New layoffs make job reductions permanent
A new wave of layoffs is washing over the U.S. as several big companies reassess staffing plans and settle in for a long period of uncertainty.
MGM Resorts International and Stanley Black & Decker Inc. recently told some employees furloughed at the outset of the coronavirus pandemic that they wouldn’t be put back on the payroll. And companies bringing back the majority of furloughed workers, including Yelp Inc. and Cheesecake Factory Inc. are making reductions as they adjust to the new reality that many coronavirus-related closures won’t be resolved this fall.
More fresh layoffs at big employers loom. A day after Salesforce.com Inc. posted record quarterly sales, the business-software company notified its 54,000-person workforce that 1,000 would lose their jobs later this year.
Coca-Cola Co. said Friday it plans to lay off some employees and offer voluntary buyouts to about 4,000 employees in the U.S. including Puerto Rico as well as Canada.
American Airlines Group Inc. and United Airlines Holdings Inc. have said more than 53,000 workers could be affected in about a month if the airlines don’t receive another infusion of funds from the government.
The outlook reflects an acceptance by corporate executives that they will have to contend with the pandemic and its economic fallout for a longer period than they had hoped.
Some CEOs and other executives suggest more pain is ahead, said David Rubenstein, co-executive chairman of Carlyle Group, a private-equity firm with around $220 billion in assets under management.
“Privately, some of them may hint that they probably won’t need as many workers as they once thought,” Mr. Rubenstein said. “They’ll have to reinvent their businesses in ways that they hadn’t done before.”
The latest layoffs come as there have been glimmers of an economic recovery.
Many employers have rehired some workers after cutting jobs this spring, pushing the U.S. unemployment rate down to 10.2% in July after it nearly touched 15% in April, according to federal data.
Some salaried workers and executives are seeing their pandemic pay cuts restored. That has led some to theorize that the economy is increasingly proceeding on two tracks, as companies modifying operations or shutting down entire divisions determine that they need fewer people, especially lower-income workers.
A survey of human-resources employees released by Randstad RiseSmart found nearly half of U.S. employers that furloughed or laid off staff because of Covid-19 are considering additional workplace cuts in the next 12 months.
New applications for unemployment benefits, a proxy for layoffs, have hovered around one million a week for much of the summer. A drop in jobless claims one week tended to be snuffed out within a few weeks when claims rose again.
Summer unemployment has improved since March, when a peak of about seven million people applied for jobless benefits in one week, but the numbers remain stubbornly high.
Economists say the new layoffs reflect a shift in corporate thinking toward a more protracted crisis.
Companies that thought they could either cut wages temporarily or cut costs temporarily or hold on are now finding out that the weakness of the pandemic is now longer than they hoped.
Millions of Americans have been jobless for several months, suggesting it will take a while for the U.S. economy to recover from the damage wrought this spring. The number who were unemployed between 15 and 26 weeks rose to 6.5 million in July, the highest reading for records that go back to 1948, according to the Labor Department. The number of Americans reporting themselves as unemployed because of permanent layoffs was about twice as high in July as in March, when the pandemic struck.