A Grim Job Snapshot

It's every carpenter's favorite aphorism: measure twice, cut once. In the corporate world, that advice applies to workers, not wood. Better to execute layoffs quickly and decisively, experts say, and let the workers who remain get back to business. The alternative--the drip-drip-drip of repeated downsizings--is a Chinese water torture that kills morale and productivity. But as America's slowing economy continues to downshift, many employers are deciding they have no choice.

Dozens of big companies have already laid off workers this year, and now a growing number--Polaroid, Dell, 3Com and Nortel among them--are swinging the ax again. And they're aiming not just at factories, but at their white-collar workers. Executives blame false optimism and the murky nature of this slowdown, which has been characterized by a wild mix of up-and-down economic stats. "When they looked in their crystal balls several months ago, they were hoping for a V-shaped turnaround--a quick downturn and a quick uptick," says Tom Silveri, president of the outplacement firm Drake Beam Morin. "But it didn't happen. I don't think we're out of the woods yet."

The latest job cuts don't signal a full-blown recession, but they are evidence of just how weak the U.S. economy has become. Despite five rounds of Federal Reserve cuts--with a sixth expected next week--the latest Fed "beige book" paints a gloomy picture of stagnant or decelerating business conditions in every region of the country. From manufacturing to high tech, demand is weak, so companies keep shedding workers. Since January, companies have announced 652,510 layoffs, the fastest rate since outplacement firm Challenger, Gray and Christmas began keeping track in 1993. Unemployment remains historically low at 4.4 percent, but most economists expect it to rise to 5 percent by year-end. "The consensus expectation is that we'll avoid a recession, but [only] by the skin of our teeth," says Randell Moore, editor of Blue Chip Economic Indicators.

Everyone feels badly when people lose their jobs. But it's especially painful for workers who thought they had dodged the layoff bullet. For the larger economy, there's a bigger worry, one Fed vice chairman Roger W. Ferguson voiced to Congress last week. The latest cuts, coming after six months of dismal economic headlines, could lead consumers to dramatically cut spending on cars, homes and services, which until now have helped buffer the steep falloff in corporate activity. Outside Polaroid's Cambridge, Mass., headquarters last week, employee Heather Randhahn says she thinks she'll avoid being one of Polaroid's 2,000 pink-slip victims. But the cuts still make her nervous. "Seeing the national trends in the economy and the stock market, my personal inclination is to be more conservative," she says. And folks who lose jobs today will also face competition from workers laid off earlier in the year.

If the economy rebounds sharply in the fall, some companies may regret the latest cuts. Unlike previous slowdowns, in which many "layoffs" were just temporary furloughs for blue-collar factory workers who returned to the same job when the economy rebounded, today most companies are cutting high-skill white-collar types. "When they let these people go, they scatter to the wind--all that training, all that corporate know-how gets lost," says Chicago outplacement expert John Challenger. Companies should get a sense of whether they've made the right choice in the coming weeks. As the latest Fed cuts kick in--and as taxpayers begin spending the rebate checks they'll start receiving next month from the Bush tax cut--things could pick up. "By the time we get back from our August beach trips," says Mark Zandi, of Economy.com, "we'll have a pretty clear sense of whether we should have taken them or not." Until the picture becomes clearer, take solace in Alan Greenspan's latest mutterings. "With all our concerns about the next several quarters, there is still, in my judgment, ample evidence that we are experiencing only a pause," Greenspan said in a recent speech. He sees reason to hope the above-average growth America enjoyed during the '90s could return. Until then, it's time to take a break from that great national pastime of complaining about your job--and just be thankful if you still have one.