The
March unemployment figures arrived just as I was thinking
about Yahoo and the 2,000 workers the company just laid
off. Although it won�t be known until next week where
exactly the axe will fall and which techies will lose
their jobs, my friends in the industry say most probably
won�t have much trouble finding new work � unless they
happen to be new entrants into the field or over 40 years
old. (Yeah, it�s that way) Just why Yahoo is sacking 14
percent of its workforce is somewhat murky. The company
isn�t going broke; it just isn�t turning in a profit volume
that investors seek, especially when measured against
rivals Google and Facebook.
The Associated Press reported
that �As traumatic as the job cuts may be for laid-off
workers,� industry analyst Scott Kessler says Yahoo needs
to prune its payroll to show Wall Street that the company
can be run more efficiently than it has been in recent
years. �Last year, Yahoo produced revenue of $353,000
per employee while its two biggest rivals, internet search
leader Google Inc. and social networking leader Facebook
Inc., each generated $1.2 million per employee,� said
AP.
Quiet as it�s kept, that�s how capitalism
works. Produce not enough value for the owners and you
can find yourself headed for the unemployment office.
Also, lurking in the background here
is an ongoing challenge to the current company management
from a certain hedge fund and the indication that the
most important asset being highlighted and coveted is
the firm�s huge use data base collected from its nearly
700 million users and thousands of advertisers � �data
that drives deep personalization for users,� which Yahoo
says can �create a new generation of more personalized
online products.�
�With a clear focus on profitability
and growth, the company will be disciplined in its investments
and radically simplify how it builds, launches and maintains
many of its properties and products,� a company press
release read.
�We need better execution to accelerate
time to market and to better monetize the attention we
have,� said Yahoo CEO Scott Thompson, the man wielding
the layoff axe.
Yahoo wasn�t the only company announcing
a 14 percent staff reduction last week. J.C. Penney laid
off 600 employees from its corporate headquarters April
6. It also said it will soon close its Pittsburgh call
center scraping the jobs of nearly 400 workers we can
be sure will have difficulty finding new employment. A
majority of the jobs are part time and a company spokesperson
told the media the sacked workers are unlikely to be absorbed
into other units of the retail company.
Penney�s new CEO Ronald B. Johnson
received $53.3 million in total compensation last year,
third on the top 100 list. �Last year, Mr. Johnson left
his position as senior vice president of retail at Apple,
along with Apple stock worth $101 million at the time
that had not yet vested,� the New York Times reported
the day after Johnson announced the layoffs. �So, as part
of his pay package, J.C. Penney gave Mr. Johnson a one-time
stock award worth $52.6 million. (As of the end of last
week, his Apple stock would have been worth about $159
million. His Penney stock was worth $58 million.)�
Yahoo CEO Scott Thompson is also
a highly paid Silicon Valley insider,
having moved less than four month ago from eBay�s PayPal
payment service. His last reported compensation pay package
there was $10.4 million paid out in 2010. Yahoo offered
Thompson a deal that includes a $1 million salary and
a bonus of from $1million to $2 million this year, depending
on company performance and Stock options valued at $22.
5million. According to The Economic Times, Thompson
is also reaping $1.5 million to offset money he forfeited
by leaving PayPal. �A $6.5 million chunk of the stock
awards are also meant to offset some of the compensation
he would have gotten at PayPal, according to the filing,�
it said.
Thompson apparently botched the staff
reduction process from a public relations point of view.
In an arena where a one-big-family ethos is promoted,
it was consider uncouth for him to have announced the
terminations without saying why they were being undertaken
or what the company�s future plans are.
�Thompson also sought to boost sagging
employee morale in a staff memo Thursday,� reported AP.
The memo said the plans would be revealed April 17. Thompson
said he wanted to be �fair and respectful� to the laid-off
employees before discussing the future.
Whether or not the laid off Yahoo
workers, or those at J.C. Penny are able to find new jobs
quickly, what each of them is going through at the moment
will, indeed, be �traumatic.� Their former bosses will
experience some drama but no trauma.
Which brings us back to the newest
unemployment figures and the millions who are out of work,
will soon be out of work, will see their unemployment
compensation run out, will lose their homes or be unable
to pay their medical expenses or afford college tuition.
�What distinguishes this jobs recovery
from others is the sheer scale of the job loss that preceded
it,� the New York Times reported April 7. �The
economy has regained 3.6 million jobs since employment
hit bottom in February 2010, but it is still missing nearly
10 million jobs - 5.2 million lost in the recession and
4.7 million needed to employ new entrants to the labor
market. The Economic Policy Institute estimates that at
the average rate of job creation in the last three months,
it would take until the end of 2017, fully 10 years from
the start of the Great Recession in December 2007, to
return to the prerecession jobless rate of 5 percent.�
�And there is no guarantee we will
ever get there,� wrote journalist Teresa Tritch, a members
of the paper�s editorial board. �It took about four years
to close the job gaps created by the recessions that began
in mid-1981 and mid-1990. In the tepid expansion after
the 2001 recession, the job gap had still not closed by
2007.�
�Despite ongoing improvements, the
labor market still has a deficit of nearly 10 million
jobs, and the lack of demand for workers means unemployment
remains high and wage growth for people with jobs remains
low,� writes economist Heidi Shierholz of the Economic
Policy Institute. �To get back to full employment in three
years we would need to be adding around 350,000 jobs per
month. The nation�s labor market remains weak, and we
continue to need aggressive policies to create jobs.�
�The fall in the unemployment rate
was actually a bad sign for the economy,� read Reuters.
�The jobless rate dropped because workers were exiting
the workforce, possibly because they were discouraged
at job prospects although some likely were retiring as
well. The workforce shrank by 164,000 people. The participation
rate, which is the percent of the population in the workforce,
fell to 63.8 percent from 63.9 percent in February.�
Most of the decline in the participation
rate is being ascribed to workers becoming discouraged
and dropping out of the labor market.
The national jobless rate slipped
to 8.2 percent in March. African-American unemployment
dropped to 14.0 percent in March. In March of 2011, the
rate was 8.9 percent overall and 15.6 percent for African-Americans.
The jobless rate for both African
American and Latino youth were lower in the first quarter
of 2012 than for the same period last year. However, the
employment-to-population ratio for young African Americans,
which had risen a bit in February, slipped in March, back
to where it was this time last year. This may indicate
an increase in the number exiting the workforce, perhaps
because they found job prospects too discouraging. For
all Latino workers, the ratio has remained pretty much
the same over the past year.
�This monthly jobs report may be
a one-off disappointment or it could signal that the job
market is doing worse than we thought,� economist Jared
Bernstein suggests we should be saying. �Either way, there�s
too many un- and underemployed people out there.�
The fourth paragraph of the front
page New York Times story on the new jobs stats
read: �The slowdown suggests that employers remain cautious
about hiring as they digest the impact of rising gas prices,
especially on consumers, and as they face uncertainty
about health care and pension costs.� Liberal economist
Robert Reich disagrees.
�You will hear other theories about
the hiring slowdown, but they don�t wash,� he wrote on
his blog April 6. � You will hear other theories about
the hiring slowdown, but they don�t wash.
�It�s not due to �uncertainty� about
the economy. That�s a tautology � the economy�s future
is always uncertain, especially when consumers don�t have
the dough to keep it going.�
�American consumers, in short, are
hitting a wall,� continued Reich. �They don�t dare save
much less because their jobs are still insecure. They
can�t borrow much more. Their home values are still dropping
and many are underwater � owing more on their homes than
the homes are worth.
�The economy has been growing but
almost all the gains have gone to the very top. As I�ve
noted, this is the most lopsided recovery on record.�
Like the layoffs at Penny, the upheaval
at Yahoo is not unrelated to the Great Recession. Over
the past four years, there have been six large layoffs
at the firm; 1,500 workers were sacked in 2008. Last month�s
jobless figures don�t say clearly whether a real recovery
is underway and, if so, whether it can be sustained. But
with industry executives raking in fantastic and unwarranted
riches while the lives of workers from Sunnyvale
to Pittsburgh are rendered ever more precarious, whatever is happening
certainly is lopsided.
BlackCommentator.com Editorial Board member
Carl Bloice is a writer in San Francisco, a member of the National Coordinating Committee of
the Committees of Correspondence for Democracy and Socialism and formerly worked for
a healthcare union. Click here to contact Mr. Bloice.
