EconoMonitor

The Wilder View

Firing at the big firms has only just begun

We have all heard the ominous announcements regarding job cuts going into 2009. The ADP report paints an even scarier picture: it is unlikely that the labor market has internalized much the announced job cuts over the last few months; and the list is long.

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The table above lists the Wall Street Journal’s compiled job cut announcements for the fourth quarter of 2008 and the first quarter of 2009 (data through through January 8, 2009).
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Notice that most of the announcements are coming from large firms, with likely more than 499 employees. The ADP report that was released on Wednesday revealed the following: that the December’s estimated private payroll loss was concentrated in the small and medium-sized firms, with 1-49 and 50-499 employees, respectively. Large firms have cut payroll at a much slower rate.
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Note: The ADP adds value – even though the estimated loss in private payroll, -693,000, was well below the BLS’ reported private nonfarm job loss, -531,000 – because the BLS report does not break down payroll by firm size, rather by industry.
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The chart lists the monthly contributions to total ADP private nonfarm payroll growth from small (1-49 employees), medium (50-499 employees), and large (>499 employees) firms spanning the years January 2001 through December 2008. The contribution to payroll growth coming from the small and medium-sized firms is usually greater than that of the large firms. However, since September, there has been a big and negative drop in the payroll of these firms relative to the large firms.

The small and medium layoffs don’t make the headlines. The job market could be quite bleak in 2009, when the larger firms start to cut into their workforces, as announced.
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Originally published at the News N Economics blog and reproduced here with the author’s permission.

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