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                                                                                BUSINESS, Page 64

The Great American Layoffs


You call this a recovery? In the past year, 375,000 jobs have
been lost, many for good, as most industries scale back.

By JOHN GREENWALD -- With reporting by Dan Cray/Los Angeles,
Allan Holmes/Atlanta and William McWhirter/Detroit


    The ax just keeps falling on the beleaguered American
worker. In a new round of layoffs that underscored the weakness
of the economy last week, three major oil companies announced
painful business restructurings. Amoco said it will cut 8,500
jobs, or nearly 16% of its work force, as it abandons
unproductive oil fields and writes off other assets. Unocal
plans to eliminate 1,100 of its 17,000 jobs worldwide, mostly
in the U.S. And Mobil said it is paring 2,000 salaried jobs, or
9.5% of that group. The energy giants joined such diverse
blue-chip companies as Hughes Aircraft and Aetna in declaring
sharp cutbacks in this summer of economic discontent.

    How long can this keep up? Technically at least, the
recession was supposed to have ended a year ago. But the
relentless pace of new layoffs, along with the surge in
unemployment from 7.5% in May to an eight-year high of 7.8% in
June, has mooted the normal distinction between a recovery and
a slump. The harsh reality is that the U.S. remains mired in a
prolonged period of stagnation that threatens to drag on for
years. Companies have restructured, whole industries have scaled
back their work forces, and staying lean has become embedded in
the corporate consciousness. "This is the end of the post-World
War boom era," says employment analyst Dan Lacey, who publishes
the newsletter Workplace Trends. "We are never going to go back
to what we knew. This is a permanent dismantling of corporate
bureaucracies."

    There are few bright spots amid this job gloom. While some
parts of the economy -- notably the health-care industry and
state and local government -- are adding workers, most American
firms are making cutbacks a way of life. Even as students, new
graduates and other job seekers poured into the labor market,
the U.S. lost a disheartening 117,000 jobs in June. So far this
year, corporate America has shed an average of 1,500 positions
a day. Says Mitchell Fromstein, president of Manpower Inc., the
largest U.S. temporary help service: "In any company with more
than 1,000 employees, it's almost a given that some kind of
restructuring is taking place. At best, they are just not hiring
and losing head count by attrition."

    The new unemployment is rooted in trends that began in the
1980s, when harried companies slashed payrolls to lower costs
and meet increasingly fierce competition from abroad. Now, in
a classic Catch-22 situation, U.S. firms are continuing their
cutbacks partly because shell-shocked consumers are fearful of
losing their jobs and are thus reluctant to spend. "The
insecurity keeps everyone in limbo," says Audrey Freedman,
president of the Manpower Plus consulting firm. "No matter what
the mortgage rate is, people don't want to buy houses, trade up
or commit funds. I think we're entering a decade or more in
which the standard of living is not going to grow."

    There are lots more reasons why few firms are willing to
hang out HELP WANTED signs. The mountain of debt that everyone
from consumers to corporate chieftains took on in the '80s
continues to hobble spending, and it forces companies to keep
tight control of costs. At the same time, the overbuilding binge
that glutted America's skylines with vacant buildings has pushed
the construction industry into a depression and helped
precipitate a general credit crunch. And the end of the cold war
means that defense contractors could slash as many as 900,000
jobs over the next six years.

    Given all this malaise, there seems little chance for any
substantial improvement in the job picture soon. Joseph
Jannotta, chairman of Jannotta, Bray, a leading Chicago-based
outplacement firm, estimates that fewer than 25% of U.S.
companies have completed the task of downsizing their work
forces. As the process rolls on, he says, the average firm could
eliminate as much as 25% of its current payroll. That means the
U.S. could face up to five more years of job losses at the
searing rate of 375,000 a year. "We still have whole functional
divisions disappearing within a business," Jannotta says.
"Middle-management levels of accounting, control and strategic
planning are vanishing."

    That will be particularly tough on layoff victims because
many of the positions they lose are unlikely to reappear.
"We've never been in a situation quite like this," says Janet
Norwood, the former U.S. commissioner of labor statistics. "It
used to be that when we had a recession, everyone would wait to
be rehired. But the psychology now is that many of these jobs
are not going to come back." White-collar workers are feeling
the pinch as never before. Harvard economist James Medoff points
out that white-collar employees constitute 36% of the country's
unemployed workers, compared with 22% during the 1982 slump.

    Even companies that are expanding see little reason to add
new workers. That is partly because many firms have streamlined
their operations and need fewer bodies, but also because firing
-- not hiring -- has become the corporate norm. While Chrysler
said last week it is investing $225 million to build a new line
of Dodge pickup trucks in 1993, the company noted that it plans
to add just 70 new jobs as a result of the program. "We're
expecting to triple truck sales, and we're looking for a return
to profitability," says a senior Chrysler executive. "Life is
going to get a lot better. But we're still going to be laying
off people."

    In Atlanta, Bell South eliminated 3,000 jobs, or about 3%
of its work force, through early retirement last year. But even
if the economy should rebound sharply, the regional phone
company has no plans to take anyone back. "We've got to be a
more efficient, more streamlined operation," declares a company
spokesman. "And this is a long-term step toward getting us
there." BellSouth is hardly the only phone company cutting back.
Bell Atlantic said last week it is eliminating 3,450 positions,
or about 5% of its remaining jobs, as part of a downsizing that
the company has had under way since 1984.

    This less-is-more stance has placed heavy physical and
emotional strains on those workers fortunate enough to keep
their jobs. Though both the length of the average workweek and
the number of overtime hours dipped a bit in June, the twin
indicators of how long and hard people work had reached record
levels in recent months. At the same time, the financial rewards
of work have continued to dwindle. When adjusted for inflation,
the average hourly wage of U.S. workers stands 14% lower than
in 1979. And male college graduates who were just beginning
their careers earned 5.1% less in inflation-adjusted dollars
last year than their counterparts made a decade ago.

    For the unemployed, the wait for a new job has been
steadily increasing. Jannotta notes that executives who had
earned at least $100,000 before losing their jobs now take an
average of seven months to place, compared with five months a
year ago. For middle managers, the search has lengthened from
three months to four. That is for the lucky ones. Outplacement
specialists say at least 10% of all those seeking jobs are
unable to find them, up from 2% last year. "For the first time,
we are really dealing with the guy who is unemployable and
structurally out of work," Jannotta concedes.

    With so many applicants to choose from, many employers
have become picky to a fault. "The companies that are looking
for people right now want God," says Jack Curphey, president of
Curphey & Malkin Associates, a Los Angeles placement firm.
"They want the perfect person, someone who can bring something
to the table immediately. Before, if you had a good background
and a good reputation, the company would train you to sell
their product. No more."

    Those unable to get jobs elsewhere sometimes return as
part-time workers to their former employers, where they offer
their know-how for substantially less than they had earned
before. The ranks of such part-timers climbed 30% last spring,
rising from 5 million workers to 6.5 million. The practice is
especially prevalent among older workers who have been forced
into early retirement but still must work to make ends meet.
Overall, analysts expect the number of part-time workers to
nearly double in the next few years.

    A few large industries have been holding their own on the
job front. U.S. automakers have boosted employment from last
year's depressed levels as buyers, lured by discounts on
attractive new models, have begun returning to showroom floors.
Betting that the turnaround will continue, Detroit has planned
its busiest third-quarter production schedule in six years. The
biggest employment gains have come in health care, which remains
a necessity for Americans even as medical costs soar into the
stratosphere. In a similar way, people's demands for education
and other public services have boosted jobs in state and local
governments even though many are running up big deficits to meet
voters' needs.

    In the long run, the relentless downsizing could pay
dividends in the form of a more productive and competitive
economy. "We're honing down and becoming more efficient,"
Norwood says. "In some ways, that is good for us. But it's a
painful process. You can't get anywhere without economic
expansion, and you can't have growth without creating more jobs.
It's a vicious cycle." For the moment, at least, Americans may
have little choice but to hope that the pain they endure today
will produce some gain tomorrow, or perhaps the day after.