Hewlett-Packard’s (HPQ) plan to lay off 55,000 workers—part of its historic move to split into two different companies—may represent a curious turning point for the economy: The last of the 5-digit layoffs.
In the immediate aftermath of the 2008 financial crisis, 5-digit layoffs were common: 50,000 at Citigroup (C), 47,000 at General Motors (GM), 34,000 when Circuit City closed, 60,000 at the postal service, and on and on. But all those layoffs left most big companies leaner than an underfed hipster. The average number of monthly layoffs fell from 106,000 in 2009 to just 40,000 through August of this year, according to outplacement firm Challenger, Gray and Christmas.
The 55,000 layoffs just announced by HP — about 18% of its global workforce of 300,000 or so -- exceed the total number of layoffs for all companies combined in every other month this year. In fact, before H-P’s startling news, the biggest layoff announcement this year came from …. Hewlett-Packard, which said in May it was laying off up to 16,000 workers.
It’s worth asking if there are any other companies that are still so big and unwieldy they could even find 10,000 workers to lay off. Microsoft (MSFT), under new CEO Satya Nadella, has already let go of about 13,000 workers this year in several different moves. Corporate giants such as IBM (IBM) and General Electric (GE) are already restructuring themselves, while DuPont (DD), Johnson & Johnson (JNJ) and 3M (MMM) sometimes attract attention from activist investors with dreams of unlocking value through spinoffs or cost-cutting. Yahoo Finance’s Aaron Pressman highlights Cisco (CSCO) as another leviathan that may still need to streamline.
But few companies, if any, have survived the last several years with substantial fat left to cut. If anything, companies need to hire rather than fire. The government’s latest report on job turnover showed 4.8 million open jobs in August, the highest number since at least 2001. The pace of hiring has slowed, however, which suggests employers know they need to hire but are going about it methodically, not yet ruling out other options or holding off until they're sure another economic downturn isn't looming.
The sharp decline in the number of layoffs, in fact, has been one of the best developments in a job market that remains plagued by persistent problems such as stagnant wages and depleted wealth. With layoffs dwindling to levels last seen during the boom years of the late 1990s, workers’ sense of job security has improved, and confidence along with it. If wages and wealth were improving too, it might feel like a bona fide recovery.
It still doesn’t, though, and one reason is the sporadic bloodletting at sclerotic giants like H-P. Sooner or later, the layoffs must end. Maybe H-P will manage to whack itself down to size before the next recession begins.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.