Layoff Trends Turning? Not so fast…

I saw an interesting article on the “Infection Greed” blog (http://paul.kedrosky.com/archives/2009/03/has_the_us_layo.html) showing a graph that may appear to show that the growing layoff trend is actually trailing off.  The graph shows layoffs peaking in January and dropping in February.

I’m not quite as rosy as they are in looking at these numbers for two main reasons:

1) The spike in January layoffs from December may be caused by company’s who simply didn’t want to bad Karma (or bad press, or bad feelings) of laying off staff right before the Christmas holiday, and put off the inevitable until January.  This pushed some December layoffs into January, under reporting the December numbers and over reporting the January numbers.  This makes February approximately flat from December and January.  Given that layoffs cost company’s cash in the short term (PTO payouts, termination expenses etc.) I also wonder if the January spike was also an attempt to massage FY08 numbers by pushing those expenses into FY09.

2) Large, public companies (who account for a lot of this layoff activity) tend to be swayed by their stock price and public perception of their performance.  I think everyone got a bit of a free pass for the last few months as investors blamed “the economy” for everything but largely didn’t point the fingers at individual companies.  I think investors are done with that view and are now watching individual companies like hawks and seeing how management is handling the recession.  Management doesn’t have much more time to start acting aggressively to make cuts and return to early 2008 profitability levels.  I expect we are going to see a lot more layoffs in the months to come as management make the tough decisions required to thrive in this economy.

What do you think?  Is the worst over, or are there darker days yet to come?

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