Layoffs may soar in December
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December could be a brutal month for job layoffs in Massachusetts, as the economy worsens and more companies look for ways to cut costs before the end of the year, economists and labor officials say.
Historically, the highest numbers of job cuts in Massachusetts and elsewhere have been recorded in December, when executives typically scramble to hit profit targets and prepare budgets for the following year.
"We're definitely bracing for more layoffs," said Tim Sullivan, legislative and communications director for Massachusetts AFL-CIO, the umbrella organization for 750 unions in the state.
Sullivan said the union expects to see significant cutbacks in the private sector, as well as in government spending. Governor Deval Patrick recently said he will slash $1 billion and 1,000 jobs from the state budget to close a $1.4 billion deficit.
Gus Faucher, director of macroeconomics for Moody's Economy.com, a research firm, said he anticipates more workers in Massachusetts will soon be out of work, though he did not predict how many.
"I would expect the end of this year to be a time for big layoffs," said Faucher, who follows the Massachusetts economy. "Companies generally think it is a good time to lay off workers before the start of the new year."
Some companies have already started the process by unveiling plans in recent days to eliminate jobs. For instance, Aramark Corp., which provides catering services, yesterday warned it might have to let go 475 workers at the Boston Convention and Exhibition Center and Hynes Veterans Memorial Convention Center on Dec. 31 unless it can negotiate a contract extension with the halls. CombinatoRx Inc., a Cambridge biotech, said it plans to cut 52 jobs, nearly one-third of its staff, effective Dec. 30 after reporting disappointing clinical results for its osteoarthritis treatment. On Monday, delivery giant DHL Express said it will close 300 shipping and receiving stations early next year, including three in Massachusetts that employ hundreds of workers. And last week, Fidelity Investments, the Boston mutual fund company, said it plans two sets of layoffs, including 1,300 jobs in the first round.
December has long been a cruel one for Massachusetts workers. Over the past decade, there were 361 major layoffs - those involving 50 or more employees - in the last month of the year. They accounted for 40,000 job cuts, far more than in any other month, according to data from the US Bureau of Labor Statistics.
Last December, 2,131 jobs were lost in major layoffs in Massachusetts, according to federal data. But historical evidence points to a higher number this year. During the last recession, which was triggered by the dot-com meltdown in 2000, the state's job market was hit with 3,887 layoffs in December. In 2001, there were 5,534 positions eliminated during December, more than any other month. In 2002, there were nearly 7,500 December layoffs, a monthly high for the year.
"It belies the idea that there is a taboo about firing workers between Thanksgiving and Christmas," said John Challenger, chief executive of employment consulting firm Challenger, Gray & Christmas, which tracks layoff announcements.
Still, not everyone agrees December will see a flood of job cuts.
Alan Clayton-Matthews, an economist at the University of Massachusetts in Boston, said there may be reason to believe December job losses will be less than some anticipate, at least in the retail sector. Because of a sharp decrease in consumer spending, many retailers are hiring fewer temporary workers for this holiday shopping season. That means fewer jobs to eliminate after Christmas. The same could be true of companies that supply toys and other goods for the holiday season, he said.
In any case, layoffs have already taken a heavy toll in Massachusetts and across the United States this year. In October, the national unemployment rate rose at the fastest pace in 26 years to 6.5 percent, climbing four-tenths of a percentage point in just one month, and up more than 2 percentage points since early 2007. Economists predict that the unemployment rate could reach 8 percent next year.
In September, the state's unemployment rate was 5.3 percent, up more than a point since April. October numbers have not been released.
"It looks pretty bad," said Clayton-Matthews. "We've already seen initial public unemployment claims rise very sharply. Employers are reporting intended layoffs all over the place; consumer spending fell last quarter in real terms."
Even though the state's economy took longer than most of the country to feel the effects of the recession, Clayton-Matthews said Massachusetts will ultimately see higher unemployment figures.
"It will be as bad here as the rest of the country," he said.
Faucher also said he expects the state's economy to be hurt as hard as or more than the nation as a whole, because of its reliance on jobs in financial services, accounting firms, legal services, and other areas affected by Wall Street's woes.
And though it might seem Grinch-like to fire workers as the holiday season nears, Challenger said an early-December pink slip could be better for employees than one that arrives after New Year's Day.
"Some people might prefer to know before they make their big holiday purchases," he said.
Todd Wallack can be reached at twallack@globe.com.
