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January Job Cuts Double to Highest Level Since 2009

Despite an apparently level unemployment rate, a wave of corporate downsizing in the retail, computer, and telecommunication sectors pushed job cuts to their highest level since the 105,696 layoffs last July, according to the latest report by the Challenger, Gray & Christmas, Inc. outplacement services.

January’s 218 percent surge over December in corporate layoffs to 75,114 workers was the highest level of after-Christmas job cuts since the brutal 241,749 layoffs at the depths of the 2009 global financial crisis.

For the week ending January 30, the Department of Labor reported that the official unemployment rate was unchanged at 5 percent. Initial unemployment claims were 285,000–an increase of 8,000 from the previous week’s revised level.

Despite a strong 8 percent sales increase over the 2015 Christmas selling season, retailers led all other industries in January downsizings with the elimination of 22,246 jobs. That was the highest total for retailing since the 53,938 job cuts in January 2009.

The Walmart global restructuring that resulted in closing 269 stores dominated the downsizing report with 16,000 worker terminations. But Macy’s also announced plans to shutter stores and terminate 4,820 employees during 2016.

Challenger highlighted that rising consumer spending should have been very good for traditional retailers, but a growing portion of their sales momentum is migrating to the Internet. “At Macy’s, for example, November and December sales at its brick-and-mortar stores fell by about 5.0 percent, while orders through its online entities were up 25 percent from a year earlier.”

Changing consumer preferences are forcing “retailers like Macy’s and Walmart to rethink their strategy; moving away from traditional stores and investing more into Internet sales,” according to the report.

No one should be surprised that in January the massively downsizing energy sector came in second with 20,246 terminations. But in a disturbing trend for technology workers who have enjoyed America’s top wage-gains over the last decade, the computer industry came in at number three with 11,003 job cuts, and the telecommunications industry was fourth with 3,371 layoffs for the month.

Since the start of the year, according to the Zero Hedge blog, corporate downsizing has seen major job cut accelerations in tech:

According to Wall Street analyst Chris Martenson, there is a compelling argument that the tech industry is about to suffer a wave of mass layoffs that could be “worse today than back in 2008/9.” He comments that most Silicon Valley downsized tech workers during that dark era could seamlessly transition to the “fast-expanding private future behemoths one could jump to: Facebook (NASDAQ:FB), Palantir, Uber (Private:UBER) and the like. Even Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN)” continued to invest heavily in growing research and development during that recession.

Martenson emphasizes that in the current job market for tech workers, there is “no ready stable of up-and-comers with similar potential to power through a recession.” He believes that “those laid-off to find open positions elsewhere will likely be more similar to the 2000 Tech bubble burst.”

As a former Silicon Valley worker back then, he remembers being amazed at “how fast 101 changed from a crawling bumper-to-bumper experience to an uncrowded freeway. The number of jobs (and thus commuters) that vaporized quickly was astonishing.”

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