Wednesday, June 12, 2024

Harsh Fall: High-Tech Layoffs Soar In October

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Dramatic layoffs in the high-tech sector helped push the total of U.S. job cuts last month to heights reminiscent of the economic fall in 2001.

After falling to a 22-month low in September, job cuts announced by U.S. companies in October jumped to 176,010 — 151% higher than September’s 70,057, according to figures released by Challenger, Gray & Christmas, Inc., which tracks job cuts daily. While September’s numbers were the lowest monthly total since September 2000, October’s rate is equal to 7,600 job cuts per business day.

“When we hit the 22-month low in September, it looked like layoffs were finally becoming manageable, but this has thwarted that thought,” says John Challenger, CEO of Challenger, Gray & Christmas. “The fact that we’ve returned to levels we were seeing in 2001 is a real cause for concern.”

Challenger says the telecommunications and computer industries laid off more workers last month than any other sector, combining for 51,644 job cuts. Another 7,942 layoffs were announced by e-commerce and electronics companies.

“The tech sector is responsible for one-third of the job cuts last month,” notes Challenger. “It was another wave, particularly with telecom, of that sector still working out the bubble effects. There’s still capacity in that area.”

While Challenger wouldn’t speculate on this month’s job cut figures or how the rest of the year will pan out, he did say that he’s nervous that layoff trends might follow those of past years. According to Challenger, in four out of the last seven years, the fourth quarter saw the heaviest number of layoffs.

“I don’t know if it’s an omen, but I hope not,” says Challenger. “There definitely is some seasonal effect. Companies tend to downsize at the end of the year. We’ll just have to wait and see.”

Despite October’s deluge of layoffs, 2002 still is looking to come in below last year’s total. Job-cut announcements this year are down 27% from last year. Through October, 1,180,627 job cuts have been announced compared to 1,613,880 last year.

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