Labor strife, benefit cut and layoffs are all part of the languid job market that seems to represent the new status quo in the United States. After four plus years of high unemployment and stagnant wages, even some of the most prolific hirers are having to tighten their belts. This includes Zynga. The social game company has lost about 85% off its stock value since it's recent all-time high earlier this year and recently had to lay over 100 employees off in a desperate attempt to cut costs. While that's a pretty substantial workforce reduction, especially to the 100 plus ex-employees affected, it's nothing compared to some of the biggest layoffs of all time.
It's hard to top, or bottom, the recent mass firings by past-its-prime Silicon Valley stalwart Hewlett-Packard. The last few years have been dreadful for the computer manufacturer. Longtime CEO Carly Fiorina was shoved out the door after a disastrous merger with Compaq. Her successor Mark Hurd followed suit after a sex scandal, and his successor Leo Apotheker lasted barely 10 months on the job. This past May, Hewlett-Packard announced that it'd cut 27,000 employees loose between now and 2014.
When tech companies do cut, they cut hard. In 1993, legendary IBM CEO Louis Gerstner closed plants, reduced dividends and let 35,000 employees go for good measure. It was all to "turn around" a company that was in relatively good shape at the time anyway. Eight years earlier, IBM had 405,000 people on its payroll. Today, it boasts 433,362. Sometimes you have to cut off a couple of fingers to save the hand. Gargantuan layoffs aren't exclusive to the quickly-changing tech industry. Money-lending has its casualties, too.
Bank Of America
In 2008 and 2009, the U.S. experienced massive layoffs around the nation, some states more than others, and Bank of America was one of the struggling companies. Bank of America did what many struggling business did. It petitioned its superiors in the federal government for a handout, and it received one. It got billions via the Troubled Asset Relief Program (TARP). Then, a little more than a year ago, Bank of America executives decided that the company's new status as a ward of the taxpayers meant that it was bottom-heavy. Bank of America laid 30,000 off, or at least announced that it would do so over the next few years. If we're detecting a theme it's this: many of the corporations that at some time reigned as the largest in the country, whether by revenue or by assets, ended up eventually succumbing to staff cutbacks.
AT&T, today just another player in the mobile market, is but one example. It's hard to imagine now, but at one point AT&T had a monopoly on phone service in this country. If you made a call on your rotary phone, AT&T got a piece of it. In 1996, AT&T was still struggling with the demands of a marketplace where the company's size made it unwieldy. AT&T then separated into three companies. One of which is the progenitor of the familiar wireless company of today. To get there AT&T had to dismiss and otherwise sever ties with 40,000 of its workers. AT&T's mission is more clearly delineated in 2012, and its workforce has grown accordingly. It currently boasts 256,420 employees around the world.
It's important to remember that very few of these mass layoffs are as sudden and disruptive as they sound. It's not as if these companies confiscate its employees' key cards and parking passes on a single dreary Friday afternoon. Most staff reductions are gradual, come with ample warning, and include forced retirements and other less jarring forms of elimination. The United States Postal Service has offered 156,000 people to leave early but said that it would come in three waves over two decades.
The Bottom Line
Contrary to what some reactionaries might believe, management doesn't let employees go with glee. Ideally, every employee is an asset. Most companies look for alternatives to layoffs, but sometimes conditions deteriorate, costs rise and obsolescence creeps in. Fortunately, in a capitalist system with a freely flowing labor market, those employees have myriad places to find the next venue at which to use their skills. Their previous employers have a chance to reorganize and ultimately offer the marketplace something better, too.
More From Investopedia