Layoffs mount as economic downturn spreads

Escalating layoffs, growing unemployment and accelerating contraction of the capitalist economy, in the U.S. and worldwide, are taking center stage in the present global crisis.

The U.S. government is handing out trillions of dollars to the banks, insurance companies and auto companies to make up the losses of the millionaires and billionaires. They are letting the crisis of the capitalist system fall squarely on the backs of the workers.

Three-quarters of a million workers in the U.S. lost their jobs since September. It is expected that 200,000 a month will lose their jobs in the next period. In September alone there were 2,269 “mass layoffs,” that is, layoffs involving 50 or more workers at one time, involving 235,000 workers. There is no telling how many workers were laid off in numbers of less than 50.

New unemployment claims for the month of September were 478,000, which is a rise of 15,000 more than expected. There was an 11 percent rise in the number of workers put on part-time hours, the highest in 15 years. And there was a rise in the number of workers who have stopped looking for work. The present official unemployment rate of 6.1 percent is expected to increase dramatically in the next several months.

In addition, in September there were two million workers officially unemployed for more than 27 weeks. Several hundred thousand workers exhausted their 13-week extended unemployment benefits passed by the Congress this summer. Many of these workers are sole family supporters.

‘Who’s who’ of big business leading the layoff wave

Many of the big corporations with global empires sense the coming recession and are “getting ahead of the curve” by carrying out layoffs to cut costs and boost profits early on. The airlines are planning 36,000 layoffs, mainly in the fourth quarter. The steel industry has shut down 17 of 29 blast furnaces. It is estimated that 300,000 jobs will be lost in the financial industry in the coming downturn. (New York Times, Oct. 26)

The auto industry has gotten rid of 100,000 workers in the last year and now General Motors is planning major layoffs if it can finish its merger with Chrysler. It is estimated that the merger would result in 40,000 job cuts. Chrysler has already ordered the layoff of 5,000 salaried workers by the end of the year. The company has also broken its contract by ending its matching payments to the 401k plans.

Bank of America is also planning large layoffs once its merger with Merrill Lynch is finished.

Among the giants leading the layoff charge are Hewlett Packard with 24,600 layoffs, 7.5 percent of its workforce; Goldman Sachs with 3,260 layoffs, 10 percent of its workforce; National City Corp. with 4,000 layoffs, 14 percent of its workers; Dell computer with 8,900 layoffs, also 10 percent of its workforce; and Merck Pharmaceuticals, which has already laid off 10,400 workers in the past three years and is planning another 7,200 layoffs, or 12 percent of its workforce.

Others include PepsiCo, which closed four bottling plants and is laying off 3,300 workers, and Whirlpool, which laid off 440 workers. General Electric has announced that it intends to make major layoffs, but won’t release the number of cuts expected.

Overproduction is to blame

It is clear that all the financial manipulation by the leading capitalist economic authorities has been unable to stem the tide of the capitalist crisis. Beginning last May, Bear Stearns collapsed and was swallowed up by JPMorgan Chase, with a $30 billion bailout from the Federal Reserve Board. Next came the multibillion dollar bailout of Fannie Mae and Freddie Mac, followed by the $85 billion bailout of insurance giant AIG, the subsidized merger of Washington Mutual with JPMorgan Chase, and the forced merger of Wachovia and Wells Fargo, among others.

During this period the financial authorities were preoccupied with preventing bank failures piecemeal. Then came the systemic bailout plans and the $700 billion plan. But, because toxic loans were spread throughout the banking system, lending ceased and credit froze. So the financial officials poured hundreds of billions more dollars into the banking system and declared that they would guarantee interbank loans in the hope of unfreezing credit. That was the phase in which the credit crisis was thought to be the problem.

Now it is clear that the crisis is flowing from capitalist overproduction. The real estate dealers cannot sell houses. The auto companies cannot sell autos. GE cannot sell airplane engines to a shrinking industry. Loans will not be made to companies that are losing sales and profits.

A surefire indicator of the economic downturn is in the transportation industry. The pre-holiday months are the time for a significant rise in shipping as companies build up inventory for the season. Right now the transportation industry is in a downturn across the board. UPS has described a “precipitous decline” in next-day deliveries. Other trucking companies have similar reports. Trucking carries 70 percent of the freight in the U.S. and thousands of trucking companies have gone bankrupt in the last year. (Wall Street Journal, Oct. 24)

The largest railroads in the country—Union Pacific, Burlington Northern Santa Fe, Norfolk Southern and CSX—have all reported third-quarter drops in shipments. The number of containers shipped through the top 10 container ports in the U.S. has dropped by 7.2 percent from January to September.

Similar reports of layoffs and economic contraction are coming in from Asia, Europe, Latin America and the Middle East. The recession is global and the worldwide working class is under attack.

Only solution is workers’ fight-back

This is leading to proposals in the U.S. that the trade unions, communities and municipalities band together and form a front to stop the layoffs, foreclosures and evictions and the social service cuts that are coming down upon the people.

The demand is rising that the trillions of dollars being used to bail out the bankers be used to bail out home owners and tenants, fund health care, cancel the debt on student loans, guarantee heat and electricity to everyone this winter, open up the workplaces that are shutting down and rehire laid-off workers.

History shows that the only answer to the onslaught of a capitalist recession is for the workers and the oppressed to organize and fight back.

The workplaces do not have to be shut down. There are millions of people who need food, clothes, automobiles, mass transportation, housing, health care and many other necessities. But the places that make and sell those goods and services are being shut down and cut back because there is a crisis of bosses’ profits.

The bosses have spent the last 30 years breaking unions, cutting wages, pensions and health care benefits, raising rents and housing costs, and generally impoverishing the vast majority of the workers. At the same time they want the workers to buy more and more so that the bosses can keep increasing their profits.

Capitalism has created this crisis. But the multinational working class, employed and unemployed, documented and undocumented, does not have to take it lying down. The trillions of dollars that are being handed over to the banks can be used to run the workplaces under the control of the workers for the benefit of the people.

The people, through mass organizations, should have control over how these trillions of dollars are going to be spent. After all, that money represents the wealth that was created by the workers in the first place. In fact, the workers should not only control it, they should own it in the long run.