An end looks to be in sight for the ongoing federal shutdown, but how much, exactly, has the government's comedy of errors impacted job cuts in private business?
Even before D.C. plunged into its current stalemate, uncertainty in the government has been pointed to by publications, pundits and economists across the nation as a possible factor in slow job growth, with companies feeling tentative about the economy to make long-term investments. As far as cutting jobs, however, government impacts are far down the list of reasons given by businesses in a survey conducted by outplacement company Challenger, Gray & Christmas, Inc.
According to the survey, there have been 387,384 announcements of planned job cuts in 2013 to date. Despite the myriad red flags coming from Washington in the last few months about an impending shutdown — not to mention the added uncertainty due to the implementation of health care reform — direct, government-related reasons accounted for less than 10 percent of those cuts.
Of those reasons, sequestration ranked as the highest reason for cuts, costing employers 11.967 jobs (about 3.1 percent of total job cuts year to date). Economic conditions, which can arguably be attributed to the government, were given as a reason for 9,772 job cuts, or roughly 2.5 percent. Losses of contracts (the Challenger, Gray & Christmas survey did not specify whether the contracts were government-related or otherwise) accounted for 9,456 cuts, roughly 2.4 percent of the whole.
Other government-related reasons for cuts included health reform, with 2,525 cuts (0.7 percent) and federal spending cuts, with 2500 (0.6 percent). The government drawdown in Iraq accounted for 215 job cut announcements, barely a blip in the whole.
So what's the main reason employers are citing? “Restructuring,” tallying 140,979 job cut announcements so far in 2013. That accounts for about 36.4 percent of cuts this year, or almost as much as the next two reasons (closing, at 20.8 percent, and cost-cutting, at 16 percent) combined.
If you're curious about what the other reasons employes gave for job cuts were, refer to the chart below (all figures from Challenger, Gray & Christmas survey):
That “Other” slice refers to a variety of reasons, running the gamut from natural disasters to work stoppage to tech updates to the aforementioned government drawdown in Iraq.
It's important to note that Washington, D.C.'s decisions are still having a measurable impact. Health care, for example, has taken a hit because of reductions and cuts enacted by the government. For the third time in the last five months, the health care sector was the leading announced of job cuts, with reported layoffs totaling 8,128.
“The health care sector is adjusting workforce levels due to cutbacks in Medicare and Medicaid reimbursements initiated under the Affordable Care Act as well as overall reductions in federal spending due to sequestration,” said John A. Challenger, CEO of Challenger, Gray and Christmas.
“It is important to remember that, while it is critical for government spending to be reduced in order to shrink the nation's deficit, these cutbacks do not occur in a vacuum. They have real-world consequences that ripple through the economy. So the push to cut federal spending, while absolutely necessary, is going to impact jobs both inside and outside of the government. We are seeing it in health care, education, and aerospace and defense,” he added.
Overall, the national pace of job cuts is virtually identical to last year's. Those 387,384 job cuts are only up 0.4 percent from the 386,001 cuts announced from January to September last year.
Last month alone, U.S. employers announced plans to reduce payrolls by 40,289 jobs, the lowest level in three months. The previous month (August), job cuts had reached a six-month high of 50,462.
September's total was also 19 percent higher than the 33,816 planned job cuts announced in September of last year.