Nearly 60 Percent of Major U.S. Companies Report Job Cuts—AMA's 2001 Staffing Survey Shows

Findings Indicate Country Was Moving Toward Recession
Prior to September 11

NEW YORK, October 10, 2001—Recessionary pressures drove job cuts to historic highs even before the September 11 attacks on New York and Washington, according to American Management Association’s annual midyear staffing survey. For the first time since the 1990-91 recession, more than half of major U.S. companies reported layoffs, with 58% of 1,631 surveyed businesses saying they eliminated jobs in the 12 months ending June 30, 2001, the highest percentage in the survey’s 15-year history.

The share of firms actually “downsizing”–reporting a net workforce reduction in the period – was 36.3%, a dramatic rise from the previous year’s 21.2%, while those reporting a net increase fell to 42.3% from last year’s 53.0%. Overall, workforce growth averaged just 0.4% after last year’s +5.9%, and billion-dollar firms shrank their staffs by an average 0.9%.

More than a third of companies (36%) reported concurrent hiring and firing, the same as last year, but firing took the upper hand as net staffing in such firms decreased by an average – 1.8% after last year’s increase of 4.6%.

“Despite the fact that the United States is in an economic slowdown, it is worth noting that more companies created jobs than eliminated them—albeit by far narrower margins than in the recent past,” said Edward T. Reilly, president and CEO of American Management Association.

Also, only one-fourth of surveyed companies cut jobs because of less demand for their products and/or services, with a majority of layoffs ascribed to structural changes or productivity gains.

While skilled workers are still in short supply, demand is easing considerably. The survey found a dramatic increase in the share of HR managers who say talent is “adequate,” rising to 45% from the previous year’s 19%. There was a concurrent drop in those who say it is “scarce,” to 47% from last year’s 76%.

Production cutbacks tend to target hourly wage earners, while strategic staffing changes tend to focus on supervisory and middle management. As the rationales for hiring and firing changed in the latest survey period, so did the mix of jobs created and eliminated.

Only at the administrative and clerical level did the share of job-cutting companies outstrip the share reporting new hiring. Nevertheless, at every level, there were fewer reports of staffing increases and more of cutbacks than a year ago.

Departmentally, the turnaround from the previous year’s patterns was most dramatic in manufacturing and in information systems, but the reports of less hiring and more layoffs applied to every functional area.

As of midyear 2001, only 40 percent of respondent firms had plans to create new jobs in the coming 12 months, while 26 percent had plans to eliminate jobs. These are baseline numbers that change as the year plays out. Historically, the share that actually cuts jobs is more than double the share that planned cuts at the outset of the period. The reported figures, therefore, offer a guideline, but economic and business events will change these forecasts.

American Management Association’s annual survey on staffing and structure is mailed midyear to human resources managers in AMA member and client companies in the U.S. Together, these companies employ about one-fourth of the American workforce. The 2001 respondent base of 1,631 firms presents an accurate sampling of the membership and client base, but the results do not mirror activity in the U.S. economy as a whole, where small firms predominate. It should be read as a survey of major U.S. employers, most of which employ more than 100 people and gross more than $10 million per annum.

For a summary of the 2001 Staffing Study, please click here.