Issue of the week: Massive layoffs, with no end in sight

Citigroup CEO Vikram Pandit this week stunned an auditorium full of employees—not to mention the global financial community—with the news that Citi will eliminate 52,000 jobs from its payroll of 352,000, said James Politi in the Financial Times. Not all the cuts are from direct layoffs—about half the reductions could come from the eventual sale of some Citi operations. But the bank’s securities-trading and mortgage-packaging ranks in New York and London will be drastically thinned. And the psychological effects of one of the biggest job cuts in U.S. history could be devastating. The layoffs “reinforce fears that the worst of the hit to employment from Wall Street’s struggles still has to make its way through the U.S. economy.”

The next wave of pink slips could be just weeks away, said Todd Wallack in The Boston Globe. In past recessions, monthly layoffs have spiked in December, as “executives typically scramble to hit profit targets and prepare budgets for the following year.” The mutual-fund industry, for instance, has already been rocked by layoffs at Fidelity and Putnam, and other fund companies will probably trim payrolls next month. “It belies the idea,” said employment consultant John Challenger, “that there is a taboo about firing workers between Thanksgiving and Christmas.”

The pain isn’t confined to financial firms, said Sudeep Reddy in The Wall Street Journal. From construction contractors and steelmakers to retailers and carmakers, layoff announcements have been coming thick and fast, “buttressing economists’ warnings that the current downturn will rival the worst recessions since the end of World War II.” Private employers aren’t the only ones to shrink payrolls. Facing plummeting tax receipts, state and local governments nationwide are slashing budgets and laying off workers. This week, Donita Mapp lost her $10-an-hour job helping Detroit public-school students with disabilities. “I try not to worry,” she says, “but in reality you know you’re going to worry.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The ax is falling extra hard in America’s boomtowns, where employment growth over the past decade has been strongest, said William Spain in Marketwatch.com. In Las Vegas, until recently the fastest-growing city in America, the gloom is pervasive. “It’s worse than after 9/11,” said a taxi driver waiting at the airport for a fare. There are fewer of them, as the number of visitors has plunged while casino receipts have fallen 5.1 percent. “We have had a few recessions here in the past,” says Jim Murren of MGM Mirage, a casino operator, “but none as severe as the one we’re in now.” Because nearly every business in the city depends, directly or indirectly, on revenues from tourism, “layoffs are rampant.” And with tourism expected to keep falling for the foreseeable future, “most indications are that it is only going to get worse.” Unfortunately, the same goes for the rest of the country, too.