- The Washington Times - Monday, September 24, 2001

The massive layoffs announced by the airline industry last week worsened a darkening employment picture.
More pink slips are coming, analysts predict.
The nation's airlines, crippled when the Federal Aviation Administration grounded all airlines for two days, announced job cuts approaching 100,000 as they cut back on schedules to cope with nervous passengers now afraid to fly.
Shortly after the carriers began announcing the layoffs, Boeing Co., the world's largest jet manufacturer, announced cuts of 30,000. Delta Air Lines is expected to announce new layoffs this week.
The aviation industry's problems soon will spread to other businesses, economists predict. As consumers cut back on their air travel, hotels and other tourism-related businesses will suffer, they say.
"You will see the hospitality industry shed a lot of workers. And these tend to be the lower-wage workers who file for unemployment benefits," said Stephen S. Fuller, a public-policy professor at George Mason University.
The hundreds of thousands of workers being let go from the nation's airliners join another 1.1 million workers who were laid off during the first eight months of the year, according to recent research by Challenger, Gray & Christmas Inc., a Chicago outplacement firm that tracks layoffs.
The number of job cuts through August was 83 percent higher than the 613,960 layoffs announced during all of 2000, the firm said.
Nineteen percent of this year's cuts have occurred in the telecommunications industry, according to Challenger. For example, Motorola Inc., the Illinois mobile-telephone and computer-chip maker, has announced at least 24,000 job cuts or more than 15 percent of its work force since December.
"The tech sector has cut jobs in ways like we've never seen before," said John A. Challenger, the firm's chief executive.
The United States recorded a 4.9 percent unemployment rate in August. While the rate was the highest in almost four years, it meant that nearly 95 percent of the nation's workers were still employed.
In the Washington area, roughly 2.5 percent or 75,600 persons of the region's 2 million workers are unemployed.
"That means those people who are still in the labor force are still bringing home a paycheck. They're still paying their mortgages. They're still spending money," said Sophia Koropeckyi, senior economist for Economy.com Inc., an online research firm in West Chester, Pa.
"The economic situation is deteriorating, but overall, employment is still strong," she said.
But try telling that to Tawanah Mason, who was a security guard at Ronald Reagan Washington National Airport until last week.
Ms. Mason, 34, has been out of work since the airport closed Sept. 11. Federal officials say they will not reopen Reagan Airport until October, but a date has not been set.
Although Ms. Mason wasn't officially laid off, she is still looking for a new job.
"I can't sit around and wait for them to reopen. I've been on public assistance before, and I refuse to go back on it," said Ms. Mason, a single mother with three children between the ages of 7 and 16.
On Friday, Ms. Mason visited the Arlington County Employment Center, where she scoured the Internet for job openings. She found few good leads. Ms. Mason worked at the airport for 3 and a half years. As a supervisor, she earned about $8.50 an hour.
"I've done clerical work before. I'll do it again if I have to," she said.
The layoffs are having a rippling effect on the economy.
For example, pharmacy chain CVS Corp. on Friday lowered its third-quarter earnings forecast, saying the terrorist attacks damaged consumer confidence.
Its announcement comes at the end of a week in which many other companies, from media to photography to hotels, warned of slowing sales.
The layoffs the airline industry announced last week are sweeping: American Airlines and United Airlines each said they would cut 20,000 jobs; Continental Airlines said it would make 12,000 cuts, US Airways said it would cut 11,000 jobs, and Northwest said it would cut 10,000. Polls show that fewer than half of Americans now believe it is safe to fly, demonstrating how difficult it will be for the airline sector to continue as it was. The airlines are now flying with 60 percent of their seats empty.
It is not clear if companies that conduct massive layoffs actually improve their financial performance, according to research by Bain & Co., a Boston management consulting firm.
A study of 288 Fortune 500 companies that weathered the last recession found the stock prices of companies that dismissed more than 3 percent of their employees performed no better during a three-year period than companies that made smaller cuts or none at all.
Layoffs and the severance pay and outplacement costs that come with them can cost companies dearly, said Russ Hagey, a partner and managing director of Bain's Los Angeles office. According to Mr. Hagey, when a company recovers financially, it often has to pay to train the new employees it hires to replace workers it laid off.
"The key message is that loyalty does pay. There is a link between loyalty loyalty to your customers, loyalty to your employees and profits," he said.
Lost in the almost daily job-cut announcements are companies, and industries, that are hiring.
The number of people working at real estate offices, financial-service firms and insurance companies jumped from 7.5 million in August 2000 to 7.6 million in August 2001, an increase of 7,400 jobs, according to the U.S. Bureau of Labor Statistics. Economists say the booming housing market, which has remained largely immune from the rest of the softening economy, is one reason for the increase in employment in those sectors.
State Farm Insurance Co., based in Bloomington, Ill., has about 2,000 job openings nationwide.
The company which made its name with automobile, life and homeowners' insurance recently expanded into banking and now offers deposit accounts, mortgages and loans.
"As our services expand, we are actively expanding our work force nationwide," said Ana Compain-Romero, a State Farm spokeswoman. The company has about 80,000 employees and 16,000 agents, who are independent contractors, she said.
Analysts also believe the defense industry is poised for expansion as the nation heads into its new war on terrorism.
Last week, companies like Lockheed Martin Corp. and General Dynamics Corp. which are both based in the Washington area saw their stock prices soar. In fact, Lockheed Martin will hold a job fair this weekend.Previous U.S. wars have lifted the economy. But economists say this war's ability to create new jobs is uncertain.
"It depends on what kind of wartime economy it is. I don't think we're going to see this fought with ground troops and carpet bombs, so it won't necessarily mean a lot for the manufacturing sector," said Sung Won Sohn, chief economist for Wells Fargo & Co., the nation's fourth-largest bank.

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