There are some very strange things being done these days by those vaunted Job Creators, to whom we are to give tax breaks, tax havens, tax deductions, tax subsidies, and reduced marginal taxes because — They Create Jobs!
Here’s BMW’s version of “job creation” in Ontario, California: “Despite making record profits and receiving over $3.6 billion in taxpayer bailout loans, the German automobile giant will layoff almost all its union and non-union employees in Ontario later this summer and immediately re-open the facility the very next day with a cheaper, inexperienced work force. ” [...] “BMW also received over $3.6 billion in secret low-interest loans during the 2008-2009 U.S. taxpayer bailout.” [PRN 7/14/11] Next month almost 100 people some with long experience with the corporation will be laid off. [AutoEv] The Los Angeles Times called the event an “evisceration of the middle class.”
Here’s ATC’s idea of job creation in Ohio: Move to Florida, closing the aerospace supply chain business in Butler County, and don’t specify the number of jobs that will be available in the new location. [BizJournal] Butler County has received four notices of job losses this year. “Butler County has had four notices of mass layoffs this year from downsizings or closings at Kmart in Hamilton, MISA Metals in Middletown and BAE Systems and CEVA Logistics in West Chester Twp. It was also announced last month that a Liz Claiborne distribution facility would close in West Chester Twp., affecting approximately 400 jobs.” However, the news isn’t completely bleak for Butler County. ”…the county will also gain some jobs from GE Aviation, which said last week it is moving 300 employees to newly leased office space in West Chester Twp. Business retention successes include the 185 jobs kept at ThyssenKrupp Bilstein of America Inc., in Hamilton, a manufacturer of automobile shock absorbers. ThyssenKrupp has an expansion project that could also add 60 jobs.” [JournalNews] Notice that GE Aviation isn’t creating new jobs, it is simply moving 300 already filled to Butler County, thus the brightest hope comes from the addition of 60 new jobs at TKB.
Here’s what job creation looks like at Cisco Systems (CA): Rumors are swirling in business circles that the company will shave anywhere from 5,000 to 10,000 employees from its roster in order to increase profits. [IBT 7/12/11]
Here’s what job creation look like in Lebanon, Tennessee: 60 employees of the Cracker Barrel are looking for other work, ranging from secretarial to management. The company saw sales drop 2.6% — fewer people are eating out these days. [Tennessean 7/18/11]
Job creation didn’t look any better in Union City, TN: “The United Steelworkers (USW) today said it was very disappointed to learn that Goodyear Tire issued a WARN notice to its members at Local 878L, informing them that their services would no longer be needed at the Union City, Tenn. facility scheduled for shutdown. [...] The shut down affects 1,900 workers in western Tennessee and Kentucky.” [PRN 7/11/11]
Job creation at Goldman Sachs looks like up to 230 people losing their jobs in New York. The company, also a beneficiary of taxpayer largesse, said it was interested in reducing “$1 billion in non-compensation expenses in the coming year.” [BusInsider 6/29/11]
The financial sector doesn’t sound like a very happy place: “There were mass layoffs in the sector in 2008 as well, but this time the layoffs are said to be permanent. The report from Challenger, Gray & Christmas has said that the financial sector is going to be cutting 21 percent more jobs this year than in 2010. Over 11,000 jobs are expected to be cut by banks, brokers, and insurance companies. “ [SBwire 6/27/11]
There’s no job creation for a bankrupt company in Cordova, MD: “The first reported layoff at one of the seven Allen Family Foods facilities up for sale will take place Friday at the Cordova processing plant, where 30 of the 474 employees are expected to lose their jobs.” [CW 7/14/11]
On Wisconsin? Except for employees of M&I Bank: “About 475 jobs will be cut after the parent company of Harris Bank acquired Milwaukee’s M&I banking chain. Jim Kappel of BMO Harris said the layoffs would take place during the next four months throughout the company’s Midwest region. “ [PCH 7/21/11]
Job creation hasn’t been a factor for Ford’s “Ranger” production in Minnesota: “Still, Shropa said, “Our last date of scheduled production is Dec. 22.” Ford, which first announced its intention to close the plant in 2006, has extended its life past earlier projected shutdown dates in 2008 and 2009. It now says only that operations will end sometime this year. The company plans to build redesigned Rangers at plants in South America, Asia and Australia and sell them only in international markets.Thus will end Ford’s mixed manufacturing legacy in Minnesota, leaving behind a workforce of about 900 as well as employees of at least 17 supplier businesses who have been declared eligible for the state’s Dislocated Worker program.” [TCDP 7/12/11]
And, the Ford Experience isn’t the only reverse Job Creation going on in Minnesota: Boston Scientific announced 5,000 layoffs in the Land of 10,000 Lakes, labor is so much cheaper in Costa Rica. [BizJournals 7/11/11]
We could probably have guessed MySpace was going to practice reverse job creation: “…MySpace gave pink slips to more than half of its base of 450 employees on Wednesday. Compare that to when MySpace employed 1,400 people as of two years ago, and its easy to picture just how steeply this company has fallen.” [ZDnet 6/30/11] But hey! They hired Justin Timberlake?
While these situations will show up as “mass layoff events” in Department of Labor statistics, the events are described in order to drive the point home that what we are looking at are not statistics in carefully tabulated charts — they are men and women who will be filing unemployment insurance benefit claims, thus reducing their spending capacity, and joining the ranks of unemployed Americans.
OK, It’s Not All Gloom And Doom
Things could be worse in the private sector, it could be the first quarter of 2009 after the Housing Bubble splattered all over the United States of America, and there were a record 3,979 mass layoff events, as defined by the Department of Labor. [DoL] According to the Department of Labor, “The total number of business functions reported by employers in nonseasonal layoff events in the first quarter was 1,926, a decrease from 2,563 business functions a year earlier.” As expected the worst sector was construction, followed by administrative and clerical personnel, then “general management,” and “first line supervision.” One year ago manufacturing accounted for 16% of all the mass layoff events, this year it accounted for 20%. [DoL]
The Other Shoe Dropping
Just as the private sector is at least experiencing a declining level of mass layoff events — not exactly what one might expect from the Job Creators, one could have thought they’d “create” a few more — the other shoe is already headed toward the floor: Lay off “events” in the public sector. One possible harbinger of things to come is that the May 2011 DoL report concerning mass layoffs included two categories either directly related to the public sector, or to the capacity of families to assume additional employment to replace jobs lost in layoff events — workers in child day care centers filed 7,120 claims in May 2011, and colleges and universities laid off 2,095, with junior colleges adding another 1,857 unemployed.
“Education services” have already begun to hit the tabulations. The Department of Labor looked at selected quarters and determined that during the First Quarter of 2010 887 individuals in this category were unemployed as a result of layoffs; by the Fourth Quarter of 2010 the number increased to 2,655, in the First Quarter of 2011 another 781 were added. The First Quarter of any calendar year is not a time one would expect to see layoffs in educational services.
The numbers in “health care and social assistance” don’t look much better. In Q1 2010 there were 5,631 recently unemployed, in Q4 there were 6,475. There were 3,812 in Q1 2011. If we add the Q4 unemployment in educational and health/social services, there were 4,593 people with reduced or no earnings. It is impossible to calculate with any specificity what these layoffs cost to the economies of local communities, but we can hypothesize for the sake of illustration that if they were earning median wages ($53,000 annually) they were contributing a total of $243,429,000 to their local economies. Since education and health sectors tend to pay less than median level wages, we might reduce this to a hypothetical $30,000 annual income, but that still might have yielded some $137,790,000 to the local economies — as well as revenue from their income, property, sales, and other taxes paid.
Teacher layoffs were narrowly avoided in New York City, those layoffs threatened 4,100 jobs. [NYT] There will be no mid-year cuts to teaching staff levels in California mid-year, but who knows what will happen after that. [LAT] Detroit Public Schools could be hard hit. [HuffPo] Intertwined with these budget gap issues, is the full-on assault on teacher unions, which is itself part of an overall union-busting agenda by Republican leaders. Even authorization for the Federal Aviation Administration is fraught with conflict over the rights of employees to organize. [DKos 3/8/11] [DKos 7/20/11] [Politico 7/21/11] [FCW 7/21/11]
And The Losers Are?
Lost in the public employee bashing rhetoric of the radical right, which claims that these are “not real jobs,” is the irrefutable fact that teachers, firefighters, police officers, aviation personnel, and other public sector employees are property owners, consumers, and taxpayers. As property owners they saw their home values decline with all others in the aftermath of the Housing Bubble, as consumers they are seeing their disposable income eroded by inflation and give backs, as taxpayers each ‘give-back’ accepting reduced wages means that they return less back to public coffers in income tax payments, and payroll taxes if such are deducted in their various districts.
If reductions in mass layoff events in the private sector are counter-weighted by mass layoffs in the public sector, no one wins. Certainly not the Cracker Barrel Restaurants who’ve seen 2.6% of their clientele disappear. Certainly not tire manufacturers who depend upon customers from both the public and private sector having sufficient disposable income to purchase automobiles. Certainly not the banks if deposits in their customers’ accounts decline.
In a race to the bottom, there are no winners.