Private sector gains offset by continued government layoffs
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Jeremy Hobson: On Friday we’ll get the big November employment report from the Labor Department. It’ll give us an idea of how the European debt crisis and gridlock in Washington are impacting job growth here in the U.S.
This morning, we got an early look at the employment picture from the job placement company Challenger, Gray & Christmas. The headline: the number of planned layoffs dropped about a percent from October to November and they’re down 13 percent from a year ago — both good things.
The firm’s CEO John Challenger is with us live from Chicago to talk about this. John, good morning.
John Challenger: Good morning, Jeremy.
Hobson: What do these numbers tell you?
Challenger: Well they do suggest the pace of downsizing continues to be relatively light, in fact we came off a 28-month high back in September, now with two relatively low job cut numbers in October and November.
Hobson: How do your numbers tell you that the European debt crisis is affecting our job market here in the U.S. right now?
Challenger: Well so far the area where that hits hardest would seem to be the financial sector. It was the second heaviest area cutting jobs this month with about 1600+ cuts — but so far for the year 56,000.
Hobson: The financial sector is the second heaviest, the first heaviest being what, government jobs?
Challenger: Government continues to lead the way. Eighteen thousand plus cuts this month — 13,000 of those came out of the military. The government certainly is in a place right now where it continues to every month cut into the gains being made by the private sector.
Hobson: And the government job cuts that we’re seeing have been for the last many months at the state and local level, but as you write in this morning’s report, the federal government is where you’re going to be looking for cuts going forward.
Challenger: It looks like the heaviest government cuts are moving to the federal level. Not only the military, but every other agency in Washington is now more at risk. They’ll all be targets for the cost-cutting. The post office alone could see workforce reductions affecting 200,000 employees, according to some sources.
Hobson: Finally, I want to get your thoughts on one of the big debates going on in Washington. It’s about tax cuts, obviously — both for middle Americans and middle income Americans and also for top earners, and whether those tax cuts will lead to job growth if they’re continued? Have you seen evidence that that is the case?
Challenger: Well certainly they may free up spending power on the part of consumers, although we had a very strong start to the retail season — let’s hope that means more jobs this season for retailers. But long-term it’s really about the deficit. Even the super committee’s triggers only make a small dent in the problem that we have going forward.
Hobson: John Challenger, CEO of Challenger Gray and Christmas, thanks so much.
Challenger: Thank you.