Why your job could be at risk now

By BusinessWeek

When the dot-com and housing bubbles burst, it was easy to see what types of jobs would disappear. But these days, as nervous lenders cower and credit contracts, virtually every industry is likely to be scathed in the widely predicted downturn starting this autumn.

Nearly all businesses rely on credit to operate -- just as they need customers to have spending power. With lending trimmed, and companies and consumers tightening their belts, jobs will be cut across broad swaths of the economy, from the tech sector to investment banking, and from manufacturing to soft drinks.

The four-week moving average of U.S. jobless claims hit its highest point in seven years, the Labor Department reported on Oct. 20.

The average number of new jobless claims rose to 483,250 for the week ended Oct. 11, the highest since 2001. September's unemployment rate was unchanged at 6.1%, but economists generally predict the labor picture will deteriorate in coming months.

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"This is an equal-opportunity recession," says Cathy Paige, a vice-president of Manpower (MAN, news, msgs), a temporary staffing company that is experiencing softening demand from clients. "Everyone is feeling it."

In any industry, the workers most vulnerable to layoffs are "bottom performers," says Nancy Albertini, chairman of Albertini Group, an executive-search company in Dallas.

"Companies will say, 'We've been meaning to eliminate these,'" she says. After trimming poor performers, companies will cut in areas not considered essential to operations, such as marketing, communications and human resources.

After these categories, any position is fair game, Albertini says, depending on the industry.

What started in the financial sector with the failures of Bear Stearns and then Lehman Bros. (LEHMQ, news, msgs) is spreading to other industries. Housing, sure, but technology is no longer immune, and consumer brands have begun culling employee ranks.

Silicon Valley has already made a wave of announcements. Yahoo (YHOO, news, msgs) this week said it would lay off at least 10% of its 15,000 workers. Yahoo eliminated 1,000 positions in January.

Earlier this month, eBay (EBAY, news, msgs) said it was laying off 10% of its 16,000 workers. Last month, Hewlett-Packard (HPQ, news, msgs) said it would lay off 24,600 workers over the next three years, though it plans to hire another 12,300 as part of its restructuring since purchasing Electronic Data Systems in August.

Meanwhile, Google (GOOG, news, msgs) has been trimming its contractor work force but expanding in other areas.

Online real estate companies, which have been experiencing growth as home prices decline, say they're forced to cut staff as well. The real estate valuation Web site Zillow announced on Oct. 17 it would cut 25% of its work force, or 40 positions, citing the recession's impact.

"One of the reasons this is so difficult is simply because the business continues to grow," said Rich Barton, Zillow's CEO, in a note posted on the company's Web site.

Consumers cut back on essentials

On Oct. 13, Redfin, an online real estate brokerage, announced a 20% staff reduction as business turned south. "October will still be pretty good, then we're headed for a big dip," Redfin President and CEO Glenn Kelman wrote on the Seattle company's blog.

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While discount retailers like Wal-Mart Stores (WMT, news, msgs) may ride out the holiday season, specialty stores may not fare as well as consumers facing job losses and lower home equity cut back. Long-ailing Circuit City (CC, news, msgs) is weighing job cuts and the closing of 150 stores to conserve cash, The Wall Street Journal reported.

A Circuit City spokesman declined to comment on what he called "rumors." Rival consumer-electronics retailer Best Buy (BBY, news, msgs), which normally adds staff during holiday season, plans to cut seasonal hiring by as many as 10,000 workers this year.

Entertainment companies are also trimming payrolls; Playboy Enterprises (PLA, news, msgs), for example, said Oct. 15 it would close its DVD division, resulting in the loss of 80 jobs.

Consumers are cutting back on essentials like food products. PepsiCo (PEP, news, msgs), the world's largest snack maker, recently said it will cut 3,300 jobs after lowering its profit forecast for the rest of the year. It's closing as many as six plants and cutting back "overlapping" marketing and sales jobs, Chief Financial Officer Richard Goodman said on a call with analysts. PepsiCo shares are off 29% so far this year.

'Going to get worse before it gets better'

Industrial and manufacturing companies are also cutting back. Smurfit-Stone Container (SSCC, news, msgs), which makes container board and corrugated packaging, on Oct. 20 said it will shut down a pulp mill in Quebec by the end of the month, resulting in the loss of 218 jobs. Danaher (DHR, news, msgs), the maker of Craftsman tools, is closing a dozen plants and laying off 1,000 workers.

General Motors (GM, news, msgs) has said it will close plants in Michigan, Wisconsin and Delaware and cut more than 4,000 jobs. More could be on the way if the company completes a deal to acquire Chrysler.

And Merck (MRK, news, msgs) this week said it will cut 7,200 more jobs, or 12% of its work force. The pharmaceutical company, which also downsized three years ago, is struggling to maintain growth as patents on some of its lucrative medicines expire and expose the company to competition from generic-drug makers.

Are there any bright spots on the jobs horizon?

"If there are any bulwarks, we can look to health care and energy," says John Challenger, CEO of Chicago outplacement firm Challenger, Gray & Christmas.

"Demand won't dissipate," says Challenger, who adds that even the outlook for those industries will depend on the effectiveness of various governments' efforts to bolster the economy. In any case, Challenger says, "it's going to get worse before it gets better."

This article was reported and written by Moira Herbst for BusinessWeek.