37,701 July Job Cuts on Sequestration, Health Reform Concerns

Job cuts declined slightly in July, as employers announced plans to reduce payrolls by 37,701 workers, down 4.2 percent from 39,372 planned layoffs in June, according to the latest report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

Last month’s total was 2.3 percent higher than a year ago, when 36,855 planned job cuts were recorded.  Employers have now announced 296,633 job cuts since January 1, which is 7.3 percent fewer than the 319,946 job cuts announced in the first seven months of 2012.  At the current pace of downsizing, which is averaging 42,376 job cuts per month, 2013 will come in below the 2012 year-end total of 523,362, which was the lowest annual total since 1997 (434,350).

July job cuts were somewhat offset by announced hiring plans that will add 9,728 new workers to employer payrolls in the coming weeks and months.  These include at least 5,000 new workers being hired by online retail giant Amazon.com to meet increasing demand.

July workforce reductions were led by the health care sector, which announced 6,843 planned job cuts.  That represents the highest number of cuts for this sector since 9,558 health care job cuts were recorded in November 2009.  Health care organizations have now cut 29,794 jobs this year, 59 percent more than the 18,770 planned job cuts announced by this point in 2012.

“Cuts in Medicare reimbursements brought about by sequestration and health care reform are hurting hospitals’ bottom line.  Some states are also cutting Medicaid funding, which adds to the financial challenges.  Hospitals are also reporting fewer patients as high-deductible insurance policies discourage would-be patients from seeking health services.  As a result of these factors, health care providers, which had been one of the country’s best job generators in recent years, are being forced to reduce their headcounts,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Meanwhile, aerospace and defense saw the second largest job-cut total in July, with firms in this sector announcement plans to reduce payrolls by 4,889.  That brings year-to-date job cuts for the sector to 22,750, which ranks fourth among all industries and represents a 20 percent increase from the 19,026 job cuts announced by these employers in all of 2012.

Get the full report here.

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