Job cuts rose by 29% from 2017 to 2018
- Job cuts across the U.S. labor force rose by 29% from 2017 to 2018, reported Challenger, Gray & Christmas, Inc., the global outplacement and executive coaching firm. The year-to-year elimination of jobs is the highest on record since 2015, Challenger said. 538,659 job cuts were announced in 2018, while 28.6% fewer, 418,770, were announced in 2017.
- The biggest cuts occurred in retail, according to Challenger. The industry announced the elimination of 98,563 jobs in m2018, a 29.5% increase over the 76,084 retail jobs that were eliminated a year before, when massive store closings occurred. Challenger tracked 3,886 announced store closings in 2018. Technology followed retail in job cuts by announcing the elimination of 86,341 positions in 2018, a 124% increase over the same period in 2017.
- According to Challenger, most job cut announcements were the result of organizational restructuring (185,931 cuts); closings (145,298); and voluntary severance, including buyouts and early retirements (48,745). Natural disasters, like Hurricane Michael, the Alaskan earthquake, and wildfires also eliminated jobs. Challenger said the impact of tariffs on jobs isn't yet known.
Do increasing job cuts during the last two years signal upcoming turbulence in the economy? Andrew Challenger, VP of Challenger, Gray & Christmas, Inc., addressed this possibility in a statement. "We've seen a number of companies responding to changing consumer behavior this year, and with tax savings and a strong economy, making staffing decisions ahead of a potential downturn next year," said Challenger.
Companies say that job cuts are a necessary means of adjusting to market shifts. Massive job cuts in major industries, however, don't seem to coincide with a tight labor market, with record unemployment and scores of hard-to-fill jobs. Still, an organization's 'agility' — defined as the ability to adapt, renew and innovate in a rapidly changing environment, according to analysts at McKinsey — has proved an important trait of a successful organization. The vast majority of C-suite execs in a recent survey said they think agility is the most important characteristic of an organization. HR will want to watch how agility and talent interact, especially when it comes to personnel decisions; for many, this shift has meant employing more contractors and contingent workers.
- Challenger, Gray & Christmas 2018 Challenger Report: Annual Total Up 29 Percent, Highest Since 2015