The coronavirus is already forcing companies to lay off workers and the job losses are likely to mount rapidly as the global health crisis drags on.
U.S. companies have announced 893 job cuts as a result of the outbreak, according to outplacement firm Challenger, Gray and Christmas. The losses include 145 drivers at the Port of Los Angeles amid stalled shipments from China, 360 by Oyo Hotels and 250 by Christie Lites, a stage lighting company.
Canceled events led to 300 layoffs, including 175 related to the South by Southwest technology and media conference in Austin, Texas, Challenger says.
Basic Fun, a toymaker based in Boca Raton, Florida, eliminated 18 jobs. Company CEO Jay Foreman told CNBC the firm has been hit with both supply disruptions from China and reduced demand.
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“Demand in certain industries is dropping off a cliff,” says Challenger Vice President Andrew Challenger. If the outbreak persists, he says, “We’re going to see continued layoffs and they’re really going to accelerate.”
The 893 layoffs track only those businesses that have announced cuts and the actual number of jobs eliminated across the economy is likely several times larger, Challenger says.
The announced layoffs include 660 in entertainment and leisure, 145 in transportation and 70 in energy. Challenger says the cuts will likely come in waves, with manufacturing and supply-chain companies and travel and tourism hit initially, followed by consumer service providers such as theaters, stores, restaurants and hair salons. If the outbreak causes a deep recession, virtually all industries will shed workers, he says.
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Many of the job cuts are temporary, with workers likely to be rehired as the outbreak abates.
With the course the pandemic takes highly uncertain, economists differ sharply over how many jobs will eventually be eliminated.
Diane Swonk, chief economist of Grant Thornton, expects hundreds of thousands of job losses.
Michelle Meyer, head of economics at Bank of America Merrill Lynch, believes hiring will pull back sharply but the vast majority of companies will be reluctant to lay off employees in a tight labor market with widespread worker shortages, assuming the crisis eases in a few months.
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