January Tech Job Cut Announcements Take a Rebound

(MoneyWatch)  Last month I happily wrote that, should the downward trend of job cuts continue, I'd stop doing this monthly post. As you have already guessed, it didn't. Outplacement firm Challenger, Gray & Christmas announced U.S. job cuts for last month, stating that they were the highest in five months, with retail and telecommunications being the big drivers. Here's a summary since January 2009:

Sector	January 09	February 09	March 09	April 09	May 09	June 09
Electronics	11,050	11,065	11,500	6,608	1,423	4,103
Computer	22,330	3,960	5,290	1,702	15,384	2,795
Telecom	13,056	5,666	250	262	812	802
Total	20,628	2,386	1,794	18,197	12,708	808	17,204

Sector	July 09	August 09	September 09	October 09	November 09	December 09	January 10
Electronics	1,343	1,562	683	10,882	4,792	239	559
Computer	1,684	75	494	7,089	4,106	352	2,635
Telecom	17,601	749	617	226	3,810	217	14,010
Total	20,628	2,386	1,794	18,197	12,708	808	17,204

Here a graph of the monthly results for the year with a trend line for the industry totals:

Retail you can understand, as the holiday shopping season comes to an end and the sales hangover sets in. Telecom didn't need many companies to boost the layoff announcements. Verizon (VZ) said that it would fire (because that's what it really comes down to) an additional 13,000 employees, even as the company had strong wireless growth and yet had a net loss for last quarter, largely because of the $3 billion it was taking from the 8,000 employees it had already sent packing. The problem is the landline business, which is not only waning, but which Verizon has seemed anxious to leave. In each of the last two years it dropped 13,000 employees from the landline business. Notice a pattern here?

It's tempting to say, "Oh, but that's a one-time thing." Unfortunately, it's almost always supposed to be a one time thing. But when you have large companies taking turns cutting jobs to preserve earnings, there's always another one-time thing to batter the industry a bit more. The level of industry layoffs is certainly down from this time last year, but I wouldn't make bets on this being the end. We have a number of factors:

• Hardware keeps getting cheaper, cutting out margin.
• Other industries are still hurting and IT budgets are under tight reins.
• Consumer spending is also tight.
• Increasingly, there are ways for people and businesses to find free or low-cost alternatives to services that once brought in revenue to companies.

These are long-term patterns, and although I'd like to think that the blood-letting has ended, the chance of that is nix.

Executioner image via stock.xchng user sateda, standard site license.