01/29/2001 - Updated 12:49 AM ET Layoff clouds start to gather

By Dina Temple-Raston, USA TODAY

The rash of layoff announcements last week sends a disturbing message about the slowing economy, but some economists caution against seeing too much gloom in the numbers. Whirlpool, Sara Lee, Gateway, Delphi, Loews and J.C. Penney all warned that they would be trimming their ranks in response to a slowing economy. All told, companies announced more than 100,000 layoffs last week, more than five times the normal weekly average. WorldCom, the nation's No. 2 long-distance phone company, could cut more than 10,000 jobs, people familiar with the matter said Sunday. Read more

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-------------------------------------------------------------------------------- "This is record territory," says Ed Hyman of International Strategy and Investment. "There is always an element of bravado in these announcements, but they do send a message: Executives are worried about the economic climate, and the quickest way to cut costs is to lay off workers."

Is it time for U.S. workers to brace for massive job cuts after years of nearly full employment? Yes and no, economists say. Though the unemployment rate is expected to begin ratcheting higher from December's 4.0%, last week's six-figure layoff announcements likely exaggerate the job losses.

"The truth is, employers don't just fire people, they make these cuts through attrition — people retire or die and they aren't replaced," says Lewis Siegel, senior economist at the Bureau of Labor Statistics. The layoffs, he says, "are not going to be of the magnitude we're seeing in the newspaper headlines."

WorldCom, for example, likely will end 2001 with employment at current levels, according to statements by CEO Bernie Ebbers, who said some departments will shrink and others will grow.

Joel Naroff, president of Naroff Associates, agrees. "The lesson of the early 1990s was that the level of layoffs announced rarely matches the level of layoffs achieved," he says. "In the early 1990s, demand came back and there wasn't the need" to make all the cuts.

The Federal Reserve could give demand a boost this week if it announces on Wednesday, as expected, a cut in interest rates.

The slowdown already is beginning to take a toll in some regions. Unemployment in Illinois has reached its highest level, 4.8%, in four years.

http://www.usatoday.com/money/economy/2001-01-29-layoffs.htm

-- Martin Thompson (mthom1927@aol.com), January 29, 2001