Worrisome Layoffs In Manufacturing

In April, the number of "mass" layoffs jumped markedly with manufacturing jobs being hurt the hardest; losing 24,000 more jobs than in the previous month (Click to See Full Story: April mass layoffs rise led by manufacturing). The number of mass layoffs is calculated by counting the number of incidents where 50 or more employees are let go at the same time.

The reason that the loss of manufacturing jobs is so worrisome is the fact the it usually precedes job losses that are well downstream and upstream from the manufacturing process. Reduced manufacturing jobs can eventually force a reduction in the number of clerical and administrative positions within the same company that is cutting the manufacturing jobs; or, those job losses can even be in the retail arena for those who would would have sold those items. Manufacturers don't cut jobs unless they see a significant downturn in sales. It is too costly for them to disrupt the entire production chain and then try to restart it or build it back up again. That's because the suppliers of the products needed in the process tend to cut back on their jobs and their inventories as they adjust to any slowdown. My guess is that the manufacturers of American-made products are telling us that we might be in trouble in the next several months.

And, while we are talking about layoffs, the next big wave of job losses is going to be in government employees at the state and local levels. May is typically the end of the school year and a simple Google search using the words "layoff notices" will give you a flavor of what's going on in our nation's schools and in other government jobs. State and local governments are trying to cope with the massive loss of tax revenues and deficits by simply cutting services and jobs. Teachers by the thousands have already received notices. Police and fire too. I don't expect that the next two unemployment reports with be very pretty. When you see just one school system like that of Orange County, California laying off 1500 teachers and you see that same story being played out in school district after school district across the country, you know that we might be seeing the beginning of an outright death spiral in government and private jobs. Just remember that every loss of a single job can have a ripple effect in causing someone else to lose theirs. Higher unemployment will also force more shaky homeowners out of their homes through foreclosure. Earlier this month, it was disclosed that one out of every ten existing mortgages has had a delay in payments; and, that 80% of those are probably going to result in a foreclosure or in a forced short sale. High unemployment begets increased foreclosures. Those foreclosures also beget unemployment because the home builders are forced to reduce the work forces needed to build new homes.

You can't expect companies to add jobs when their profits are being sapped by allowing the Bush Tax Cuts to expire. You can't hope that companies will hire more people when each new employee might cost them a fortune in having to provide mandated health insurance. You can't expect the hiring situation to get better when employers are forced to pay 10% more for any entry level position because the minimum wage was recently raised. A union Card check will just force companies into paying higher union wages for less employees and won't do a damn thing to create a new job. Finally, you can't expect companies to hire more people in the face of higher manufacturing and energy costs due to Cap and Trade.

There is nothing that this Congress and this President have done to stimulate anything in the worlds of business and economics. In fact, this President seems to be at war with business, Wall Street, and our banks. In doing so, he and Congress have done everything that they possibly could do to cause unemployment to go higher. Remember, when Obama took office, there were 9 million people out of work. Instead of creating jobs, we now have 15.2 million in a jobless status; with a combined unemployment and underemployment rate that is closing in on 20%. Obama can talk all day long but things aren't really getting better if people don't have jobs. End of story.