Conflicting accounts indicate that the U.S. job market is heading in two directions: Larger firms continue to consolidate production and decrease costs by outsourcing, while smaller companies appear to be hiring.
On Wednesday the Department of Labor released a report that indicates January showed signs of an improving job market. The study noted that unemployment applications fell by 12,000 and were at their second lowest point since 2008.
Following the report, the Department of Labor concluded that the U.S. economy is moving slowly in the right direction even though job cuts have increased by nearly 30 percent since December.
Private firms with fewer than 500 employees added 167,000 jobs in January. Small business growth is a good sign of economic turnaround but will not do much to reduce the unemployment rate.
Planned job cuts for the month of January totaled 53,486, up 30 percent since December, according to the consulting firm Challenger, Gray, & Christmas.
Meanwhile, 81,000 American Airlines employees are feeling the pressure for cost reduction. As part of its bankruptcy reorganization plan, American Airlines parent company AMR will meet with union officials this week to discuss employment and pension benefits. AMR management expects a 20 percent reduction across the board.
American Airlines is attempting to cut costs by outsourcing plane repairs to countries like China and El Salvador, and their neighbors.
“This is the dirty little secret of U.S. aviation,” said Transport Workers Union spokesman Jamie Horwitz. “You don’t know where the plane that you’re flying was repaired. You assume standards are high for the person who works on your fuel line, but it doesn’t necessarily follow.”
A comparison of Department of Labor data from December and January shows a slowdown in hiring. A net total of 130,000 jobs were added in January, while that number reached 200,000 in December.
Treasury Secretary Timothy Geithner predicts that the unemployment rate will rise in February.
