Historic job loss data from Challenger, Gray & Christmas gives context to our current economic woes.
By Meridith Levinson, CIO
Challenger, Gray & Christmas has kept tabs on the number of job cuts public and private sector organizations across the U.S. have announced since 1989, and in studying the outplacement firm’s data, I identified a few facts worth discussing:
* Since 1989, the worst job losses occurred during the 2001 recession. That year alone, organizations eliminated nearly 2 million jobs. That’s more than three times the 555,292 jobs that were cut ten years earlier, during the 1991 recession. Last year, organizations red-lined 1.2 million jobs. 2009 is shaping up to exceed that number: As of August, more than a million job cuts had been announced.
* The economic boom of the late 1990s saw the largest job cuts of that decade.
* With the exception of 2005, when job losses increased ever-so-slightly, the number of jobs organizations cut steadily declined from 2001 through 2007. (Of course, the numbers were so high you could argue that they could only go down.) In 2008, the downward trajectory reversed as the economy sank into recession.
* Though the size of job cuts dropped between 2001 and 2007, they were still larger than the job cuts that took place in the 1990s. For example, from 2000 to 2008, there were six years when the number of job cuts announced exceeded 1 million positions. At no time from 1990 to 1999 did cuts exceed 1 million jobs. In fact, at no point from 1990 to 1999 did job losses exceed 800,000 positions.
It’s not a surprise that the U.S. has lost more jobs at a faster pace during the first decade of the 21st century than during the last decade of the 20th century—given the offshoring trend that escalated in 2002, the technological advances that have increased worker productivity, and the economic turmoil that inaugurated the decade. Arguably, the United States has not experienced an economic boom so far this century. The rebound that began around 2005 after the economy fell off a cliff in 2001 was quickly followed by the current recession, which economists say began at the end of 2007.
I find Challenger’s historical data on announced job losses interesting and helpful in establishing context for what we’re witnessing today, but to my layman’s eye, they raise more questions than answers. For instance, how is it that an economic boom—the most significant one of the past 20 years&mdashh;produced the most job cuts of its decade?
The more significant question in my mind, as the nation embarks on what’s expected to be a very long and rocky road to economic recovery, is if we’ll ever experience an economic boom like the one we saw in the halcyon days of the late 1990s. And if we do, are we destined for another crash as precipitous as the one that took place eight years ago? Or are we destined for economic mediocrity?