By Nicole Lucht / Staff Writer
Zappos, Trump Tower, MGM Mirage, Ford Motor Credit, Sunrise Hospital, Las Vegas Sands. Layoffs are hitting all sectors of the local economy.
On a national level, retailers Macy’s and Home Depot are cutting 7,000 jobs each, pharmaceutical giant Pfizer and wireless provider Sprint are cutting 8,000 each, Microsoft is cutting 5,000, Intel is cutting 6,000 and United Airlines is cutting another 1,000 on top of the 1,500 positions eliminated last year.
In December, Nevada’s unemployment rate hit 9.1 percent, an unprecedented full percentage point increase from the previous month. The national rate is 7.2 percent.
And the news becomes more dire: State economists are expecting 39,300 jobs will be lost this year, compared with 24,600 in 2008.
Granted, there will be some mass hirings, such as CityCenter’s recent announcement it is accepting applications for 12,000 positions. But those aren’t expected to outweigh the job losses this year and next.
CityCenter was expecting 150,000 job applications, and even a small employer such as In-N-Out, which had 50 open positions for its newest Las Vegas store, had about 1,000 people apply, reported the Las Vegas Sun, a sister publication of In Business Las Vegas.
As the recession deepens, employers don’t want to cut their workers, most of whom are loyal employees, so they are considering creative ways of keeping costs down to minimizing layoffs, local workforce experts said.
“Employers are doing a lot of things: They’re not hiring people, they’re not replacing people who quit, they’re letting people go, they’re cutting salaries, they’re reducing work hours … they’re cutting back expenses,” said John Restrepo, principal of Restrepo Consulting.
“Everyone’s cutting back to adjust their cost structure down to the reality of the revenues they can expect to see over the next couple of years.”
Although employers may worry about how their workers will react to cuts, employees may actually be relieved to find their hours or benefits have been cut rather than finding themselves filling out an unemployment claim.
“I think (employers) initial concern is how the employees will react,” said Joan Burge, chief executive of Office Dynamics, a Las Vegas-based workplace training company that consults large and small companies nationwide. “Will they lose good people?”
But when employers make changes – be it across-the-board salary cuts or fewer work hours – they are receiving a more positive reaction from employees than they anticipated, she said.
Employees may be more willing to accept a pay cut or reduction in hours if it means their colleagues will be spared the ax, she said.
There’s optimism that President Barack Obama will give the economy a fresh start, but at the same time, Congress continues to wrangle with the details of a promised economic stimulus package.
“We’ve got to get to bare bottom … and work our way up,” Burge said. “People are saying, ‘We’re sick of where things are.’ They want to contribute. They want to be part of the catalyst of change.”
The second economic stimulus package, a $800 billion-plus program, probably won’t be felt on the local level for a couple of years, Restrepo said. “The immensity of the problem is so large that no one really knows right now what it’s going to take to turn things around sufficiently so that we see a sustained recovery,” he said.
Until the economy recovers, shifting costs to the employee, such as cutting benefits, dropping 401(k) contribution matches and changing eligibility for benefits are being considered more frequently by businesses, said Tanna Prince, Nevada market vice president for Lockton, a company specializing in insurance, risk management and employee benefits. The company has about 25 clients in Nevada and several hundred nationwide.
“Things are evolving all the time,” she said. “We’re seeing the gamut of what you would expect.”
She said she has noticed a gradual drop-off in the number of employees at companies that Lockton serves, as the overall insured population is reduced.
Although employers make changes to benefits every year, Prince said, “it has been particularly poignant with the economy so bad.”
Employers, she said, “are looking at every possible strategy to keep programs, but also to afford them.”
“I’ve just never seen it this bad,” in terms of if employers can keep their plans afloat, she said.
Prince talked about the continuously rising health care costs – some at 10 percent annually – that employers struggle to keep up with. Some employers are cutting back on insurance just to maintain a flat cost for the new year.
And many employers are cutting benefits midyear, an unusual move in prosperous times.
But eventually, if an employer continues to make cuts every year, there won’t be anything left.
Employers who have the budgetary ability to make long-term strategic shifts in their benefits, such as adding wellness and health risk management programs, may find an improvement in their costs a few years later as healthier employees’ demands for health care go down.
And for the short term, Prince is finding businesses implementing stricter eligibility requirements for new employees, for instance, requiring employees to waive benefits for a husband or wife who has a job that also offers benefits.
Also, she said companies are conducting dependent audits to weed out any people that aren’t legally their employees’ dependents, further saving costs.
And those employees who gripe about cuts or stand around the office water cooler all day complaining? They should be the first to go, Burge said.
“They are dead weight.”
When laying off people, employers will have to reassign responsibilities, to pick up the slack left by those cut from the workforce, she said.
“A lot of (employers) feel bad,” Burge said. “They don’t want to do this, but it’s one of the decisions that has to be made as a business owner.”
To make up for employees’ sacrifices, Burge suggested that when a strong economy returns, reward those workers with a bonus or a creative token of appreciation.
When Burge was an employee, she lost two jobs because of downsizing.
“There are no guarantees ever – even in good times,” she said.
One of the Las Vegas companies that Burge advises is considering cutting its workdays to four days a week, effectively cutting employees’ hours from 40 hours a week to 32.
The big corporations that Burge advises are still considering layoffs, she said.
“It’s not over yet,” she said. “There’s still more coming.”
Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at 2598832 or at nicole.lucht@lasvegassun.com.
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