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Job Cuts Don't Necessarily Mean Hard Times, Economists Say
By Leigh Strope   Associated Press
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WASHINGTON — While announcements of job cuts, layoffs and corporate belt-tightening have shaken consumer confidence, economists say all the news does not spell gloom and doom.

Not conveyed, they contend, is that many cuts will occur overseas or will come through attrition and retirement — even over several years.

"The implication is you can go tomorrow and find these people walking the streets, and that doesn't necessarily happen," said Lewis Siegel, a senior economist specializing in layoffs for the Bureau of Labor Statistics.

Layoff notices rose to 142,208 in January — the highest total in the past eight years, according to Challenger, Gray & Christmas, a private Chicago placement firm.

Appliance maker Whirlpool Corp. plans to make most of its announced 6,000 layoffs in Latin America, Europe and Asia. Most of the 300 North American jobs it wants to cut will be eliminated through voluntary retirement.

DaimlerChrysler's plan to shed 26,000 jobs will occur over the next three years and much of it through retirement programs, attrition and some phased-in layoffs.

Nortel Networks had already cut 6,000 of the 10,000 jobs it announced last month it would eliminate, and will minimize layoffs by not replacing workers who retire or quit. Verizon Communications said last month it expects to cut the equivalent of 10,000 jobs this year — mostly by not filling vacancies and cutting overtime and the use of contractors.

For those 142,208 announced cuts in January, overall payrolls increased that month by 268,000 new jobs, according to the Bureau of Labor Statistics. The unemployment rate rose only slightly in January to 4.2 percent from 4 percent in December — the latest figures available.

Finding a new job is not the hard part for Mike Cook, 41, of Levittown, Pa., laid off two weeks ago at U.S. Steel's Fairless Hills plant where he worked as an electrician. He had only been back on the job about a week after being laid off previously for about 11 weeks.

Cook, a United Steelworkers of America union member, is hopeful he will get recalled again this time before his 26 weeks of unemployment compensation runs out. He worries about finding a new job that can come close to his benefits and pay. An employee for 13 years, he was paid $18 an hour with a pension and good health and dental benefits.

He considered going to work for a contractor at the steel mill, but was not offered any health care coverage or benefits. One of his three children is a special education student who needs medical care, so benefits are a must. His wife does not work.

"Most places want to have a no-strings-attached kind of employee," he said. "There are not a lot of big industries left in this country that are offering the kind of benefits and pay I'm making now."

Theoretically, laid-off workers have employment opportunities in the new jobs still being created. The services sector added 81,000 jobs in January, and hospitals and doctors' offices reported solid gains. So did construction, real estate firms and mortgage banks.

Many companies still have "help wanted" signs posted. A survey of second-quarter hiring plans by temporary staffing agency Manpower Inc. showed that 28 percent will need additional staff in the second quarter, while 8 percent plan cutbacks. The report, based on a survey of 16,000 businesses nationwide, showed that some 59 percent expected their work forces to be unchanged, and 4 percent were uncertain.

A year ago, 32 percent said they would hire staff, while 6 percent predicted cuts. Some 58 percent expected no change and 4 percent were uncertain.

Despite the failure of many dot-coms, technology companies still are hiring and expanding.

"The industry continues to grow, but just a lot more slowly," said Mark M. Zandi, chief economist for consulting firm Economy.com. "There were so many open positions going begging before the current problems, and now they're being filled."

Manufacturing in particular is seeing tough times. The sector was the hardest-hit in January, losing 65,000 jobs — the largest decline in five months and bringing total factory losses to a quarter-million since June.

Many of the layoffs being announced are in manufacturing. The gloom tends to get cast over the entire economy, but much of the bad news is relegated to one sector, said economist Ken Mayland, president of ClearView Economics.

"These news items make splashy, perhaps even gut-wrenching headlines, but those headlines aren't representative of what's going on in the whole economy," he said.

The fastest-growing occupations through 2008, according to the Bureau of Labor Statistics, include computer engineers, computer support specialists, systems analysts, database administrators, desktop publishing specialists, paralegals and legal assistants, medical assistants and home health aides.

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