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Companies Continue Layoffs, Even As Economy Pulls Out of Doldrums


`ECONOMISTS and the federal government keep telling us that the recession is over, but then I keep getting calls from friends of mine who are losing jobs,'' says an accountant for a major Fortune 500 company in New York, getting into a car in mid-town Manhattan. ``Frankly, we're all worried about who may be next.''

It is a cruel twist of the current recovery: Layoffs among middle-management workers are increasing as many of the nation's premier companies restructure, accompanied by a new wave of mergers and consolidations. The trend is especially pronounced here in the greater New York area, where large numbers of professionals live and work.

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In recent months, layoffs have been announced or are expected at companies such as IBM, AT&T, Grumman Corporation, Key Corporation, Society Corporation, the Health and Hospitals Corporation, and Paramount Communications Inc.

During the recent recession, New York City alone lost about 375,000 jobs. However, the unemployment rate has started to fall throughout the metropolitan region, says Amos Ilan, manager of economic trends for the Port Authority of New York and New Jersey.

The irony is that ``the two trends are occurring at the same time,'' Mr. Ilan says. ``The business cycle is working. The economy is starting to pick up. But continued restructuring is taking place, in part because of new business opportunities, which leads to new job losses.''

The continued economic expansion will have the ``stronger effect'' in the months ahead, resulting in net gains in employment, Ilan says.

``There's every indication to believe that the service sector is improving,'' in terms of new jobs, Ilan adds. But in such sectors as electronics, communications, finance, insurance, and banking, ``more opportunities will probably present themselves for restructuring.''

Many of the people who are losing their jobs are in high-paying positions, with expensive homes in the suburbs and school-age children, economists note.

``The [new layoffs] are one of the reasons why we believe the economic recovery will slow in the second half of this year,'' says Cynthia Latta, an economist with DRI-McGraw Hill, an economic consulting firm in Lexington, Mass.

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Cutbacks at Grumman Corporation, the largest industrial manufacturer on Long Island, are expected to put downward pressure on local school district budgets. Grumman subcontractors also will be pinched.

Layoffs at AT&T are expected to have an impact on many small communities in New Jersey. The company recently announced that it will eliminate 15,000 jobs worldwide. But 5,000 of the lost jobs will occur in New Jersey, where AT&T has its largest work force - 51,000 out of a total roster of 309,000 employees.

``Many of the positions will be closed off through attrition,'' says Mary Barnsdale, an AT&T spokeswoman. ``But unfortunately, many people will also lose jobs.''

The job losses will be concentrated in northern New Jersey. About 29,000 AT&T employees work in Somerset, Hunterdon, Union, and Middlesex counties, all outlying suburbs of New York. ``About 60 percent of the layoffs'' will occur among middle-management positions, Ms. Barnsdale says.

The layoffs at AT&T, IBM, and Grumman reflect the changing nature of the core business operations of these blue chip firms, as fewer workers are needed. In other companies, jobs are being lost as a result of mergers and consolidations.

For example, Key Corp. and Society Corp., two New York bank holding companies, have recently merged. The new parent company has decided to relocate to Ohio, where corporate taxes are lower. But that also will mean 1,500 jobs lost.

The Health and Hospitals Corporation, which operates a number of medical facilities in New York, plans to cut 1,300 jobs by June 1, at a savings of $10 million.

Paramount Communications Inc., which recently announced a merger with Viacom Inc., also is expected to shave off some middle-management positions as the two firms consolidate operations.

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