Layoffs Sweep From Wall St. Across New York Area
A broad array of businesses across the New York region have begun eliminating jobs by the thousands as the pain of the financial crisis spreads well beyond Wall Street.
Companies as varied as Yahoo , American Express , Time Inc. and Swissport Cargo Services at Kennedy International Airport say they are preparing to lay off employees, including online ad sales representatives, magazine editors and baggage handlers, in the coming weeks.
Economists and labor-market analysts predict that the cuts will be part of a large wave of pink slips that is expected to drive up the city’s unemployment rate and strain the state’s unemployment insurance fund. In the week that ended Oct. 11 — the latest week for which data is available — New York led all states with an increase of 5,224 first-time unemployment claims.
Law firms are shrinking and publishing companies, which employ about 54,000 people in the city, announced layoffs of about 880 employees this week. Other service businesses, like consulting, catering and tourism, are almost certain to follow suit, said James Brown, who analyzes the city’s job market for the New York State Department of Labor.
“The professional fields are going to feel the impact of falling corporate profits,” Mr. Brown said. “We have a lot of firms in professional services and they sell to corporations nationally and internationally. With corporate profits dropping, their business is weakening. I expect them to start losing jobs soon.”
Those cuts would come on top of the layoffs of tens of thousands on Wall Street, which is in the midst of its most wrenching changes in decades.
Despite large cutbacks at some of the city’s most venerable banks, city and state unemployment rates have risen only gradually this year, with each holding at 5.8 percent from August to September. But that is expected to change: The number of New Yorkers filing claims for unemployment benefits has been rising at an accelerating pace, in part because layoffs are spreading beyond Wall Street.
In the first nine months of this year, about 60,000 New York City residents collected unemployment checks, according to the Labor Department. That was an increase of about 7,000, or 13 percent, from the first nine months of 2007. Financial services accounted for the biggest share of that rise, but every other sector in the economy also saw increases in unemployment claims. The number of unemployed city residents who used to work in the media, for instance, rose by about 20 percent to more than 2,800, according to the department’s figures.
Those numbers did not include the seven employees of Wenner Media, the publisher of Rolling Stone magazine, who were laid off this week, or the 600 jobs that Time Inc. said it planned to eliminate during a reorganization announced on Tuesday. But among them may have been some of the 270 people whose jobs were eliminated in the last three months at McGraw-Hill , which owns BusinessWeek magazine and the Standard & Poor’s debt-rating agency.
The digital media, a bright spot in the Bloomberg administration’s efforts to reduce the city’s economic dependence on Wall Street, may be the next to scale back. Yahoo, which is based in California but has much of its ad sales force in Manhattan, is preparing to eliminate at least 1,500 jobs before the end of the year, the company announced last week. Analysts predicted that some of those layoffs would be in New York, but Kim Rubey, a Yahoo spokeswoman, declined to say how many there would be.
Kevin P. Ryan, the chief executive of Alleycorp, which owns six start-up online companies, said that even a relatively robust industry like his would have to cut back if the downturn is prolonged.
“Almost every industry’s going to be impacted,” Mr. Ryan said. “There will be less financing available. Already, a lot of conversations about consolidation are happening. I think it’s going to happen pretty rapidly.”
The traditional advertising agencies of Madison Avenue, he said, are due for some significant layoffs because of the faster decline of printed publications. But much of that cutting might be put off until after the busy fourth quarter.
“The interesting moment’s going to come early next year” in the advertising and retail businesses, Mr. Ryan said. “I think a lot of it’s going to come in January.”
The outlook for the metropolitan area has darkened quickly in the last several weeks. Moody’s Economy.com, a research firm, raised its projection of job losses in financial services by two-thirds this month, to 100,000 from 60,000, which, it said, would put the region into recession before the end of the year.
In recent weeks, each new forecast of the fallout has been bleaker than the one before. Two weeks ago, the office of the city comptroller raised its estimate of job losses on Wall Street to 35,000 from 25,000. On Tuesday, Gov. David A. Paterson raised the estimate again, to 45,000, and projected that the state’s unemployment rate would climb to 6.5 percent. He also said his administration was projecting that the state would lose 160,000 private sector jobs by the end of next year.
On Wednesday, Governor Paterson told Congress that the state expected 90,000 laid-off workers who have been out of work for six months to exhaust their 13 weeks of additional emergency benefits by Dec. 31.
So far, investment banks, brokerage and other securities firms have accounted for almost all of the jobs lost in financial services in the city. But that, too, is about to change. American Express, the giant credit card company, has been hinting that a large layoff would be part of a restructuring plan that it expects to unveil in the next few weeks. A spokeswoman for the company, which is based in Lower Manhattan, declined to say how many of the layoffs would be in the metropolitan area.
While the number of jobs in all professional services in the city was still higher last month than it had been a year before, the legal business is smaller than it was a year ago, Mr. Brown said. Law firms are suffering from the sharp drop in transactions on Wall Street, as well as the softening real estate market, Mr. Brown said.
Heller Ehrman, a firm with a big presence in Manhattan (with Lehman Brothers as a client), went out of business this month. This week, the managing partners of Thelen, a law firm with about 300 employees in New York, recommended that the firm be dissolved by the end of next month. A spokesman said approval of the shutdown was a “formality.”
At Kennedy International, Swissport is considering eliminating 97 of 128 jobs in its baggage-handling operation by the end of next month because of the impact of the slowing economy on airline traffic, according to documents filed with the state labor department. Swissport, which is based in Zurich, handles luggage for several airlines at Kennedy, said Stephan Beerli, a spokesman for the company. Mr. Beerli declined to discuss details of the layoff plan, saying that no “official” notice had been given to employees.
“We are right now in a phase where everybody’s preparing contingency plans,” Mr. Beerli said.