Economy

Where 1.2 Million High-Profile Layoffs and Furloughs May Come From

To think that 2020 started off on such a great foot. The phase-one trade pact with China was signed, the stock market was hitting all-time highs, the global economy was getting back to growth mode, the job market was stellar and interest rates were expected to remain incredibly stable for the entire year. All that has changed drastically over the past 30 to 60 days. Now all the economic forecasting and reporting is falling off a proverbial cliff. The raging bull market that was 11 years old has seen a roaring bear market knock off more than 30% of its value.

24/7 Wall St. has covered the devastating news about the rapid spread of the COVID-19 pandemic from almost all aspects, but one thing that most of America has not come to grasp fully is that the jobs market in America is crumbling. Over the past two weeks, the news had focused on how many workers in America were being told to work remotely from home and all the major business conferences have been canceled. The news is only now in the beginning throes of reporting the waves of layoffs that have started in the restaurant and retail locations that have been forced to close. The large spike of 70,000 weekly jobless claims to 281,000 for the week ended March 14 is just the beginning, and it seems impossible even to calculate how high the unemployment rate can jump in the coming months after bottoming out at 3.5%.

In this recession, the coming layoffs are certain to get ugly, and it seems as though no government bailout can prevent it. If businesses that have storefronts are closed and their services or goods are only on site, their workers are all at risk of furloughs or that their jobs will no longer exist. Ditto for manufacturing facilities forced to be closed or that have closed out of caution. The toll of people not traveling for leisure and business is just the start and puts millions of jobs at risk. The airlines have started warning of furloughs, route cuts and capacity cuts, and the hotels have warned about their rooms empty. Restaurants and retail stores are closing and so on. The entertainment world has been shut down, and many news broadcasts and interviews are now taking place via remote systems from people’s living rooms.

It feels almost impossible to determine how many jobs are at risk, but one extreme number from Treasury Secretary Mnuchin was as high as potentially 20%.

In an effort to determine how many layoffs might be seen, we have pulled data that was available from S&P Global, from annual reports and other sources. In all cases, these were rounded down rather than up, and unfortunately some of these figures already may have gone up or down since the last reporting period. In some cases, we have simply benchmarked certain industry percentages, and in other cases, we have tried to specify how individual companies might have to conduct layoffs or furloughs under a growing recession scenario rather than based on a V-shaped recovery that would come in days or weeks.

As you will see, these are just a snippet of the top companies in major industries. Some industries and companies have been left off due to conflicting data, and in the restaurant industry it is hard to pinpoint the real numbers because so many locations are franchise-owned or owned by individuals and workers at those locations who are not counted as parent company employees, as outlined below. That means some of these industries could be facing far worse damage in furloughs and firings than we have tried to pinpoint, and there is still some hope that many of the companies shown here hopefully will be able to avoid the potential cuts that could be seen.

As a reminder on all of these brutal numbers, these are not formal forecasts. They are intended solely to demonstrate potential losses in a continual recessionary setting. They might not be as bad as this in many cases, but they could be far worse in other cases. Again, the potential losses could be temporary rather than permanent, and other jobs ultimately will open up after this coronavirus passes.

As for industries, airlines and anything tied to tourism are suffering worse than after the 9/11 terror attacks of 2001. Restaurants and retail locations are being closed down across the country and beyond. Factories are being closed in the auto sector and other manufacturing sectors. Bank branches are being closed, theme parks are on lock-down, and freight and delivery efforts are being affected (some up and some down). The oil and gas segment is facing its most brutal pricing in years, and many technology companies and services companies might have to conduct layoffs or furloughs.

Again, these are not going to all be firings. These are not forecasts that are happening in the coming days. They are rough figures and, due to labor agreements, some cuts could take months to be enacted even if the companies have had to shut down.

There are very few finite answers about exactly what to expect here, but the night and day scenarios from a few weeks ago are alarming. That said, Standard & Poor’s has warned that the global recession is here, and that has been echoed by Goldman Sachs, Morgan Stanley and other firms. According to LendingTree, nearly four in 10 American workers will see a reduction in wages and hours due to coronavirus pandemic and 63% of Americans are saying that their finances already have been affected. The firm Capital Economics has warned that U.S. home sales could fall 35% in the second quarter from the fourth quarter of 2019 as the coronavirus is forcing people to stay home right as the typical home buying starts each year.
Industry/Company Employees Potential Cuts
Oil & Gas Majors (15%)
Exxon Mobil 74,000 11,100
Chevron 48,000 7,200
Occidental 14,400 2,160
Schlumberger 105,000 15,750
Halliburton 55,000 8,250
Baker Hughes 68,000 10,200
Freight/Delivery (5%)
UPS 260,000 13,000
FedEx 309,000 15,450
Hotels (25%)
Hyatt 55,000 13,750
Hilton 173,000 43,250
Marriott 174,000 43,500
Airlines (30%)
Southwest 60,000 18,000
United 96,000 28,800
Delta 91,000 27,300
American 133,000 39,900
Manufacturing
Ford (0.15) 190,000 28,500
GM (0.15) 164,000 24,600
Boeing (0.2) 161,000 32,200
Caterpillar (0.1) 102,000 10,200
Deere (0.1) 73,000 7,300
General Electric (0.1) 205,000 20,500
Casinos (25%)
Las Vegas Sands 50,000 12,500
MGM Resorts 63,000 15,750
Wynn Resorts 30,000 7,500
Media/Entertainment (10%)
Comcast 190,000 19,000
Walt Disney 223,000 22,300
Restaurants/Food
Aramark (0.3) 280,000 84,000
Darden Restaurants (0.10) 185,000 18,500
McDonald’s (0.05) 205,000 10,250
Retail
J.C. Penney (0.75) 90,000 67,500
Kohl’s (0.2) 129,000 25,800
Macy’s (0.35) 120,000 42,000
Home Depot (0.15) 400,000 60,000
Lowe’s (0.15) 300,000 45,000
Bank/Finance (10%)
JPMorgan 256,000 25,600
Bank of America 208,000 20,800
Wells Fargo 259,000 25,900
Citigroup 200,000 20,000
US Bancorp 69,000 6,900
American Express 64,000 6,400
Morgan Stanley 60,000 6,000
Truist 59,000 5,900
Capital One 51,000 5,100
PNC 50,000 5,000
Goldman Sachs 38,000 3,800
Tech & Services (10%)
IBM 352,000 35,200
Accenture 492,000 49,200
UnitedHealth 325,000 32,500
Cognizant 292,000 29,200
Dell 157,000 15,700
Cisco 75,000 7,500
HP 56,000 5,600
Sprint 28,500 2,850
T-Mobile 53,000 5,300
Verizon 135,000 13,500
AT&T 247,000 24,700
TOTAL 8,401,900 1,203,660