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First, the bad news: thousands of jobs are being eliminated in the telecommunications industry. Second, the not-so-bad news: the employees losing jobs aren't necessarily having a tough time finding new work, largely due to the shortage of skilled technical workers in the U.S.
U.S. employers in December announced plans to cut 133,713 jobs and the bad news has continued into the new year, the outplacement company Challenger Gray & Christmas reports. The sheer numbers of jobs being eliminated by telecommunications service providers and equipment companies seem staggering.
Lucent Technologies says it will cut 16,000 sales, marketing and administrative jobs, while WorldCom Inc. is expected to trim up to 11,550 workers, or 15 percent of its 77,000-person workforce. Qwest Communications International Inc. eliminated 4,500 jobs in the six months since it acquired Baby Bell U S West Inc., and plans another 6,500 cuts in 2001.
For smaller, fledgling companies, like those in the financially strapped competitive digital subscriber line (DSL) industry, the actual numbers are smaller, but the percentages increase. Rhythms NetConnections Inc. in suburban Denver cut 450, or 23 percent of its workforce. Bankrupt NorthPoint Communications slashed 248 jobs, or 19 percent. Jato Communications Corp. shut down, putting 68 people out of work. Industry leader Covad Communications Group Inc. eliminated about 800 full-time jobs-close to 25 percent-to save money. DSL Networks outsourced its call center, and axed 50 people, or 30 percent of its tech support, customer care and administrative staff.
The national unemployment rate, currently 4.0 percent, is a lagging indicator of the health of the economy. That means the cuts in the telecom industry won't show up for several months.
The job cuts are affecting consumer confidence, another key economic benchmark. The Conference Board's consumer confidence index in January showed its biggest decline since October 1993. The survey also saw drops in the percentages of respondents expecting more jobs to become available and those who still see jobs as being plentiful.
"Confidence is down all across the nation, regardless of whether the area is wealthy or not, whether it has seen many cuts in jobs, or whether energy prices or curtailments are an issue," reports Sung Won Sohn, chief economist for Wells Fargo & Co. He forecasts the cooling economy eventually will see jobless figures approach 5 percent by year-end.
The Bureau of Labor Statistics tracks mass layoffs involving 50 or more people. It reports that more than 320,000 individuals were affected by major job cuts during October and November, the latest months for which data is available. More than 258,500 jobs were lost in the comparable period in 1999.
The BLS has a hard time tracking high tech and telecommunications job cuts, since they don't fit into the Labor department's traditional industry categories that are based on manufacturing. But Lewis Siegel, senior economist at the BLS in Washington, says labor analysts aren't seeing pressure on unemployment levels due to workers with technical skills losing their jobs.
"The skill levels are such that they go out one door and in another door," Siegel says. "These layoffs have been going on for some time, and we are not seeing them at the unemployment office."
Total U.S. employment is expected to add 20.3 million jobs by 2008, a 14 percent increase over 10 years. The skills of the workforce needed to meet these demands will continue to change, "as employers incorporate technological innovations and revise business practices to optimize their efficiency," a Department of Labor report states.
The Communications Workers of America, the labor union that represents many telecom company employees, still is seeing demand for employees with skills for certain kinds of work, says spokeswoman Candace Johnson. At the DSL installation level, however, there has been some pullback as companies assess where the technology is going.
One of those reassessing its employee needs is SBC Communications Corp., the parent of Southwestern Bell, Pacific Bell and Ameritech.
During the last six months, SBC's DSL division, Advanced Solutions Inc., has found that about 70 percent of new DSL subscribers are opting either to install the DSL modem themselves or to buy a DSL-ready PC through the company, says spokesman Kevin Belgrade.
SBC is reducing the number of slots for DSL installers, but it hasn't announced any layoffs. "We have needs elsewhere in the company, so what we do is we offer employees the opportunity to choose positions elsewhere," Belgrade says.
Even those companies that have seen drastic cuts still are looking for qualified employees. Rhythms, which eliminated 450 jobs ranging from installers to call center customer care representatives, hasn't imposed a hiring freeze, says spokesman Chris Hardman. If the employees being fired have skills that match the company's needs, some are being offered a chance to move to different positions. Hardman wouldn't say how many workers had been offered other jobs within the company.
Despite the layoffs at Rhythms and the shutdown of Jato, both in Qwest's backyard, human resources personnel at the telecom giant haven't seen a spike in the number of DSL technicians seeking work, Qwest spokesman Matt Barkett says.
Qwest Chairman Joe Nacchio said recently that the Denver-based company is committed to shedding another 6,500 jobs this year as it continues merging its operations with those of U S West.
Nevertheless, the "help-wanted" sign is out across Qwest's operations. The company is "actively recruiting" network technicians and customer services reps, Barkett says. "Most of the jobs we're bringing on right now are as a result of the merger," and the promises Qwest has made about improving service in the 14-state region where it provides local telephone service.
Many of the jobs being eliminated are in marketing and administration areas, but that, too, is creating an opportunity for companies seeking to fill key positions in those areas.
Convergent Communications Inc., an Englewood, Colorado-based networking company that's trimmed its workforce by half in recent months, is building a new sales team focused on its broadband business. It has found entire sales teams looking for work.
"All of the competitors are downsizing, so if you want to build a good sales force, it's easy," says chief executive officer Joe Zell.
The relative strength of the U.S. economy is helping job hunters weather the layoffs. So are interest rate cuts, which historically help the telecommunications and technology sectors.
The Conference Board, which surveys "help-wanted" ads in 51 newspapers, reported recently that the volume of ads rose in the Mountain, New England, West North Central, East North Central and Pacific regions during December. Declines were reported in four regions across the southern tier of the country.
"The labor market is not deteriorating at anything like the pace of change associated with a recession," says Conference Board economist Ken Goldstein. While the labor market is growing more slowly than three to six months ago, "this economy is not falling apart."
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