And it’s reaching far beyond energy.
Turning points in the vast US labor market rarely come with a big drumroll that no one can miss. Instead, they wedge themselves into the rosy scenario bit by bit, here and there, posing contradictions where none are expected. And today, we got one of those contradictions: unemployment claims v. job-cut announcements.
The number of people who applied for unemployment insurance during the week of March 20 to 26 rose by 11,000 to 276,000, the Labor Department reported today. While up, these initial claims are still near the low of 253,000 established on March 5, which had been the lowest level since the late 1960s!
So even at 276,000, initial unemployment claims are still very low by historical standards. Red flags go up when claims jump well above 300,000. Serious fretting begins when claims hit 400,000. That’s a sign that laid-off people can’t find new jobs and are filing for unemployment insurance to tide them over. It’s a sign that layoffs by one company can no longer be absorbed by other companies.
Companies have already started laying off people. The announcements and rumors bubble up on a daily basis. And today, the Challenger Job Cut Report confirms it in a chilling way.
In March, job cuts announced by the largest US-based companies soared 31.7% year-over-year to 48,207. The fourth month in a row of year-over-year increases. Up 40% from March 2014.
Job-cut announcements in the first quarter jumped to 184,920, up 32% from 2015, and up 52% from 2014.
These are not minor increases. And they only include the largest US-based companies that announce layoffs to the media. They do not include smaller companies that might be trimming their payrolls quietly.
In Q1, about 50,000 job-cut announcements, or 27% of the total, were “attributed to falling oil prices,” as the report put it. That includes companies such as manufacturers that supply the oil sector. Last year in Q1, “oil-related” job cuts had reached 47,610, or 34% of the total.
This shows that the oil sector is still shedding jobs manically, but other sectors have now jumped into the fray in significant numbers. As the report put it: This “upward trend outside of the energy sector is somewhat worrisome.”
Beyond oil is the larger energy sector, which includes coal that is careening company by company toward bankruptcy, but it doesn’t include industries that supply it. In energy, job cuts reached 52,901 in Q1, up from 37,811 last year.
Then there’s retail — brick-and-mortar retail which has been getting whacked by the shift to online retail in an environment of lackadaisical retail spending. And so the retail sector responded with 31,832 announced job cuts in Q1, up 41% from last year.
And job cuts in the computer sector in Q1 soared by 148% year-over-year to 17,000.
The hardest-hit state is Texas, with 60,350 job cuts in Q1, more than all the job cuts in the energy sector in the US, another sign that the oil bust is seeping into the broader Texas economy. This is no longer a blip, but a new reality [read… Consumers in Texas Hit by “Negative Ripple Effects”].
Arkansas, with a population of only 3 million, is in second place with 16,200 job cuts in Q1. That hurts! California, with over 12 times the population of Arkansas, is in third place with 14,198 announced job cuts, which barely produces a ripple in the big state.
The fact that job cut announcements are rising – just the last two days, we’ve heard from Boeing laying off 8,000 and BlackRock 400 – is one of the early signs of a turning point in the labor market. With business revenues and earnings slumping, and with productivity down, companies are reacting, but they’re not panicking yet, at least not outside the energy sector. Outside the energy sector, they’ve taken out the scalpel and they’re carefully trimming here and there to bring expenses down.
But the energy sector is in panic mode. The entire sector is laying off. So a specialized engineer or oil field worker — very well paid when they still have jobs — is going to have a hard time finding an equivalent job. And this is hitting Texas particularly hard.
There is a fairly long delay, however, between announcement and actual layoffs. After the job-cut decision and the announcement, a company has to sort out who has to leave and what severance packages, if any, they get. If it is “voluntary” via “buyouts,” people are given time to decide. The to-be-laid off people often don’t know for months about their fate. Others know but hang on to their jobs for months.
So the impact of the current job-cut announcements will be felt later. For now, companies outside the energy sector have been picking up laid-off workers fairly rapidly, and the initial unemployment claims remain low. But as more companies start laying off, fewer continue to hire and fewer of the laid-off people get hired right away. This is when the currently tepid signs of deterioration in the labor market heat up.
And that crucial link between business sales and jobs? It’s becoming a real party pooper. Read… And this is When the Jobs “Recovery” Goes Kaboom
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Numbers of jobs don’t even come close to telling the real story. You might as well throw the reports in the trash where they belong.
Engineer Bob is working at Boeing making US$125K a year. Bob is let go and had to get another job at 30% less than he was making at some other company making widgets. Now times that by another 2000 leaving Boeing on early retirement because they can go on Social Security or a lesser paying job.
Lets add up the pre layoff $’s and match it against after resettlement $’s somewhere else in the economy and see what the glorious numbers are.
The fact and figures coming out of DC are nothing but lies just like what dribbles out of the mouth’s of our politicians.
Until they get it right the people should demand they work for free. Hell you can’t even call what they do work.
Nothing more than pack of thieves. Bastards and whores.
And, they are not even particularly good at being thieves…
HI ERG. I finally took the time to read your link. Hilarious and sadly, oh so true. Thanks for posting!
I appreciate the kind words, TheDona. That little book explains more about what’s wrong with the world than nearly anything else I’ve read. The definition of ‘stupid’ is truly remarkable, having nothing to do with intelligence and more to do with how civilization turns into hell in a handbasket. It should be required reading in US high schools!
There are somewhere between 45,000 and 70,000 startup jobs currently open…Amazon alone has over 15,000 job openings.
Take a look at Start-Up Jobsite.com for tons of startup jobs and jobs at young, fast-growing jobs.
” Bob is let go and had to get another job at 30% less than he was making at some other company making widgets.”
You are too generous. We live in an age of specialization. People no longer read resumes, or go by the gut to find employees , they use computers and specialized algorithims to optimize picks for the person most qualified to do the job NOW, without any pesky adaptation period or view toward the future.
In that way no one in management need put their own job on the line by vouching for an employee. They can blame the computer if the hire doesn’t work out!
Engineer Bob will either be designing airplanes again or working at Starbucks at a 90% salary cut !
More like employers live in the age of whining, when the labor market justifiably cannot match their vast out-of-reality demands, it must be the fault of the market, never them.
Maybe in the future they would even want free revenue without doing this little pesky thing called business, because it is “too much hard work”.
right. Engineer Bob works at Starbucks at a 90% paypay c Cut. then as a result engineer Bob can never open up his own engineering firm and develop some newfangled technology that will break this world into the 22nd century… putting the world into a permanent stage of Arrested Development and also engineer Bob’s son will never be able to afford to go to engineering school himself and perpetuate the cycle of further technological development by a superior pedigree of people. soon engineer Bob’s neighborhood is overrun by third-world migrants from Somalia and the Middle East. and thus Begins the story of Mad max.
I have been personally freaking out about this for going on twenty years or more.
The simple truth is that a career, regardless of your profession, is now a treadmill and if you don’t hold up a pace greater than your peers you are screwed.
This is why ZERO debt is so important – it redefines the whole arrangement.
I recently posted that I am working towards taking my CPA exams (even though I do not work in accounting and will never have a CPA license) simply for the reason I can use this on my resume to differentiate myself from other candidates.
For the record I work with accounting software (MS stack).
And I think it is a smart move.
I recently posted I am likely going to study data mining through an online video training provider (and I have a small internal budget for revenue/load forecasting and a very well qualified professional to assist).
This stuff IS NOT rocket science – people attribute too much to technology. I will figure it out, ride the wave, eventually cattle and goats will invade the space, but I had a good ride prior to that event. It is just the pattern thus far. I am investing in the “good ride” part.
This is what folks have to do, in my space, to stay on top of the heap as it were – and failure doesn’t help.
I don’t manage well, I am not a people person – so I feel driven to demonstrate technical success across a range of modern goals/relevancies should I have to interview for work again.
As far as the data mining comment goes, you are spot on. There is a Coursera course on data mining that is offered many times a year. This course can even be taken at your own pace. It is taught by Dr. Andrew Ng.
I live in Bay Area and I can tell you that data mining that most engineers do is crap. They mostly do regressions or clustering. They don’t have domain expertise and the results are largely meaning less.
For example, go to Kayak (and their competition) and check out their price predictor for airlines. It makes some gibberish prediction involving probabilities that prices will go up or down. Those predictions are much like GPS time-of-arrival predictions — mostly bogus and constantly updated so that they cannot be really tested.
The other bubble in DM is clustering for recommendations. When was the last time you found a recommendation by NYT or Netflix very compelling?
Why do these things happen? Because most people who use DM have no feel for the subject.
So, you are right. There is a lot of hope for those who develop a feel for the domain rather just be Math jocks.
Of course it is smart move, investing in yourself by yourself is the best thing you can do. I did same thing MBA on line even though I’m PEng. and make killing, get job whenever I want and wherever I want, doing mostly consulting for Lean and 6sigma, getting hired by companies and managers who don’t know what they want with my knowledge but who cares for as long as they pay six figure.
Life is only what YOU make out of it and wealth is not entitled, it is created through smart and dedicated work.
Hope everything works for you and wish you all luck.
“Life is only what YOU make out of it and wealth is not entitled, it is created through smart and dedicated work.”
You forgot to mention that
– People who work three jobs are poor because they’re lazy.
– Farmers who lose a crop to drought are morally deficient.
– Underemployed science PhDs are stupid.
– Children who choose their parents badly deserve a life of misery.
– Victims are always to blame.
@Mark, just wondering if you’re from Ontario, Canada. That’s where PEng is used mostly, I think. How’s business up there? BC is great if you’re in real estate, but Alberta is really grim I heard, Ontario maybe treading water, eh? Love those Canucks, touch as icebreakers in the arctic!
You know, it is a roulette called life and you have a winning ticket. Enjoy it, but do not brag about it.
PS: Recommend watching “Any human heart”, a movie and a book.
The single most important factor in maintaining your employability is also the one thing you have absolutely no control over – your age!
The ‘trend’ I’ve witnessed in the last 5 years is that somewhere around age 52 (give or take a few years) – no matter how technically competent you may be – the best anyone may be able to do will something on the short side of 40 hours a week.
You are correct about the age cut off of 52. I have witnessed this too many times with the Engineers that I know. Most feel lucky to find a job at half of previous salary. Companies are ignoring experience for kids fresh out of college so they can pay them ludicrously low salaries.
One older Engineering Manager (59, and on third recent job due to M&A closures) told me he desperately needs to hire someone with a particular skill-set and has someone in mind (who is 55) but HR (and he is 60+) said he had been unofficially advised not to hire anyone over 45 because of the risk of health insurance payout losses.
Meanwhile this company is limping along with defects in product, tool downtime….all because they won’t hire a 55 year old expert. They would rather step over a dollar to pick up a nickel.
Well here in Oz that number seems to be about right too: hit the 50’s, find yourself out of a job and unless you have hard skills (mechanic, plumber, electrician, MD) you’ll find yourself unemployable and going through all your savings before you are able to claim any government benefits.
Anyone else here ever been let go by email:
“Hi, the company is shutting down. Don’t do any more work. Your employment ends as of today.”
Welcome to the new world of HR.
You are right about debt and right about getting a new certification; CPA.
I am 60. When I was 17 I started working construction and used my wages to purchase flight training. At 19 I started out flying bush planes, getting jobs in a ‘dead market’ because I was a 3rd year carpenter apprentice. I went back and forth between the two industries as each sector took turns thriving. Flying companies hired me because they knew I could work and do stuff. Fast forward a decade or two and I began a teaching career. I was hired in the school district I lived in because I was ‘multi-faceted’, and knew how to work. As a teacher I went back and forth between the three industries on holidays and weekends. Parents sometimes came in to a teacher interview, did a double take and said, “What the hell, you flew me into camp last week”!
The debt issue you raise is key. It allowed me to retire at 57. I had a blast along the way and still am.
My son is now 32. He has his own electrical company on the North Island. He can do industrial, commercial, and resi. He can pull permits. He is getting his alarm system designation as well as well-pump certification. He is writing an exam, today, in Nanaimo…and tonight has to head up Island to do a trouble-shoot before continuing on with a big project underway which requires almost total dedication of his time. He has projects lined up until the fall.
There are lots and lots of capable people out there. But it makes all the difference to have the certifications as well as the experience. (And no debt). Good for you!!!
I have a friend who is a retired engineer here in New Zealand.
The company he works for keeps on ringing him up to bring him in on various projects because none of the younger engineers are able to get things done.
He really doesn’t want to continue working but feels obligated because he spent many years with the company and doesn’t want to leave them hanging.
Blackrock laying off! Now that is scary. Boeing- so what- but if there is no money to made in scams, we are in serious trouble
I almost posted earlier, then bailed. Then I saw this over at ZH:
I was going to comment on my K-Wave rants and what not … and I was going to try to butter it up with 1988 youtubes of Yellowstone burning and down and rebirthing … but … maybe the lights just go out.
I struggle with humanity these days – living is getting older, getting wiser, and trying to true things up along the way – I am not sure we are wired right to pull out of this mess.
It’s going to get bad, very bad.
“It’s going to get bad, very bad.”
For most people it’s already bad, very bad. And they deserve their misery for not having picked rich parents. You know how those people are. They’re too lazy and stupid to become rock stars, movie stars, and tycoons like decent people.
My mother worked all her life as production worker for almost minimum wage. I have PhD.
What is your point?
Just curious how you or she paid for that?
Glad you have a PhD and supposedly a job, but lots of people with PhDs do not. And I do not mean BS degrees in humanities.
“What is your point?”
I wanted comment to your previous five points, but no Reply option. Can you patent those or someone already did?
My grandmother’s cousin put a son thru medical school working as a cleaning lady in a Manhattan sky scrapper. Her union job paid for her son to have an apartment and maid while he attended medical school in Spain. He did undergrad at Columbia University. In the good old days.
I’m tired of measurements only of “companies”…
Join the 21st century: the majority of people today seem to work part-time, sell online, work ‘gigs’, are self-employed, work for small businesses, are contract workers, work two or more part-time jobs, work at home or, yes, work for SMALL outfits. Many of these do not qualify for “unemployment benefits” and render the statistic even more meaningless.
All these central planners, number crunchers and social measurement types ever look at is a very small number of huge employers.
The economy is perniciously changing and becoming less and less secure, but that unmeasurable kind of change is disregarded.
What should one expect when pyschotic quants, feckless CEOs, lying politicians, parasitic banksters and bureaucratic leaches, steal from the public they’re supposed to serve, in broad daylight !
You have not got the Tony Blair in your list. He needs to be in there as a member of your club for he might just have defied a description.
It’s a BIG club……..and I certainly ain’t in it !!
It’s BACK- Nikkei down 500 + points- 3+ %
I guess given the time difference we could call this April 1 news
I guess CNBC will have to tune the ‘good times are here again tune’
Well for you folks in the USA that are thinking about early retirement and social security………………well I guess you are lucky.
For those of us overseas, we are ‘special’ in so many ways for the US government: this form, that form, reduced benefits or none at all.
Did you know that if you take early retirement overseas you are restricted in the number of hours you can work and still get social security?
Work 45 hours a month and you get the full monthly discounted amount.
Work 45 hours and one minute and you lose the entire amount.
And the definition of work? Ridiculous. If you own a business and don’t even work one minute, you are still considered to have worked…………no early social security.
Read all about it in:
Your Payments While You Are Outside The United States
Oil and Gas has always been boom and bust. Back in the 60s, the joke in Houston was that the best exploration team in town worked in the J.C. Penny’s shoe department. When I started out in the late 70s, most of the older geologists I met in the industry had gone to the Middle East for work until things swung back around. For those unwilling to leave the US and willing to take less coin, but good benefits, there was work for the Feds and state agencies, like the USGS or a state geological survey. The same was true during my first downturn in the late 80s.
It is, however, different now. The lackluster economy of the past 8 years has caused those former “safe places to fall” to layoff workers and leave positions unfilled. And if you get one of these government jobs, the pay and benefit packages are much less attractive than pre-2008.
Many of the O&G casualties instantly become “consultants”. They will pick up some work and a few will be successful, but most won’t. Many of them will try to hang on until things pick up again. They will burn through severance pay, savings, and credit cards. Many will wind up losing homes and relationships. That’s how it unwound in the 80s. I expect it to be worse for these folks this time due to the sorry state of the rest of the economy. I do wish them luck.
Just like Albertans, who have now figured out that this is no typical oil bust that’s over before your benefits run out;
So too will this fact dawn on the rest of the population.
I don’t believe a word governments say, especially this government and double especially when it comes to politicized data like unemployment numbers.
Lowest in decades is it?
That would be why retailers are going belly up in droves? I don’t buy the “switch to online” argument because online sales make up 10% or less of most retailers’ business, so a 15% increase in their online sales is much less in real dollars than their 5% drop in same store sales.
But it sure makes for a happy headline when you’re a desperate CEO needing something to cling to in order to prevent a mass exodus of investors.
Reality began to bite late 2015 and will has her teeth firmly planted in the neck of the economy now.
Regarding retailers, before Easter my husband needed a new pair of jeans and we happened to catch a sale at the mall. The store was packed and the jeans were $23, a good price.
I had been in the market for a jacket for my son since Xmas but couldn’t afford anything nice. Well, I landed up getting 2 very nice jackets for him at unbelievable prices. A $125 jacket discounted to $15 and a $50 jacket discounted to $6. While I made out on the sale, I also understood that this store is in big trouble. They are practically giving away merchandise to raise cash.
This anecdote pretty much describes the state of the economy, the consumer, and retail. The scariest part was that the lines at the cash registers were very long and I knew they were losing money on each customer. The other scary part is that I almost didn’t have enough money to buy the items in the first place.
Hi Petunia. I am wondering how this “sell it at huge loss” is going to impact the stores like TJ Maxx, Marshals, and Ross; who usually buy left over inventory.
My daughter was at Target to pick up a few things for an out of town trip (also thinking she would buy a fun pajama set Bday gift for a friend) and returned excitedly with bags of items marked down 80-90%. She picked up several cute cotton PJ sets to give as gifts for the rest of the year for $5 bucks a set and 5 pair of cute cotton draw string pants at $3 knowing this is what I sleep in and work in at home. So I am set for the next 2 years for less than one replacement pair would cost. The older lady checking out in front of her bought $400 worth of 90% off items for her children and 8 grandchildren for the entire years worth of Birthdays and next Christmas.
So if you have done your shopping for the year at such a huge discount….what will the trickle down effect be in terms of future sales? Your son will not be needing a jacket for years. We will not be needing anything from Target for a year at least. And that older Lady sounds like she is done shopping for the year.
The ridiculous part of this whole scenario is that we are paying a lot more for toilette paper and paper towels than any of these clothes.
I saw a report yesterday that luxury retail is hurting as well. I expect that merchandise will land up at the discount stores soon. I just don’t know if there will be any buyers there either.
Why, because your toilet paper and paper towel is still made in USA and clothes come from China, Vietnam, Bangladesh etc.
Now you get full picture :).
You miss a thing, this is how china destroys the competition.
These goods are exported on sale or return consignment.
They are entered to the US/nation of destination, at a higher dollar value, to clear customs and avoid dumping investigations.
All of the purchase price, is not paid up front.
If all the stock does not sell, at the agreed retail price, the retailer dumps the stock, at an agreed sale price, and claims the agreed rebate.
The looser’s are the local manufacturers, taxpayers, and workers.
Think of the sales-tax rebates, this “Sale” activity generates for these entity’s.
8 container loads out of 10 the chinese make a good profit so 10 out of 10 they still make money. The local manufacturers along with competitors from other nations, DIE.
The chinese company’s that market like this, are STATE SUBSIDIZED.
This is just an element in the Economic War. china is waging on America and others, everybody buying those cheap goods is helping china WIN IT.
We no longer make shoes for everyday people in our country ( we Export our good shoe leather to china and buy their plastic cr4ap products) this is how china destroyed our local manufacturers of everyday shoes for everyday people. Also, children’s clothing, underwear, sox’s, garden tools, Etc Etc..
Now people have, cheap, uncomfortable, chinese shoes, that dont last, and no jobs.
Large companies (e.g., Chevron, COP) pretty much have the layoff list complete when they announce in order to keep operations going. They give 60 days notice or at least 60 days pay to comply with the WARN Act. Employees are laid off now by HR, not their cowardly supervisors, accompanied by hired security if laid off in person; email and voicemail layoffs are also common. If you are lucky, you get 15 minutes to gather your personal effects under scrutiny and then you are perp-walked out of the facility.
For O&G, these layoffs will be every bit as devastating as the 1980s in that experienced (i.e., highly paid) professionals aged 55+ will likely never work in the industry again. There will be too much competition from younger/cheaper folks chasing too few jobs.
Deja vu all over again.
Merlin: Even back in the 80s O&G outfits, especially the big ones, did the 15 minute out the door with a security guy escort. I was District Geologist for a small independent that was bought for it’s reserves and data. I was the last man standing and had to sign a contract that all seismic data, especially our proprietary seismic, that had ever been in that office was there and that I knew of no copies in anyone’s hands. Surreal experience shutting down a 15 person office.
Fortunately I was 40 at the time and had a wife with a good secure job. I had the good fortune of having time to get my career back on track. If I had been ten years older, it might have been a different story. Now with the ever increasing cost of healthcare and younger workers available, if you are caught up in layoffs and 50+, your career is probably over. So the oil price rebound in 2016 or 2020 may be of little consequence.
i think that the real issue concerning the terminating of the older than 52 is the medical costs.
working for a large corpse that offers good medical benefits, at some point the employees age and the likelihood of more claims, higher costs to the corpse, forces them to cull the herd.
so, while the usa electorate continues its jingoistic clamoring for more wars, they fail to recognize that spending taxdollars for killing prevents spending taxdollars for living.
though the choices made by the electorate might be the result of ignorance, it makes no matter. if they work for a large corpse providing medical benefits, at some age, no matter how long they have worked for that corpse, they are laid-off.
and the affordable care act will not resuscitate them. the business to be in at the moment must be in funeral homes[service corp international?].
How come my investments are better than ever? How come I have no debt? How come I don’t work, but retired at 60? 5 years later have more than I started with? Why are twins SO bleak?
I must be a dismal failure…
The fact that you have no debt sums it all up. Here in Texas they freeze your county, city and school taxes at 65. So one is sitting pretty if debt free.
The fact that you are debt free tells me that you have restraint and discipline in spending which furthers your positive economic position.
Are you lucky enough to direct your own investments? Most people are not. The fact that you are on sites like this means you study it and act accordingly. Most people do not.
A couple of relatives had some great annuities that finished paying out. There are no similar products to replace those with now. They are scrambling to replace that income, but nothing to be found.
Let’s see how the bond market plays out the next year or 2. That debt is scary.
SORRY, but texas does not arrest propery taxes when a citizen of the state turns 65.
if an appraisal district raises its appraisal of your property, you will pay higher property taxes.
and you can only get relief if you protest to the appraisal district and can show that your appraised value deviates from comparable appraised valuations. for example, they say that your property demands an appraised value $100,000 higher than the previous year.
if a comparable propery, your neighbor’s for instance, had its appraised value unchanged or lowered, then you might get what the appraisal district wanted reduced.
but age of the property owner has no probative value in appraised values. in other words, just because one turned 65 does not cement the appraised value as it was in that year.
SORRY, but yes there is a tax ceiling on 65+ and disabled at time of qualification for school tax which in my area is the killer tax (we are number 1 or 2 in the State) but worth it.
Other exemptions for city and county.
If you do not apply for or are qualified for Homestead exemption, then no, you do not get the benefits. So that means if you have a principle residence in some other state or were too stupid/lazy to apply for homestead…you are screwed.
For the rest of us…Every 2 years they raise your appraised value based on an apples and oranges comparison for a win on their side. Every 2 years I put my own comps together and contest it and win. Unless they actually come into your house they have no idea what your house is worth. And that is obviously impossible for them to do. I just take the time to exercise my rights.
Another comment to clarify….your appraised tax value has nothing to do with your actual market value. It might be a starting point but is not what your home is really worth.
Does anyone track what percentage of working people would even qualify for unemployment benefits, should they lose their jobs?
If only 1/1,000 workers can qualify, then the application numbers are going to be low, no matter what the jobless rate is.
I’ve wondered about this for years, but haven’t run across any statistics.
Heading: New Jobs
Text: There are currently no vacancies.