Forget rosy jobs data: Layoffs persist

Pepsi and Boeing announce big cuts and take the air out of positive payroll news.

By InvestorPlace Jan 5, 2012 10:27AM
Rubberball/JupiterimagesBy Jeff Reeves

investorplaceWall Street received news Thursday of positive jobs numbers in a private-sector payroll report from ADP. Specifically, jobs increased 325,000 in December, led by the service sector and small businesses. Additionally, November's employment numbers were revised slightly higher.


But lest you think everything is coming up roses, keep in mind that many big corporations are still reluctant to hire. In fact, they continue to cut back based on some of the recent headlines.


For starters, PepsiCo (PEP) is considering cutting about 4,000 jobs, according to the New York Post. Citing inside sources, the paper also said Pepsi may reduce pension contributions in order to boost its earnings.


And Kansas employees of Boeing (BA) will be looking for work soon. The aircraft maker will be out of Wichita entirely by 2013, leaving more than 2,100 workers in the lurch. Boeing has called Kansas home since the 1920s but decided the facility no longer allows the company to produce planes competitively in the current market.


While the ADP improvement is mildly encouraging and the drop in unemployment from above 9% to the mid-8% levels is nice, these mass layoffs show that the labor market still has a long way to go.


What's more, these cuts signal what is likely a disturbing trend in corner offices beyond those at just Pepsi and Boeing. Aerospace workers nationwide are bracing for protracted cuts in Pentagon spending as federal budget cuts take center stage in this election year.


The Boeing headline is worrying to workers at competitors like Lockheed Martin (LMT) and Northrop Grumman (NOC), but perhaps of greater concern is that Defense Secretary Leon Panetta is reviewing plans to trim $450 billion from the military budget over the next 10 years. Military contractors have begun to consolidate manufacturing facilities and eliminate thousands of jobs from coast to coast in anticipation of this plan.


As for Pepsi, the company employs about 300,000 workers globally, so the layoff might seem small-time. Pepsi is sitting on eight consecutive quarters of year-over-year revenue gains and is on track to see its fiscal 2011 earnings jump about 37% from 2008 numbers.


So Pepsi isn't in dire straits. It's just squeezing employees to impress Wall Street because it lacks confidence. And lets face it, confidence is the only thing that will ever save this economy.


Pleasant jobs reports like the one from ADP are nice, but workers need to read between the lines. The sad reality is that while small businesses might be hiring and more jobs in the service industry might be available, blue-chip corporations continue to slash costs and benefits to improve their profits.



Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.




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93Comments
Jan 5, 2012 11:31AM
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Also the Postal Service is closing half of their distribution centers which will prompt massive lay-offs. Yet mainstream media is still trying to convince the sheeple that the employment picture is improving.  Sure, just like:

 War is peace

ignorance is strength

slavery is freedom

 I think you get the idea.........

Jan 5, 2012 11:29AM
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I'm don't think many of us believe in "announced" figures anymore.  Anyone living in the real world, including the author in his private life, knows nothing much is happening outside the fantasies of hype land.  The numbers are manipulated to present whatever the present political agenda is.  Employment figures are, literally, a joke to any thinking person. 

 

I wonder what it's like to wake up in the morning realizing with the thought "aw ****, I gotta write something today and it has to be positive".  Called creative writing.  But it pays the bills, draws advertisers and give one something to do. 

 

Untold millions of us are abandoning the mass media.  Personally, I've spent considerable time finding people who have their feet on the ground and are writing about things I'm seeing in the world around me. 

 

 

Jan 5, 2012 12:31PM
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The U.S. allows guest workers from Mexico to work here in an obscure setup where by the company sponsers them. These are not low paying service jobs. I am an A&P mechanic who works on the planes you fly in. My last manager was a Mexican citizen. Over a quarter of the work force were Mexican nationals. Basically it keeps wages low. The pay for professional aircraft mechanics is about the same as it was in 1991 when I got my FAA license. Factor in inflation and you can see my point. I think the occupy wall streeters had a good point. It,s the corporations that are starving us to death with the help of our elected officals they own. This is not America!

Jan 5, 2012 12:14PM
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Like another person already said, the Postal System is laying off people.    They are the 2nd largest civilian employer behind Wal Mart currently.   The jobs market is shedding jobs like a dog does hair.

Face it, folks, people are obsolete.  This day was coming with all the advances in technology were you no longer need people to run the accounting books, type letters, run farms, carry mail, produce cars (robots do it )   etc.     There are now self check outs replacing cashiers.   Look at all an ATM can do now too replacing tellers.   

Supply and demand for goods and services are equal.   With no new demand for services or products there is no reason to hire.
Jan 5, 2012 4:13PM
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the unions hurt boeing just like they've hurt the auto industry.    you can't pay someone $15-20/hr to sand parts or sweep the floors and remain in business.  by the way, i worked a boeing in wichita so i know what i'm talking about.  worked with lots of people that barely had high school educations, but were staunch AFL/CIO supporters simply because of the wages the unions got them.  went on strike and all we saw were the union bosses driving by in their limos telling us to hang in there. i left, got a college education in a critical care area and took a big pay cut.  but i sure don't pay union dues any more. the unions had their place in the past, but their time is past.  they are killing our economy.  you complain about the big brother of govt overseeing you, them you turn around and let the unions control your very livelihood.
these other countries don't have to attack us, just keep encouraging the outsourcing of cheap labor to areas out of the united states and we will self implode. 

Jan 5, 2012 11:55AM
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Pepsi is still very profitable but is just squeezing the employees to impress Wall Street?  These are the "job creators" why would they want to impress Wall Street when then can continue to earn billions treating employees like human beings, because they can.  The country is now obviously run by Wall Street.  We bailed them out, they squeeze us dry.  But wait, lets not get crazy and attempt to put controls in place to better regulate their operations and lets not tax one red cent of this privileged 1%.  They need the money to create jobs overseas and squeeze middle class Americans.  Tell me again why unions are the criminals (I am not now nor have I ever been a member of a union).  If the 99% is not really organized, here is an issue you can run with, Americans being "squeezed" thus totally eliminating the middle class.  Remember the line about history repeating itself?  Well, I am beginning to believe this is the "let them eat cake" moment.  When will we storm the Bastille?
Jan 5, 2012 12:19PM
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I'm afraid you're mistaken, RICH NYC.

 

It's become a regular thing for the Obama Administration to make announcements about improvement in job creation, consumer spending, GDP growth, etc.

 

They know that they can depend on their media wh0res (like NBC) to splash the "good news on the economic front" all over the place.

 

Then, a couple of weeks later, there is usually a quiet announcement, most often late in the day on a Friday, "adjusting" the numbers downward. Of course, these "adjustments' get very little media attention.

Jan 5, 2012 12:27PM
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This world is going to hell. Really fast.

Jan 5, 2012 11:37AM
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getting rid of good paying middle class jobs with benefits.

but hey lets all be happy. they are creating poverty level jobs

with no benefits or retirement. hooray for corporate america

and wall street.

usairways just got rid of good paying jobs in seven cities, the work is still

there, its just now being done by a british company with SCAB labor, paying $7.50 hr with no

benefits, because of two rounds of bankruptsy and paid off judges to

bust union contracts. by the way usair is making money, no justification for doing what they did.

except maybe to keep giving astronomical bonuses to the executive "talent pool" that put them in bankruptcy in the first place.

Jan 5, 2012 12:11PM
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Don't read to much into the Boeing announcement. Jobs are moving not disappearing. They are going to Oklahoma City, OK, San Antonio, TX, and Puget Sound, WA. It isn't 2,000 layoffs. Don't get me wrong. It sucks for those 2,000 employees of which I am one so I know all to well. From an economy standpoint though, this isn't 2,000 layoffs.
Jan 5, 2012 3:49PM
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aerospace is one of the few manufacturing areas that is high tech and globally competitive.  Now we will be cutting back on that skilled set of workers, Maybe we can hire more government workers to make up the difference.
Don't worry as our economy continues to lay off skilled workers due to government policies and the economy worsens, our labor costs will be so low, since only low tech jobs will be available, and then in 20 years our children can be the ones making clothes pins for the world

Jan 5, 2012 11:52AM
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Jobs always increase in November because of the holidays.
Jan 5, 2012 2:16PM
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Pepsi may reduce pension contributions in order to boost its earnings. nice!! screw the workers first and foremost for earnings.

eight consecutive quarters of year-over-year revenue gains and is on track to see its fiscal 2011 earnings jump about 37% from 2008 numbers.

how much more earning do they need or due they just want to move jobs over sea's.

sorry people keep eating them fatty food snack and slurping down the teeth rotten junk.

Jan 5, 2012 4:33PM
Jan 5, 2012 1:45PM
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I love the Americans who complain about their jobs being outsourced. They complain when their jobs go to a third world country but when they go shopping they buy their clothing made in the 3rd world, groceries from outside the USA, electronics from Asia, refuse to drive an American car, and all home improvement products and tools from Asia, and major appliances from outside the USA. I guess they feel that their job is special and should not be outsourced but screw everyone else's job because I am special and I did get a good deal.

 

Hell, look at the last election. We had a war hero who was shot down in enemy territory over Vietnam, captured, and tortured. The brilliant American public who did not like Bush and Dick Cheney decided to vote for Dick Cheney's cousin, the radical black that hates whites, did not grow up in the US, was friends with Bill Ayers, and maybe not even a Natural Born US Citizen since his father was not a citizen at birth. The idiots that hated Cheney went and voted for his puppet cousin who carried on his agenda.

 

At the same time these flag waving idiots in this country keep telling everyone to love and respect veterans but they pissed on a war hero during the last election and elected the opposite. I guess the American public should keep watching football and reality shows, reading people and worrying about who some actress or actor is screwing.

 

Rather than reading People or propoganda from Repubs and Dems or watching idiots on MSNBC or FOX, try reading the Constitution.

Jan 5, 2012 12:02PM
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Pepsi company, fire your CEO  who doesn't have any confidence in running a multi billion dollar industry. because of this people are loosing there job and home.

 

even with less confidence CEO they get paid multi million dollar pay check for there service shame on PEPSI Company.

Jan 5, 2012 2:02PM
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Now that Christmas is over, wait for January numbers.

 

Jobs should only be those that provide an income that would allow a single income to support a family of 4,  Any thing less would have to be negative growth.

 

Why are temp jobs even counted?  Why not base job growth on income taxes collected each week?  At least you would have a better look at the increase of income and if people are going to buy more and generate new growth.

Jan 5, 2012 12:01PM
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Why dont we boycott Pepsi.  I bet they will keep the companies overseas, drop our american workers.  I would say that Any company that close or reduce their manpower in the states and outsource overseas should be boycotted
Jan 5, 2012 5:18PM
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"So Pepsi isn't in dire straits. It's just squeezing employees to impress Wall Street because it lacks confidence"

 

And people continue to CON others by saying that Wall Street isn't in control.  Another 4000 people losing their jobs ONLY to boost the bottom line to WALL STREET doesn't punish their stock, so the PIG FAT PIGS at the top can enjoy a nice huge BONUS check.

 

Yup.  More of that trickle down economics creating jobs lying CON party squabble again.  Pepsi is sitting on 8 quarters of year over year revenue gains, and revenue is up 37% since 2008.   Yes, sounds like a company in financial trouble that needs to cut costs.

 

Maybe we should all boycott Pepsi products, now.  BOA reversed their Debit Fee.  Verizon reversed their $2.00 "pay by CC" fee.  All because of public outrage.

 

Let Pepsi's 8-quarter continued sales growth end and give them a real reason to cut costs... Like the bonus checks and benefits package of their big fat PIGS.

 

Jan 5, 2012 12:56PM
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I believe that the slight improvement in the unemployment % is due to an increase in temp workers for the holidays. What a lot of people don't know is HOW the unemployment rates are calculated. For an example: a person was recently laid off from his/her job; is collecting unemployment benefits; and actively looking for a job. These people are considered "marginally attached" to the work force and not counted as unemployed. People are considered unemployed when after 6 months of looking for a job, they give up on job searching because either they can't find one, or due to their circumstances, taking a large pay cut just to get a job would actually place them into a worse financial situation. When I see what the government posts as the unemployment rate, I usually tack on 8-10% to get a REAL TIME understanding about how many people are actually unemployed. Then there is the "under employed"; those who have college degrees; most likely will a student loan to pay off; who are waiting on tables at the local eateries or professional women with higher degree levels that turn to being exotic dancers or even escorts to help pay the bills. This administration acts like it has the "pulse of the people" but they are so far removed from the actual reality of the state of our economy, its pathetic. What CEO from Wall Street has actually been investigated and prosecuted for criminal negligence, criminal ethic violations, and outright fraud and deception lately?. You do not crash an economy by making "poor decisions" or by "showing poor judgment". It is business as usual at Wall Street now that they have had their toxic debt resolved by the taxpayer bailout. Recently there was a CEO of a company who made 145 million dollars in ONE YEAR for his total compensation package. That is obscene and repulsive because NO CORPORATE POSITION in the USA is worth that amount of compensation for 1 person. So what if he made money for his investors; THAT IS HIS DAMN JOB TO BEGIN WITH!!! Investors have no say-so in these good ole boy compensation packages; if they do get to vote on it, their vote is typically non-binding and dismissed by the compensation/board members. It makes investors feel empowered, but it means nothing and does nothing to change this obscene compensation packages for CEO's. Oh, lets not forget about the COO's and CFO's of those companies; their compensation packages are RARELY discussed publicly or even published for review. So, the morale of the story is that when you see the unemployment rate, add 8-10% to it to get the REAL feeling of the unemployment situation. Last year, our "elected officials in Washington" got NOTHING significantly done to improve the economic situation because they- both republican & democrats- can't put aside their ego's and political differences to get this country moving forward. Thanks for letting me share.......
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