Job Cuts Almost Triple in 2020

Outplacement firm Challenger, Gray & Christmas on Thursday reported that announced job losses last month rose by 134.5%, compared to cuts announced in December 2019. For all of 2020, more than 2.3 million job cuts have been announced, almost three times the 592,556 jobs lost in all of 2019.

U.S. employers announced 77,030 job cuts in December, an increase of 19% from November’s total of 64,797 job losses.

Andrew Challenger, vice-president of the outplacement firm, noted that “companies that may have survived the initial impact of the pandemic in March and April” had to cut jobs due to “increasingly difficult market conditions.” Hardest hit was the entertainment and leisure segment, as it has been for most of the year.

Nearly half of the job cuts announced in 2020 were directly attributed to the COVID-19 pandemic, according to the Challenger, Gray report. Another 445,182 were attributed to market conditions, while a drop in demand was blamed for 257,640 job cuts. More than 106,000 cuts were attributed to businesses shutting down and 15,781 were caused by bankruptcies.

Industry sectors hit hardest in December were transportation (29,430 announced cuts), government (10,975 announced job cuts) and entertainment/leisure (8,426 cuts). For the year, the entertainment/leisure sector has lost 866,046 jobs, a year-over-year increase of nearly 5,700%. Total job cuts announced in 2020 were 289% higher than the 2019 total.

On the other side of the ledger, U.S. firms announced plans last year to hire 3.19 million workers, including 77,267 hiring announcements announced in December. Nearly 800,000 of those jobs represent seasonal hiring plans for the holiday shopping season. Last year, companies hired about 814,000 seasonal workers.

New York-based employers announced the most job cuts in December with 20,289 planned cuts. Texas (13,999 planned cuts), Pennsylvania (11,116), California (8,618) and Massachusetts (6,089) round out the five states losing the most jobs last month.

Wednesday morning, ADP reported that private-sector payrolls decreased month over month in December by 123,000, well short of expectations for a gain in a range of 75,000 to 255,000. The weekly report on new claims for unemployment benefits is due later Thursday morning, and the consensus estimate calls for 803,000 new claims filed in the week ending January 2. The monthly employment situation is due Friday morning, and analysts expect nonfarm payrolls to rise by 65,000 and the unemployment rate for December to rise to 6.8%.

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