First-Quarter Layoffs Are Back Big-Time

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BOSTON (TheStreet) -- Happy New Year, we're letting you go.

With companies including Northrop Grumman (Stock Quote: NOC), Yahoo (Stock Quote: YHOO), Sunoco (Stock Quote: SUN) and TJX (Stock Quote: TJX) planning cutbacks in the first quarter and some layoffs already begun, employers and the outplacement agencies that help them downsize are welcoming the post-recession return of the post-holiday layoff. Between 2003 and 2007, the Department of Labor's Bureau of Labor Statistics says the number of layoffs in January outpaced December layoffs every year but 2006. January and first-quarter layoff postponements were also popular during the decade before the terrorist attacks of Sept. 11, 2001, according to BLS data.

"Even during other recessions, like 1987 through 1992 and years like that, we did not see huge layoffs in December," says Kate Wendleton, president of the Five O'Clock Club, a New York-based outplacement and career counseling firm that's helped companies handle layoffs since since 1978. "Companies were more altruistic and did not want to lay off people, but in this recession companies did huge layoffs in December."

The number of employees laid off in December 2007 bested January 2008's total by nearly 5,000, according to the Department of Labor, while third-quarter layoffs in 2009 topped first-quarter 2010 by more than 90,000. Even when January 2009's layoff numbers exceeded December 2008's, the number of companies laying off employees the following December eclipsed January's total by more than 2,000.

"We tried to convince companies not to lay people off in December and not lay them off until January, but CEOs said no," says Wendleton, who notes that December was her company's biggest month for both outplacement and revenue in 2007 because of companies who saw the recession coming. "We would say to companies in 2007, 2008 and 2009 that three weeks doesn't make a difference and to keep the people on and cut them in January, but HR people would go back to their CEOs, who wanted them cut now; I think there was panic at the top."

That panic has largely subsided, Wendleton says, with companies returning to form and calling her firm in October, November and December about first-quarter layoffs. She suggests that companies may be feeling more good-natured after unemployment dropped from 10% at the beginning of last year to 9.8% in November and 9.6% in the three months prior -- adding an average of 86,000 jobs a month since the December just passed -- though she cautions that her firm expects massive layoffs this month. One of her colleagues, however, isn't so convinced holiday spirit helped companies delay layoffs from December.

"Some companies are quick to release people and others dawdle," says Bill Ayers, vice president of the Ayers Group, a career management firm and division of the Kelly Services (Stock Quote: KELYA) outsourcing and consulting group. "We're seeing people take on old habits, but they're doing it for different reasons."

Ayers suggests that much of companies' new-found layoff forbearance is strictly budgetary. While January layoffs make sense for companies ending their fiscal year, Ayers says they also help companies dump bonus-eligible employees as early as possible before their windfalls come due. By navigating around those contractual constraints, companies can create a larger bonus pool for employees they wish to retain and allocate funding for other projects. Of course, late forecasts for the coming year can also delay things a bit.

"Companies are communicating with customers and finding that the demand for their services is lower than expected, thus a lower sales number, a lower profitability number and a need for reductions," Ayers says. "We also know that there's a general market uncertainty and companies are holding back on terminations not knowing what was going to happen based on regulatory issues."

Companies that were waiting on the outcome of the Dodd-Frank Wall Street Reform and Consumer Protection Act and new health care law may be ready to move, but companies waiting out their aging work force also faced tough personnel decisions. Ayers says a hardworking generation of baby boomers who just aren't up for retirement are retaining their positions of authority at a 15% to 20% premium over their Generation X counterparts.

Forcing them into retirement or forcing them out is of little consequence, as Ayers says 80% return to the work force. This means either laying off younger workers who aren't climbing the ladder or losing them -- and their intellectual property -- to other firms. Of the companies facing this problem, Ayers says only 30% are aware of this logjam and are doing something to pass down boomer employees' experiences to a new generation and transition boomers out of the work force.

This year looked like the year most firms could count on baby boomer retirement," Ayers says. "The boomer turns 65 this year, there are 78 million doing so in 2011 and there are 10,000 of them leaving the work force each day -- but you wouldn't know that listening to the person on the street."

Perhaps the reason boomers aren't leaving the workplace is because they're as optimistic about its recovery as the rest of the work force. According to a survey by job-placement firm Manpower, 84% of workers are confident enough in the economy to look for a job change this year -- up from 60% last year.

"The companies that are laying off are also hiring, and they're hiring a different kind of people," Wendleton says. "We're also seeing a huge influx of employed people who've decided it's time to look, which is good because we don't want a stagnant job market and churn is what really matters, though it's not reflected in the unemployment numbers."

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