Are employers using the recession as an excuse to let people go?

[MessiahRp]

I have long wondered if during recessions, companies that are otherwise still doing well, use the whole concept of a "recession" as an excuse to can workers so that their profit margins go up and the people at the top (namely CEOs) rake in the cash.

I was reading the newest issue of Internet Retailer (link: http://www.internetretailer.com/article.asp?id=30596) and found this to be somewhat disturbing.

In a survey of Internet Retailers, IR Magazine found the following.

In the first quarter of 2009 compared with the first quarter of 2008 did your web sales:

Increase 51.6%
Decrease 30.8%
Stay the same 17.6%

Now 51.6% are seeing their amount of sales increase. Not bad for a recession, especially when you consider this:

By what percent did your web sales increase?

(snip)
30.1% to 35% - 4.3%
35.1% to 40% - 8.5%
40.1% to 45% - 6.4%
45.1% to 50% - 4.3%
More than 50% - 25.5%

So for the 51.6% of retailers who are making MORE money during this recession, they are making out big. Over 49% of them are making MORE than 30% OVER what they made last year.

So then they should be able to invest more in their business or at least retain the status quo, right? After all how many businesses need to cut back when they are posting 30-50% increases?

In the light of the severe recession, do you plan to cut expenses?

Yes - 62.6%
No - 37.4%

So they're making a ton more money, but they are going to use the recession to cut expenses. And where do they plan to cut?

In what areas will you reduce expenses?

General and administrative - 47.8%
Marketing and advertising - 29.3%
Fulfillment and distribution - 17.4%
Technology - 17.4%
Other - 12.0%

General and Administrative... read: cut employees from the payroll.

Just in case anybody thought that corporations should be trusted, as our lovely idiot Blue Dogs and Republicans do, to do the right thing at all times, they are the ones that are creating the recession with their greed and now they are using it as an excuse to put good workers out on their asses.

Gotta love American Capitalism.


Rp

[Missy Vixen]

1. It's definitely happening in the tech sector

If you make more than a first-year employee, (or someone you can import via H-1B visa and not pay prevailing wage to,) you're gone.

:mad:

[brendan120678]

5. I work in the tech sector...and for us it seems more like...

last hired, first fired.

[onethatcares]

2. I've often wondered just where those lost jobs go

people have to be employed to buy the products and services that are offered, but in order to produce the products and services,people need to have jobs
This circular logic has me clusterfarked.

[B Calm]

3. Cheap Labor Cons love recessions. They use it to get pay cuts,

freeze wages, cut benefits, etc etc etc.

Then they turn around and give corporate people a big raise. . .

[izzybeans]

4. It's why some components of a recession are self-created and/or reinforcing.

lay-offs beget layoffs regardless of revenue. It's the same type of irrationality as a run on the bank. The panic drives the layoffs. My organization's in a hiring freeze despite being fiscally strong. It's the "everyone else is doing it" mentality.

When an entire community's employers do this, who will be left to buy their products?

[Freddie Stubbs]

6. Why would an employer need an excuse to let lay off workers?

Plenty of them downsized when the economy was booming.

[MessiahRp]

9. Easier to deal with negative PR when you use the recession as a reason.

Since everyone knows the economy is bad it's a much easier spin job rather than cast a negative light on your company, which downsizing in periods of growth does.

Rp

[Occam Bandage]

7. Since when do they need an excuse? They lay people off during good times and bad. nt

[MessiahRp]

11. See response #9

It's not about just wanting to make cuts, it's about doing so by avoiding as much negative PR as possible. Because of the common knowledge of a recession there is less backlash from workers, more empathy from the community over "hard times". You take a lot more heat downsizing in a period of growth so this is a perfect opportunity to do this and avoid the storm you would otherwise have a difficult time weathering from the media, etc.

Rp

[Occam Bandage]

16. They don't really care about that. Never have.

The cost savings of layoffs are far more important than the temporary PR of people complaining about job losses. This isn't France; we don't riot in the streets or take executives hostage when we lose jobs.

[JVS]

24. True.

[Godhumor]

8. G&A expenses are not salaries of the workers

G&A expenses are any not directly related to product or service in question. These include things like rent, facilities, general utilities, etc. Salaries counted under G&A are management and executive salaries as opposed to those actually in the line of production, so to speak.

In other words, it makes sense that the first place companies will look to cut expenses is in the category not directly related to what they sell.

[MessiahRp]

10. Actually it is..

They had a different section for capital expenditures which included facility costs, etc. In that question only 45.1% were making cuts and 15.1% were for stores/real estate.

Rp

[Godhumor]

12. Capital Expenditures are things they included like

web platform, etc. or foundation of web based work as well as some owned or leased facilities. That said, rent, utility payments, etc should be included in G&A. The definition of G&A expenses is essentially overhead, which includes managerial pay. Production-based people, unless this survey uses a non-industry standard definition, do not have salaries included in G&A.

[MessiahRp]

13. Under the definition names used in the expenses question...

Exactly what other category would workforce fall under. Seems to me that "general" fits a pretty solid all around bill for that.

Capital Expenditures seem to have to do with costs like platform and web applications but also to real estate and other tech costs for fulfillment and call center materials, etc. It seems like most of the non-human costs go in this category. Say you decide that in the expenses question General and Administrative is office and other workers and that fulfillment and distribution covers warehouse workers, that is a much larger number than what I mentioned previously. Somewhere in there they are talking directly about workforce in the cuts and it appears to me general fits this bill.

Rp

[Godhumor]

18. Not quite, I think

Again, this is a survey so definitions probably will not fit exactly with income statements. But most companies that have someone respond to this should be using the understood definitions. G&A is overhead--it is what it means. They're talking about the first place to cut is overhead. Production salaries are not counted as overhead. From the survey, my assumption would be that companies are first trying to cut areas that do not lay off that many people which is overhead and advertising. My guess is that lay-offs as a specific way to reduce cost is either in the "other" category or rolled into each individual category--i.e. marketers would be counted under marketing reduction.

They should not be and probably are not in G&A.

[anigbrowl]

14. Quite. floor-level staff = fulfilment and distribution.

Also, while many respondents are seeing increased sales, that tells you nothing about the volume of their business. If I have a website that sold $100 last month and $200 this month, I've doubled my sales but but only because I'm a minnow. It's like trying to gauge the performance of the stock market by weighting penny stock price movements as equivalent to those of companies with enormous market cap.

[MessiahRp]

15. I would guess that as all of their surveys go, this is from members of the IR Top 500 Retailers

I don't believe any "minnows" make it into this survey.

Rp

[Stinky The Clown]

17. That happens in every economic downturn.

My clients are architects. Some have a staff of four or five or ten or twenty. Some have staffs of a few hundred. Some have staffs over a thousand.

In the good years, they pay hiring bonuses to people if they are capable of fogging a knife blade held under their nostrils. In bad times, those are the first people to go.

I expect this is true across the board in all industries.

[leftyladyfrommo]

19. Its a great way to layoff older workers n/t

[lolly]

21. Or bust unions

The community college near here fought against unionizing part-timers for years.

Now, union leaders and senior adjuncts are getting classes cut--but somehow they're finding classes for fresh-out of grad school new part-timers.

[leftyladyfrommo]

22. And this whole situation has been hardest on older people.

We've lost all of our savings for retirement and now there is no work. There are millions of people caught.

I just started my own business three years ago and boy am I glad I did. But I don't know what most older people will do. They aren't physically or mentally able to just go out and take any job. Its pretty scary.

[lifesbeautifulmagic]

26. yes,

yes yes yes

Why is the press not paying attention to the disproportionate layoffs of the over 50's? A whole new invisible class of poverty is being created, that will be heavily dependent on government services. No one is paying attention. What a sick way to treat older Americans who devoted their lives building up corporate America.

This has happened TWICE in my family, once in the 70's to an uncle who had worked for his employer for over 30 years, and was let go 2 years before retirement, and the employer made no bones about it. Called it a profit maximization plan.

I can't speak to the second time, it just not good for me to go there right now.

[leftyladyfrommo]

28. The long term effects will be enormous.

But its like no one is even paying attention.

I find that very odd. But then I found it very odd that no one paid attention when the Iraq inspectors found nothing and were forced out before they found anything to that Rumsfeld and Cheney could attack.

The press just totally overlooked that one, too.

[SmileyRose]

29. Actually

Yahoo posted something weeks (or maybe months) ago that said the right out of college and younger workers are getting it first -- that too many companies are worried about discrimination lawsuits so they are just doing last in first out. Older workers with more experience are being asked to take pay cuts.

[Swamp Rat]

20. Yep... all part of the Grand Plan, Stan.

[HopeHoops]

23. FUCK YEAH!!!1 n/t

[Help_I_Live_In_Idaho]

25. Yes and to pay them less

In fact they would have us working under whips if they could get away with it.

[Commie Pinko Dirtbag]

27. Employers will use the score of yesterday's ball game as an excuse to let people go. -nt

[4_TN_TITANS]

30. Of course they do....

My company just came off a record year in 2008 to fire people in the first quarter of 2009. The economy was an excuse to get rid of 'dead wood' and those who rubbed management the wrong way. Otherwise, the company might have faced some legal trouble in justifying the firings.