U.S. Economic Growth Questioned Amid Layoffs

While some economic indicators suggest America is inching toward steady fiscal growth, a growing number of layoffs from companies that range from mom-and-pops to large corporations suggests more problems may lie ahead.

Since President Barack Obama was re-elected and with a fiscal cliff looming, a number of companies have gotten rid of employees at a time when the workforce is traditionally steady. Some say the economic impact of health-care reform, coined Obamacare, has spurred the layoffs. Others say it’s because of overall concern for the future.

According to the U.S. Department of Labor, 885 separate “mass layoff events” took place in the third quarter of 2012, from July to September. While that’s down year over year, recent layoffs resulted in 138,484 workers being displaced from non-farm sector jobs. However, analysts say that 47 percent of those effected by the mass layoffs will be recalled.

Companies Announce Recent Layoffs

More recently, dozens of companies announced layoffs. The day after the election, a Las Vegas, Nevada, business owner with 114 employees fired 22 employees as a direct result of Obama’s reelection. An Ohio coal company headed by a prominent Mitt Romney supporter laid off more than 160 employees following the election.

Among the companies that have recently downsized a due the faltering bottom line include Westinghouse, Bristol-Meyers, Corning and medical manufacturer Boston Scientific.

Groupon, which employees more than 10,000 people globally, made cuts unrelated to the politics. It recently announced it has cut its sales force by more than 600 positions due to slow growth. The company’s profits dropped from about $64 million in the second quarter of 2012 to $42 in the third quarter.

Battery manufacture Energizer announced it will shed about 1,500 employees to save about $200 million a year. Boeing Co. will cut 30 percent of its executives at its defense unit. And NBCUniversal is continuing its slow-but-steady layoff of about 500 employees nationwide.

Is Affordable Care Act Responsible for Layoffs?

The new healthcare legislation, formally known as the Affordable Care Act, is affecting future job growth as well. Darden Restaurants, best known for its Red Lobster and Olive Garden restaurants, said it will limit workers’ hours to avoid the healthcare requirements under the law. The company wants to avoid the provision that requires large companies to offer healthcare to employees who work 30 hours or more a week. Darden said it will limit many employees to 28 hours a week, thereby making its workers find their own medical insurance.

At the same time, however, other companies that threatened layoffs if Obama was reelected have scaled back on the plans. Most notable is David Siegel, a Florida billionaire and CEO of Westgate Resorts. Siegel threatened his more than 7,000 employees with layoffs in October if Obama was reelected. Since then, Siegel had a change of heart, saying he was going to instead give his employees raises.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

Layoffs

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    Sources:

    1. CBS Las Vegas (2012, November 7). "Vegas Employer: Obama Won, So I Fired 22 Employees." Retrieved from http://lasvegas.cbslocal.com/2012/11/07/vegas-employer-obama-won-so-i-fired-22-employees/
    2. Edwards, J. (2012, November 8). "The Groupon Nightmare Begins: 648 Jobs Cut Prior To Revenue Miss." Business Insider. Retrieved from http://www.businessinsider.com/groupons-q3-earnings-call-disaster-2012-11?op=1#ixzz2C6zPqQGR
    3. Pedicini, S. (2012, October 7). "Darden tests limiting worker hours as health-care changes loom." Orlando Sentinel. Retrieved from http://articles.orlandosentinel.com/2012-10-07/business/os-darden-part-time-workers-20121007_1_darden-restaurants-health-insurance-olive-gardens
    4. U.S. Department of Labor, Bureau of Labor Statistics. (2012, November 8). Mass Layoffs Summary. Retrieved from http://www.bls.gov/news.release/mslo.nr0.htm