Coronavirus lay-offs split corporate America

The United States is preparing for a historic wave of jobless claims as companies lay off workers in an effort to overcome a pandemic that has caused demand for their products to plummet and cut entire industries from their customers.

In recent days, trade groups in Washington have said that 1.7 million retail jobs, 3-5 million restaurant jobs and 4.6 million travel jobs could be lost. lost. Yet some of the largest US companies are sending a different message in this crisis: retaining employees will be more important to their long-term prospects than any effort to protect short-term profits.

“The typical move involves reducing a number of sales and customer management positions. . .[but]I wouldn’t do that again because I think it’s a real short-term response, “Stephen Squeri, chief executive officer of American Express, told analysts last week.

“Even during the financial crisis, [in] the worst year we’ve had, we made $ 2.2 billion. How bad it would have been if we had made $ 1.8 billion and had more of my trade organization to get out and hit the ground even faster [when business recovered]? ” He asked.

The coronavirus hit US companies six months after Squeri and 180 other CEOs signed a letter organized by the Business Roundtable in Washington to treat all stakeholders – including employees – as equals to their shareholders.

“I hope this is the time when they can implement this commitment in principle,” said Mary Kay Henry, international president of the International Union of 2m Service Employees.

SEIU last week called on companies to “show leadership by exceeding their bottom lines to ensure the health, safety and financial security of all workers”, but Ms. Henry told FT that the need for collective action to stem the spread the virus gave him hope that they could resist the “instinctive reaction” of the job cuts.

Harvard Professor of Economics Rebecca Henderson echoed that CEOs who were “all-in on the stakeholder approach” put staff first in this crisis, having learned the lesson not to do during the 2008 financial crisis. But, she added, others reverted to less “avant-garde” behavior.

“Responsible capitalism” is now facing its greatest test, Paul Polman, the former head of Unilever, wrote on LinkedIn last week. “Today’s CEOs are deeply rooted in unfair choices,” he said, but “all large companies, except the hardest hit, should be able to protect vulnerable workers.”

The crisis has revealed marked differences in the responses of companies, often motivated by the health of their balance sheets.

Several groups, from clothing retailer Eileen Fisher and Walt Disney theme parks to casino operator Las Vegas Sands, have said they will continue to pay staff while their operations are closed. Others, such as travel technology company Saber, have imposed wage cuts or asked staff to take leave without pay.

Several general managers have been explicit in telling Washington that their ability to avoid layoffs will depend on receiving government assistance.

Gene Lee, CEO of Darden Restaurants, told analysts that he had been in touch with the Trump administration and Congress to try to come up with a plan “that would use government money to pay [employees] and not have to part with our 190,000 team members. ”

Even the United States Chamber of Commerce, which is generally wary of the government that binds businesses, has suggested that a condition be attached to loans it would like to see made to small businesses: that they use the funds to keep their employees at work.

For some companies, the scale and speed of the crisis do not allow some to maintain the hoped-for rescue.

GE announced on Monday that it would cut 10 percent of its aviation staff after Marriott had warned of “tens of thousands” of layoffs at its hotels. Cowen & Co analysts advised airlines to “lay off each of their employees” to save money, while Delta Air Lines threatened to cut its payroll in line with reductions in its schedule if it were not bailed out.

So far, the toll has been most severe in leisure and entertainment, according to Challenger, Gray & Christmas, an outplacement company that found that the sector was behind most of the 9,000 ads job cuts. he had followed by the end of last week.

Flywheel and Solidcore, two exercise companies, each temporarily laid off 98 percent of their employees, while Cirque du Soleil, the Canadian circus troupe, said it had no choice but to cut 95% of its staff at the moment “to weather this storm.”

Their experience shows how the crisis has widened the gap between the largest American companies and its small businesses. Torsten Slok, a Deutsche Bank economist, noted that S&P 500 companies employ only 17% of the U.S. workforce, and polls suggest that small employers have a harder time keeping workers: a survey of 64 mid-market CEOs by Stifel found that 31 percent were already applying layoffs.

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Some of the largest American companies hire or promise salary increases and bonuses. Amazon has announced plans to hire 100,000 more people; CVS and Dollar General announced on Monday that they would recruit up to 50,000 people each; 7-Eleven is committed to hiring 20,000 people and PepsiCo is hiring 6,000.

Some retailers are also raising the salaries of staff facing a wave of purchasing buyers: Walmart has promised a bonus of $ 150 for hourly workers and $ 300 for full-time staff, while Target increases wages $ 2 an hour until the beginning of May.

However, some small businesses do not have the resources to retain the staff they had before the crisis started. Danny Meyer, a restaurateur who laid off 80% of his more than 2,000 employees, said that it was almost impossible to reconcile the principles of his business with the needs of the moment, “and it is absolutely heartbreaking.”

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