While we await for the BLS to report another seasonally adjusted Initial Claims report which will be near multi-decade lows, a far more disturbing report was released moments ago by outplacement consultancy Challenger Gray, which has done a far better job of compiling true layoff data, and which reported that in July there was a whopping 105,696, up 136% from the 44,842 job cuts in June, and the highest in nearly four years, or since September 2011, which the last time there were more than more than 100,000 layoffs.
Worse, the July surge brings the year-to-date job cut total to 393,368, which is 34 percent higher than the 292,921 cuts announced in the first seven months of 2014. This represents the highest seven-month total since 2009, when 978,048 job cuts were announced amid the worst recession since the Great Depression.
Finally, this was the worst July for layoffs in over a decade.
And while we expect energy-sector terminations to take center stage in the coming months following the resumed plunge in energy prices, the July surge in layoffs came from an unexpected source: the US Army.
According to Challenger, more than half of the July job cuts were the result of massive troop and civilian workforce reductions announced by the United States Army. The cutbacks will eliminate 57,000 from government payrolls over the next two years.
“When the military makes cuts, they tend to be deep. In fact, the last time we saw more than 100,000 job cuts in September of 2011, it was 50,000 cuts by the US Army that dominated the total. With wars in Afghanistan and Iraq winding down and pressure to cut government spending, the military has been vulnerable to reductions,” said Challenger.
Indeed, some of the biggest job cuts announced in recent years have come from the military and other government agencies. In addition to the 50,000 cuts announced by the US Army in 2011, the United States Air Force announced plans in 2005 to reduce its headcount by 40,000. Between 2002 and 2010, the United States Post Office announced three separate job cuts that affected a total of 90,000 workers.
In the meantime, drone operators will have to find more socially acceptable ways to express their deadly rage: “The transition from the military to the civilian workforce is always challenging, but the economy is in a much better position to absorb this influx of job seekers now, compared to two or three years ago. This does not mean it will be easy for these service men and women, most of whom undoubtedly thought the military would offer career-long job security,” noted Challenger.
“The most difficult part of the transition may be translating one’s military experience into terms that are meaningful to civilian employers. These men and women have skills and experience that are in demand, but they just don’t know how to describe them in a way that non-military recruiters understand. Luckily, there are a growing number of programs and services that help with this and there has been a concerted effort among the nation’s employers to hire former military,” he added.
Well, there is a simple way to "fix" this problem: start more wars, which considering the current situation in Syria, is about to materialize.
The bigger problem is what happens to all those energy sector jobs which were spared in the last moment after oil launched its dead cat bounce earlier this year and which has been fully faded at this moment. In July only 8,878 oil-related jobs were cut, which is a far cry from the 21K monthly peak early in the year. Expect those same numbers to be promptly surpassed.
Bonus table: Challenger's reasons for the soaring layoffs. We are not quite sure what the difference between restructuring and cost-cutting is but there probably is one.