Layoff Lawyer Sees Ominous Signs

[Rajiv]

Layoff Lawyer Sees Ominous Signs

Economists have many ways of gauging the temperature of the economy. Now, a lawyer has one, and it’s not encouraging.

Garry Mathiason is 37-year veteran of Littler Mendelson, a leading employment-law specialist with 800 attorneys and 30,000 clients. Mr. Mathiason estimates that the firm is consulted on roughly half the layoffs in the U.S.

When Littler’s layoff-related business surged last fall, Mr. Mathiason conducted an informal survey of his colleagues and found the firm was handling around a million prospective job cuts. That suggested two million for the nation as a whole, though Mr. Mathiason knew some of the prospective layoffs might not materialize during the quarter. When the government released its official numbers in January, U.S. employers had eliminated 1.5 million jobs in the fourth quarter – close to what Mr. Mathiason had expected.

Now the bad news. Mr. Mathiason says Littler is working on roughly two million additional prospective layoffs this quarter. Applying his admittedly unscientific methodology, Mr. Mathiason estimates the U.S. could lose around three million jobs from January through March, or one million a month. That’s equivalent to all the job losses in 2008. The government estimates that 600,000 jobs were lost in January.
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(contd.)

[BiscayneSunrise]

Re: Layoff Lawyer Sees Ominous Signs

Right. The last few months put unaware companies on notice.

Right now, in corporate offices around the country, long shelved plans on re-structuring (AKA downsizing) are being dusted off and are about to be implemented.

[petertribo]

Re: Layoff Lawyer Sees Ominous Signs

The dynamics of Littler Mendelson must be very interesting. If the Economy sours, that's good but too much and that's bad, because there's no more layoff biz, everyone's been laid off. Or things are so bad the companies cannot afford your services or you have to cut your margins to get business. For Littler Mendelson, Depression is a mine but you do not want to exhaust it.

For Garry Mathiason a 37-year veteran of Littler Mendelson the dynamic may be different. He probably would want business to boom now just before his retirement so he can top up, cash in and be out the door. If it all crashes after, well who cares, he got his.

Layoffs the Silver Lining in the Depression Cloud for Littler Mendelson at least.

[GRG55]

Re: Layoff Lawyer Sees Ominous Signs

Right. The last few months put unaware companies on notice.

Right now, in corporate offices around the country, long shelved plans on re-structuring (AKA downsizing) are being dusted off and are about to be implemented.

No doubt.

Layoffs are a growth business for Human Resources Departments and labour lawyers, and not much else. The task is so distasteful, and often so traumatic, that coming off a long economic expansion very few companies will have maintained effective control over their labour costs. Only when the very survival of the enterprise is at stake will most management teams take any real action. GM, Ford and Chrysler are taking a lot of heat over their cost structure, but they have a lot of company. Those companies that made efforts to variablize some portion of their costs will come under criticism for letting go contract, temp and part-time workers without adequate severance compensation [witness what's going on in Japan in this regard; it would not surprise to see this become an issue for the new Democrat Administration].

[BiscayneSunrise]

Re: Layoff Lawyer Sees Ominous Signs

In an ideal world, or at least with progressive executives, companies constantly re-structure, whittling away waste and inefficiency on a continuing basis. Probably, Andy Grove of Intel being the textbook example, with his famous quote, "Only the Paranoid Survive."

As you point out the task is so distasteful, and frankly, hard, that most executives don't do it.

The few companies that were early in the process like the airlines were excoriated for breaking promises. Promises that were unsustainable, however, and the airline leadership was forced to act. Survival, was indeed, at stake. There will no doubt, be lots of squealing and lobbying by organized labor, and the Democrats will try to help on the margins but in the end, even they will be powerless to help. The tsunami is just too overwhelming. State and municipal pensions will be the next to go. As an aside, it will be interesting to see if organized labor remains loyal to Democrats when they will be unable to help.

ECON 101 teaches us that the purpose of economic downturns is to finally weed out those inefficiencies that build up over time. One must begin making difficult decisions as to what serves the company any more and what does not. This really focuses the mind on the future and only once old fashioned practices are jettisoned can one begin thriving into the future.

Here is a small micro example: Many Americans are being forced to decide between landline phone service and their cell phones. In a tight economic environment that can't afford both. The old model (landlines) are being cast off with an eye to the future (wireless) This trend was already in place but tough times accelerates that modernizing process. That same decision making process is going on in millions of different ways right now in kitchens and boardrooms around the country.

That is, except in the boardrooms of the Big 3 right now who are trying how to spend their multi billion dollar subsidy on more failure. :p

But that is a story for a different thread.

[Quincy K]

Re: Layoff Lawyer Sees Ominous Signs

didn't ej predict 10 million layoffs for 2009 sometime last year?

[zoog]

Re: Layoff Lawyer Sees Ominous Signs

didn't ej predict 10 million layoffs for 2009 sometime last year?

Yes, and seems corroborated by Mathiason's prediction of a million jobs per month.

...In November 2008 we published our industry sector analysis of future unemployment Unemployment by industry: Brace for Impact that concluded, “In total we see the US economy losing between seven and 13 million jobs by the end of 2009 representing a 5% to 10% increase in unemployment.”
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Unfortunately, as dreadful as today's employment data are, readers should expect to see unemployment rising in every sector and state of the U.S. economy and see job losses increase to a rates as high as 1 million per month this year...