The recent spate of bankruptcies in corporate America is taking its toll.
In the first seven months of the year, U.S.-based companies announced 42,937 job cuts due to bankruptcy, up 40% on the same period last year and nearly 20% higher than all bankruptcy-related job losses last year, a report released Tuesday concluded. Despite record-low unemployment, bankruptcy filings have not claimed this many jobs since the Great Recession.
‘It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced.’
“It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced,” according to the report by outplacement and business coaching firm Challenger, Gray & Christmas. “In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009.”
Companies cited bankruptcy as the reason for 11.6% of all job cuts announced from January to July. That’s compared to 11.3% of all cuts for the same period in 2018. Since 2007, bankruptcy has accounted for approximately 6% of all job cuts every year. The Challenger report tracks planned job cuts publicly announced by U.S.-based employers.
These job losses are gleaned from news reports, company filings with the Securities and Exchange Commission, annual reports, company press releases and, where possible, state Worker Adjustment and Retraining Notification (WARN) reports. Regardless of when the job losses actually occur, they are counted in the month they are announced.
Most of these job losses were in the retail sector. Barneys New York said Tuesday it had filed for Chapter 11 bankruptcy protection. Analysts cite competition from online retailers like Amazon
and rising real-estate costs. The company’s landmark Madison Avenue store will remain open; the company secured $75 million in financing to pay employees and vendors.
The number of retail store closures in the first seven months of the year has exceeded the total number last year.
Consumer spending rose 0.3% in June, in line with a forecast of economists polled by MarketWatch. U.S. consumers didn’t spend as much in June as they did in the previous three months, but incomes rose solidly for the fifth month in a row and an already strong savings rate edged even higher. The savings rate edged up to 8.1% from 8%, near a three-year high.
The number of retail store closures in the first seven months of the year has exceeded the total number last year, according to Coresight Research data cited by the Associated Press. Coresight expects 12,000 stores will be closed this year: So far this year, 7,567 retail stores have closed their doors versus 5,864 for all of last year. (Barneys employs approximately 1,400 people.)
There was a 5% monthly increase in total bankruptcy filings in July 2019, the American Bankruptcy Institute announced in a separate report released Monday. There were 64,283 bankruptcy filings, up from 62,241 for the same period last year. And there were roughly 1,000 more consumer bankruptcies by July, compared to the same period last year.
Alabama had the highest per capita rate, with 5.61 filings per 1,000 people, followed by Tennessee (5.39), Georgia (4.31), Mississippi (4.25) and Nevada (3.79). Last year, there were more than 770,000 bankruptcy filings — a legal process that gives financially strapped debtors a fresh start while also paying their creditors — down from 1.6 million in 2010.
The number of job openings, meanwhile, held steady at 7.3 million on the last business day of June, the U.S. Bureau of Labor Statistics said Tuesday. Over the month, hires and separations were also relatively flat at 5.7 million and 5.5 million, respectively. Within separations, the quits rate was unchanged at 2.3%, and the layoffs and discharges rate was also little changed at 1.1%.