Category Archives: layoffs

Labor Market Continues to Tighten

The Bureau of Labor Statistics’ latest official employment report shows that businesses added 227,000 workers last month and the unemployment rate rose slightly to 4.8 percent, while the January national employment report from ADP’s Research Institute shows that private-sector employers adding 246, 000 jobs in January. The BLS report beat estimates by economists surveyed prior to its release by Reuters, who’d predicted the report would show a gain of 175,000 jobs.

The BLS and ADP employment reports are based on different methodologies, as CNBC’s Mark Fahey has noted: ADP counts all employees who are listed as active on an employer’s payroll, while the BLS surveys companies to tally employees who are actually paid. The reports differ by 40,000 about half the time, he wrote.

“The U.S. labor market is hitting on all cylinders and we saw small and mid-sized businesses perform exceptionally well,” said ADP Vice President Ahu Yildirmarz, the co-head of the payroll-processing giant’s Research Institute.

That’s not to say everything’s rosy on the employment front: Yesterday, outplacement consultancy Challenger, Gray & Christmas released its monthly jobs-cut report, which shows U.S. companies made nearly 46,000 job cuts in January — up 37 percent from December, when layoffs totaled 33,627.  However, while last month’s tally was the highest since last April (64,141), it’s a year-over-year improvement from January 2016, when employers announced 75,114 job cuts. This January’s job reductions were concentrated  in retail, which accounted for 49 percent of the job cuts, while retail and energy accounted for the much of the cuts in January 2016. Macy’s led the pack last month, announcing plans to close 68 of its stores and reduce its workforce by 10,000 workers.

“Overall, it was a solid holiday shopping season, but several retailers, including Macy’s, were unable to capitalize on stronger consumer confidence and spending,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

ADP’s report, based on payroll data compiled from its 411,000 U.S. clients, shows that mid-sized businesses with between 50 and 499 employees added the most jobs in January (102,000). Large companies with 500 or more employees added 83,000 jobs, while small businesses (those with between 1 and 49 employees) added 62,000 positions.

“2017 got off to a strong start in the job market,” said Mark Zandi, chief economist of Moody’s Analytics, which helps ADP produce the report. “Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.”

The BLS report finds that January’s robust employment numbers did not lead to increases in workers’ pay, with a year over year increase of 2.5 percent, compared to 2.9 percent in December.  A smaller-scale study,  Glassdoor’s Local Pay Reports — which monitor salaries for approximately 60 job titles across multiple industries — finds that the annual median base pay in the United States grew by 3.2 percent year over year in January to $51,360.

The positive sentiment on jobs is reflected in Gallup’s latest Job Creation Index, which measures U.S. workers’ perceptions of their workplace’s job climate. The JCP’s January score of +34 is the highest in its nine-year history, Gallup reports. That score compares to JCIs of -5 in January and April of 2009, when the country was in the depths of the Great Recession. Gallup bases the JCI on a daily, randomized sample of employed U.S. adults’ perceptions of their workplace’s hiring-and-firing activity.

Dressing Down the Bosses, the French Way

Many of you have likely already seen the disturbing images coming out of France after its national air carrier, Air France, announced layoffs involving 1,700 ground staff, 900 cabin crew and 300 pilots between now and 2017, according to the Guardian.

The story also features an image of Air France’s deputy head of human resources, Xavier Broseta, being pushed to safety over a fence after he was “left bare-chested after workers ripped off his shirt and jacket,” according to the story.

Below is some BBC News’ footage of the angry scrum that preceded the “dressing down” of the Air France executives.

This much is clear: Layoffs during difficult economic times are never an easy executive order to carry out, no matter what country you’re working in. But, as the Guardian notes, France seems to be a particularly difficult place to make such a transition:

Olivier Labarre, director of BTI, a human resources consultancy, told Libération newspaper in 2009: “This happens elsewhere, but to my knowledge, taking the boss hostage is typically French. It’s the nature of the social dialogue in our country.”

According to the Guardian story, it is “not the first time French workers have taken matters into their own hands with violent results. Since 2009, as the global economic crisis has escalated, several bosses have been held hostage by angry staff.” And:

In January 2014, workers at a Goodyear factory in northern France prevented two managers from leaving and said the pair would be held until the company gave a “satisfactory response to requests.”

The French finance minister later tweeted his support for the attacked men, notes the Guardian. “Those who engage in violence are irresponsible. Nothing can replace social dialogue,” Emmanuel Macron wrote.

Indeed, nothing can ever replace social dialogue. But most would agree that creating new jobs to replace the ones being lost would surely go a long way in charting the course of any future dialogue, no matter what language that dialogue is conducted in.

H-1B: Disney Retreats; DOL Investigates

The Walt Disney Co.’s Disney ABC Television Group appears to be backing off from a layoff announcement two weeks ago, in which it had told a group of approximately 35 of its IT workers that their jobs were being outsourced to Cognizant Technology Solutions, a New Jersey-based company with large overseas operations. But now, reports Computerworld, those IT workers have been told that the layoff has been canceled.

Some of the IT workers who were to be laid off were told by Disney/ABC managers they would have to train their replacements before leaving, Computerworld reports. This is, of course, reminiscent of the move by Disney’s Parks and Resorts division to outsource 250 IT jobs to workers allegedly brought in under the H-1B visa program and have many of those employees train their replacements in order to receive severance. The furor this created when it was reported recently by mainstream publications such as the New York Times may have led Disney to cancel the latest layoffs, a source told Computerworld.

“They [Disney officials] want this to go away — right now,” said the source, a Disney/ABC IT employee who asked not to be named.

A source at Disney confirmed to Computerworld that the layoff had been rescinded. Although Cognizant is a major user of H-1B visas, it is unclear whether any of the workers in the Disney/ABC project had been brought in under the program.

Other companies besides Disney have come under fire for replacing their IT workers with H-1B visa holders, including Southern California Edison. The Department of Labor has announced it will investigate two outsourcing companies, Infosys and Tata Consultancy Services, for possible violations of rules for H-1B visa holders in conjunction with work they did for Southern California Edison. Those two companies, along with several others, are the biggest recipients of H-1B visa allotments each year. Sen. Bill Nelson, D.-Fla., has also called for an investigation of the H-1B program.

The fracas continues to focus more negative attention on the H-1B program. In a post on his blog, longtime tech observer and consultant Robert X. Cringely labels the  H-1B program “a scam” and says the argument that it’s necessary due to a shortage of technical talent here in the United States is false. He quotes an anonymous source, identified as a former chief technology officer at several companies, who said that — throughout his career — H-1B visa holders were routinely brought in by companies as a cheaper alternative to hiring more-expensive American tech workers: “The reason of course was $$$.  The H1B’s cost approx. 1/3rd or 1/4th the cost of the comparable American in the same job.”

Disney World’s H-1B Controversy

Additional  and corrected information below:

A front-page story in the New York Times focuses on what critics say is flagrant abuse of the H-1B visa program by Walt Disney World Inc. It’s only the latest example of the controversies swirling around the temporary visa program.

The Times is actually a bit late to the story: In April, Computerworld profiled several of the approximately 250 Disney IT employees who were required to train their replacements, prior to being laid off at the beginning of this year, in order to receive severance pay. The replacement workers were immigrants who had been brought in to the country by an India-based outsourcing firm via the H-1B program, according to Computerworld and the Times.

The H-1B program is, of course, intended for the use of highly skilled immigrant workers to fill jobs for which companies cannot find qualified candidates in this country. Disney CEO Bob Iger is a big proponent of the program: He is one of eight co-chairs of Partnership for a New American Economy, which lobbies for an increase in the number of H-1B visas allowed each year, reports Computerworld.

Disney has said the restructuring was necessary for increased innovation and has led to more IT jobs at the company: Kim Prunty, a Disney spokeswoman, provided the following statement: “Disney has created almost 30,000 new jobs in the U.S. over the past decade, and the recent changes to our parks’ IT team resulted in a larger organization with 70 additional in-house positions in the U.S. External support firms are responsible for complying with all applicable employment laws for their employees.”

A source at Disney tells me that the Disney Parks IT department underwent a shift from focusing on systems maintenance to developing new capabilities, with much of the support function shifted to outside vendors. The source says she can’t comment on the allegations that the employees were forced to train their replacements, but stressed that Disney expects its vendors to comply with “all applicable employment laws.” Of the 250 Disney employees laid off, 120 found new jobs within Disney, 40 took early retirement or found new jobs outside the company and 90 did not find new jobs at Disney, she says.

Earlier this spring, a group of former employees filed suit against Southern California Edison charging the utility with abusing the H-1B program. The plaintiffs say they, too,  were laid off and forced to train their replacements.

And just a few days ago, the Wall Street Journal reported what appears to be abuse of the H-1B program: Immigration lawyers involved in the process say they have helped firms file multiple H-1B skilled-worker visa applications for the same person in the hopes of prevailing in the lottery under which the visas are allotted. Some workers, meanwhile, are accepting offers from multiple employers, each of whom files a petition on their behalf, lawyers told the WSJ.

Given that this is an election year, and that the H-1B program has been a sensitive topic for years now, I’d say the chances are very good that Congress will soon be  holding more hearings about the program. As for increasing the visa cap, currently limited to 85,000 per year? I’d say not very likely this year, for sure.

Layoffs or No Layoffs, Employees Come First

Whatever side of the layoff story you find yourself on — now or in the 187065451 -- layoffsfuture, conducting them or avoiding them at all costs — don’t ever lose sight of your employees’ experiences.

That seems to be the collective message of two articles I came across recently, written on the same day, no less. One, from the Harvard Business Review site, written by the chief executive officer of Scripps Health, Chris Van Gorder, trumpets that company’s no-layoffs policy.

The other, from the Society for Human Resource Management site (registration required), details Target Canada’s recent “unprecedented” move to offer a $70 million severance package to the some 17,600 employees who are slated to be laid off by mid-year 2015 as the company exits the Canadian retail market.

A more recent HREOnline news analysis by Senior Editor Andrew R. McIlvaine, “Cushioning the Blow,” highlights the merits of giving severance to everyone. In that story, Sanjay Sathe, founder and CEO of San Jose, Calif.-based outplacement consultancy RiseSmart, is quoted saying that, “if the No. 1 goal of severance is to take care of employees, then the practice should be to offer it to all employees.”

Without a doubt, taking care of employees is at the heart of both the Target and Scripps Health examples mentioned above.

As Brian Cornell — CEO and chairman of Target’s U.S. parent company, Target Corp. — says in a statement:

“We do not take lightly the impact that our decision to discontinue operations in Canada will have on Target Canada’s team members who have worked tirelessly to make improvements to the guest experience. That is why we took the unique step of establishing the employee trust.”

More specifically, that’s why his company has set up a trust fund for employees to receive 16 weeks of pay, an amount that will be kept separate from Target’s restructuring process. Lisa Stam, a partner at Koldorf Stam in Toronto, calls the severance amount “unprecedented.”

Anil Verma, director of the Centre for Industrial Relations and a professor of human resource management at the University of Toronto’s Rotman School of Management, tells SHRM it’s “unusual” for a company to protect its employees with a trust fund. In his words:

“[Laid-off employees] will also accrue certain benefits, such as medical and life insurance. This act demonstrates that Target is a good employer.”

In defending his decision to establish a no-layoff policy, which “isn’t the norm in my [nonprofit] industry,” Van Gorder shares his belief that “a no-layoffs philosophy is good for employees’ physical and psychological health.” As he puts it:

“I’ve seen what it’s like to carry out mass layoffs — I had to do that in the 1990s at a hospital that was in bad financial shape. I vowed never to let myself get into that position again. Instead, nonprofits need to match institutional discipline with authentic good will toward employees, developing effective employee-assistance and wellness programs and eliminating anxiety about job security.

“Who knows? If enough nonprofits master this balancing act, then maybe we can teach the for-profit world something for a change. … In today’s economy, organizations are supposed to treat employees almost as free agents, with low expectations of loyalty on either side. … But paternalism works — even in the 21st century, and even in an industry undergoing disruption.”

Just some food for thought, I thought.