Yesterday, I noted Walmart’s decision to cut around 11,000 Sam’s Club jobs. Today, with Verizon’s fourth-quarter earnings release, we get more bad news on the employment front: the telecommunications giant also plans to cut more workers this year — 13,000. I don’t like the trend that appears to be forming here.
Dow Jones Newswires reports:
“The economy won’t help us as much as we thought,” said Chairman and Chief Executive Ivan Seidenberg, adding that he doesn’t see a significant improvement until the end of the year. As a result, the company plans to shed another 13,000 jobs in 2010, roughly the same amount cut in each of the past two years. The latest represents 11.1% of its total work force of 117,000.
I take that to mean that Verizon thought that the economy would turn out better than it has. In other words, that awful 10% unemployment that the U.S. is suffering from might not be high enough to reflect how bad things actually are. So Verizon will cut a whopping 11% more of its workforce this year to save additional costs.
This is actually much worse news than the Walmart announcement. At least some of those jobs would be saved by the consultant the company is hiring. But Verizon’s cuts appear to be outright losses. And it seeks to increase unemployment by approximately the same portion as it did in the past two years. That’s an ugly prospect. I can hardly imagine a world where all companies did the same in 2010 — 12.6% unemployment by year’s end.
Realize this isn’t a little company saying that it probably won’t hire in 2010. This is one of the largest in the U.S. — one of the 30 Dow Jones Industrial Average components — saying it will endure deep job cuts again this year. According to Forbes, Verizon is the 35th largest company in the world by market value.
This is so disturbing because job growth will likely have to start with larger firms. They have an easier time securing financing through the capital markets than small business. They’ll feel the economic winds changing first through their diversification. If they aren’t turning around, then I find it hard to believe that small business will either. If companies like Wal-mart and Verizon continue to layoff workers in 2010, I’m not sure how we can expect unemployment to decline nationally.
