single-month total since 53,968 retail cuts were announced in January 2009.
The consumer products sector announced the second highest number of job cuts last month, with 7,158, while health care and products companies announced 6,531 layoffs.
“Retail, consumer products, and services are all sectors ripe for automation. This may spell a loss of jobs in the short term, but could create better, higher-paying jobs going forward,” said Challenger.
The services sector announced 3,212 cuts in January, while companies in the transportation sector announced 1,472 cuts last month.

Impact of Tax Law

“It remains to be seen what impact the passage of tax legislation will have on companies’ staffing plans. We’ve seen a number of companies announce one-time bonuses or a raise to their minimum wages. Other companies are planning new investments, and several have pledged new jobs,” said Challenger.
According to Challenger tracking, seven companies have announced plans to add over 37,000 new jobs, so far. This includes Apple’s announcement of creating 20,000 new jobs and Starbucks pledge to hire 8,500 new workers.
Nearly 180 companies have announced some sort of investment, either through bonuses to employees, increased wages, new jobs or new facilities.
In fact, Challenger reports that nearly 60 companies have announced they are raising wages for their workers, typically to around $15 per hour.