Good News at Last? Layoffs Are Down and Companies Have Resumed Hiring

Despite the mixed news on the job front coming out of Washington – the national unemployment rate inched up to 9.6% in August – there is some good news on the employment picture: layoffs have slowed considerably, people are feeling more secure in their jobs, and the prospects for white collar workers are suddenly downright rosy.

Take layoffs. Planned job cuts fell to 34,768 in August, a fall of 17% from July and the lowest monthly total in over 10 years, according to a report by outplacement firm Challenger, Gray & Christmas. The firm collects the numbers from public sources such as SEC filings, company announcements sand media reports.

The Challenger report says that job cuts through the end of August were 55% below the same period last year. The company says 30% of the cuts this year were in public sector jobs like the Census Bureau.

"Layoffs have diminished significantly in the last year from the levels they were at in the recession," says John A. Challenger, CEO of the Chicago-based firm. "In many ways that leaves the economy poised for more job growth as demand grows and the willingness of companies to take risks grows."

Challenger says most of the cuts that are happening in the private sector are taking place as the result of merger and acquisition activity. Typically, when one company buys another, it eliminates the headquarters staff of the target firm.

"Job cuts are really very light," Challenger says. "There is much more job security now if you have a job than many people may think they have."

A "Slow Heal"

That upbeat mood is also reflected in a survey of fourth quarter corporate hiring plans conducted by Robert Half International Inc., a professional staffing firm. The company asked 4,000 corporate executives about their plans to hire professional or highly skilled staff in the coming three months.

Some 11% of the surveyed executives said they were going to increase staff levels, while 5% said they were going to reduce staff. A majority said they were either very or somewhat confident of their company's prospects for growth in the fourth quarter.

"The 6% net increase in hiring is actually a very positive sign," says Brett Good, district president at Robert Half in southern California. " I think we're healing, but its going to be a slow heal."

The hirings are usually of two types. There is normal churn, where an employee leaves and has to be replaced. The other type is a job created because business is expanding.

White Collar Rising

Law firms were among the leaders in planning to increase staff. A 23% of lawyers said they would be hiring staff in the fourth quarter, according to the Robert Half survey.

A net 1% of chief financial officers said they would be hiring in the finance and accounting area, while net 3% of both tech executives and advertising managers said they would be adding more staff in the months ahead.

"Anecdotally, we are seeing this borne out in job order flow, client requisitions and what we're seeing out in the market," Good says. "There's some activity taking place that we didn't see this time last year, which I think is boding very well."

The executives also complained that it's getting harder to find the right candidate for many jobs. Some 61% of business people in the business services sector and 58% in the manufacturing area said they were having trouble finding the right candidates.