By Patrick Thomas, Sarah Chaney and Chip Cutter
A new wave of layoffs is washing over the U.S. as several big
companies reassess staffing plans and settle in for a long period
MGM Resorts International and Stanley Black & Decker Inc.
recently told some employees furloughed at the outset of the
coronavirus pandemic that they wouldn't be put back on the payroll.
And companies bringing back the majority of furloughed workers,
including Yelp Inc. and Cheesecake Factory Inc., are making
reductions as they adjust to the new reality that many
coronavirus-related closures won't be resolved this fall.
More fresh layoffs at big employers loom. A day after
Salesforce.com Inc. posted record quarterly sales, the
business-software company notified its 54,000-person workforce that
1,000 would lose their jobs later this year. Coca-Cola Co. said
Friday it plans to lay off some employees and offer voluntary
buyouts to about 4,000 employees in the U.S. including Puerto Rico
as well as Canada. American Airlines Group Inc. and United Airlines
Holdings Inc. have said more than 53,000 workers could be affected
in about a month if the airlines don't receive another infusion of
funds from the government.
The outlook reflects an acceptance by corporate executives that
they will have to contend with the pandemic and its economic
fallout for a longer period than they had hoped. Some CEOs and
other executives suggest more pain is ahead, said David Rubenstein,
co-executive chairman of Carlyle Group, a private-equity firm with
around $220 billion in assets under management.
"Privately, some of them may hint that they probably won't need
as many workers as they once thought," Mr. Rubenstein said.
"They'll have to reinvent their businesses in ways that they hadn't
The latest layoffs come as there have been glimmers of an
economic recovery. Many employers have rehired some workers after
cutting jobs this spring, pushing the U.S. unemployment rate down
to 10.2% in July after it nearly touched 15% in April, according to
federal data. Some salaried workers and executives are seeing their
pandemic pay cuts restored. That has led some to theorize that the
economy is increasingly proceeding on two tracks, as companies
modifying operations or shutting down entire divisions determine
that they need fewer people, especially lower-income workers.
A survey of human-resources employees released by Randstad
RiseSmart found nearly half of U.S. employers that furloughed or
laid off staff because of Covid-19 are considering additional
workplace cuts in the next 12 months.
New applications for unemployment benefits, a proxy for layoffs,
have hovered around one million a week for much of the summer. A
drop in jobless claims one week tended to be snuffed out within a
few weeks when claims rose again. Summer unemployment has improved
since March, when a peak of about seven million people applied for
jobless benefits in one week, but the numbers remain stubbornly
Economists say the new layoffs reflect a shift in corporate
thinking toward a more protracted crisis.
"Companies that thought they could either cut wages temporarily
or cut costs temporarily or hold on are now finding out that the
weakness of the pandemic is now longer than they hoped," said Diane
Swonk, chief economist at Grant Thornton.
Following casino shutdowns and furloughs in March, MGM Resorts
said it would lay off 18,000 furloughed workers in the U.S. as the
global travel slowdown impedes the gambling industry's recovery.
The job cuts, which start Monday, represent about one-fourth of the
company's prepandemic workforce of 68,000 U.S. employees.
American Airlines said that unless it receives more federal aid,
it will furlough 17,500 union workers and move forward with 1,500
layoffs in its management ranks this fall. Flight attendants, 8,100
of whom are furloughed, would be the most affected. Airlines agreed
not to terminate employees or cut pay rates through the end of
September as a condition of taking $25 billion in federal
United Airlines said it would furlough 2,850 pilots, which is
600 more than it had anticipated, as it seeks more federal aid.
United has warned that as many as 36,000 of its employees could be
eliminated Oct. 1 if the airline doesn't get more government help.
The union that represents United's pilots called it tragic that the
carrier hasn't provided more options to allow pilots to leave
voluntarily. Delta Air Lines Inc. said it would let go of 1,941
After furloughing or reducing hours for more than 10,000 workers
earlier this year, tool maker Stanley Black & Decker said that
in October it will permanently lay off 1,000 of them but bring back
9,300 to a full-time schedule. Chief Executive Officer James Loree
told investors on a recent call the cuts are part of a $1 billion
"It paves the way for us to manage successfully through any
reasonable economic scenario which may unfold in the coming
months," he said.
Hundreds of furloughed workers at C.H. Robinson Worldwide Inc.,
one of the largest freight companies in North America, won't be put
back on the payroll, in part because their positions have been
automated, the company told investors on a recent earnings call.
The job cuts will become "permanent cost savings from our
investments in tech," said Bob Biesterfeld, chief executive of C.H.
Yelp is among a number of companies including Walt Disney Co.
and General Motors Co. that are restoring executive and
white-collar worker salaries to previous levels, after making some
employees take pay cuts in the spring. But even as Yelp brings back
most of the 1,000 workers it furloughed earlier this year, the
changing business picture required eliminating 63 roles, most of
them in recruiting or real estate, according to a letter to staff
from CEO Jeremy Stoppelman.
"Sadly, this pandemic will remain part of our lives for some
time," Mr. Stoppelman said in the note.
After furloughing more than 40,000 in March, the restaurant
operator Cheesecake Factory is recalling most workers as it
gradually reopens dine-in service. But some locations are closing
for good, the company said, resulting in 175 layoffs.
For small businesses, 22% of employees furloughed between March
and June had been laid off by July, while 28% were still
furloughed, according to a recent study by Gusto, a payroll and
benefits company for more than 100,000 small-business clients.
Many employees furloughed in the spring who haven't been brought
back to work most likely won't have a job to return to, said Daniel
Sternberg, head of data science for Gusto. That is because many
small businesses have only partially reopened or have had to roll
back reopening plans and sales are nowhere close to pre-pandemic
"There's not much evidence to suggest that there is going to be
this massive bringing people back on the payrolls," Mr. Sternberg
said. "Businesses are also retooling in a lot of situations, and
the way they are retooling requires lower head counts. They are
trying to do what they can do to survive long term."
Lenore Estrada, co-founder of Three Babes Bakeshop in San
Francisco, had to furlough 20 of her 26 employees in March. She
brought back some of them in April and May when she got a Paycheck
Protection Program loan, but revenue at the bakery is still down
40% compared with a year ago. When the PPP money ran out, Ms.
Estrada had to permanently lay off many of her workers earlier this
month. She has about a dozen left, but says she is losing $15,000 a
month and may have to cut more.
"The assumption is if I get no outside assistance, how would I
make this work?" she asked, then added, "I'm assuming that help
Millions of Americans have been jobless for several months,
suggesting it will take a while for the U.S. economy to recover
from the damage wrought this spring. The number who were unemployed
between 15 and 26 weeks rose to 6.5 million in July, the highest
reading for records that go back to 1948, according to the Labor
Department. The number of Americans reporting themselves as
unemployed because of permanent layoffs was about twice as high in
July as in March, when the pandemic struck.
"It's becoming harder and harder to imagine that these people
will be brought back in," said Josh Wright, chief economist at
Wrightside Advisors, an economics consulting firm.
--Alison Sider contributed to this article.
Write to Patrick Thomas at Patrick.Thomas@wsj.com, Sarah Chaney
at firstname.lastname@example.org and Chip Cutter at email@example.com
(END) Dow Jones Newswires
August 28, 2020 18:52 ET (22:52 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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