Tuesday, January 27, 2009

Black Monday for Workers

By Daniel Politi- Slate
Slate is owned by the Washington Post Co.

It was a depressing Monday for tens of thousands of workers as several big U.S. companies announced massive job cuts that illustrate how the Great Recession is hitting almost every corner of the labor market. The Washington Post says U.S. employers cut more than 55,000 jobs in what it calls "a staggering one-day toll."

The New York Times reports that more than 75,000 jobs around the world disappeared yesterday. The Los Angeles Times adds it all up and notes that 187,550 jobs have been slashed so far this month, which is more than double the number in January of last year. And the pain is far from over. USA Today highlights that "far more job cuts are likely" in the near future, and some economists expect 3 million people will lose their jobs this year.

The Wall Street Journal leads its world-wide newsbox with the Senate confirming Timothy Geithner as Treasury secretary with a 60-34 vote. Now that Geithner is in place, the Obama administration is expected to quickly outline its plan to prop up the financial system, which is expected to have a strong focus on helping homeowners. As early as today, Geithner is expected to announce new rules to limit the influence of lobbyists and special interests in determining who will get help from Uncle Sam.

Job losses are nothing new as companies have been laying off workers for more than a year. But these losses were once concentrated in companies related to the housing and finance industries. "Now the ax is falling across large swaths of manufacturing, retailing and information technology," points out the NYT.

The WP notes that 22 of the 30 companies that make up the Dow Jones industrial average have cut jobs since October. No other company cut more positions yesterday than Caterpillar, which announced that 15,000 jobs would be eliminated by the end of this week and 5,000 more by the end of the first quarter. Among the other companies that announced job cuts were Sprint Nextel, which shed 8,000; Home Depot, which cut 7,000; and Texas Instruments, which made 3,400 positions disappear.

And that's only part of the equation. USAT points out that while the huge numbers from big firms may hog the headlines, smaller companies are also hurting and many are also resorting to layoffs in order to stay afloat. Indeed, in a front-page story about the layoff woes at a tile factory in Ohio, the WSJ notes that "tiny firms … have an outsized role in employment." More than half of private-sector workers are employed by companies that have fewer than 500 employees.

The new round of job cuts increased the pressure on Washington to pass the economic stimulus package. "These are not just numbers on a page," President Obama said as he urged lawmakers to act quickly. "These are working men and women whose lives have been disrupted. We owe it to each of them, and to every single American, to act with a sense of urgency and common purpose." But it's becoming increasingly unclear whether even a massive stimulus would be enough to get companies to start hiring.

Economists estimate that the stimulus package would save or create somewhere around 3 to 4 million jobs within the next two years. But, as the LAT points out, 2.6 million jobs were slashed last year, and 2 million more are expected to go the same way during the first six months of the year. The package "is as much psychological, to get people to think that even if we're in a recession, it's going to be temporary so I don't have to lay people off," an economist tells the LAT.

The NYT also notes that even if business does improve in the next few months, it's unlikely that companies will rush to rehire workers because layoffs often spur companies to restructure their business models. "There is nothing in the economic tea leaves that suggest someone is going to be hiring," one economist tells the WP, "every aspect of this economy is in a free-fall."

Amidst all the depressing economic developments, there was a bit of good news from the unlikeliest of places: housing. The WSJ goes high with new figures that show U.S. home sales increased 6.5 percent from November, representing the biggest one-month jump in almost seven years. But no one thinks this means the market is headed for a comeback since it seems clear that buyers are taking the plunge largely due to the sharp decline in prices as sales of foreclosed homes were partly responsible for this surge. In all, 45 percent of homes sold in December were characterized as "distressed sales."

The recession may be in full swing, but that doesn't mean companies aren't willing to shell out as much as $3 million for 30 seconds of airtime during this year's Super Bowl, reports the LAT. Viewers will even be able to watch 2.5 minutes of commercials with special 3-D glasses. "There is no platform anywhere in the world that is as effective as this one," said Jeffrey Katzenberg, chief executive of DreamWorks Animation. "The Super Bowl is the single greatest shared American event."

But TV advertising on any regular old day is drying up. The WP's Paul Farhi points out that TV viewers in prime time are being subjected to an unusual number of infomercials. "It won't make most economists' radar screens," writes Farhi, "but the rise of such ads might be a leading economic indicator." As the price of airtime continues to plummet now that banks, automakers, and car dealers are cutting back, viewers are getting used to seeing the likes of Vince Offer of ShamWow fame.

If you're looking to charter a private jet for the Super Bowl weekend, there are still plenty available, notes the NYT. "It's sure not 2008 any more," the chief executive officer of Jets.com said.

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