Pic: U. Chicago
The year isn’t off to a good start, but it’s the same bad news it’s been for a while. Focus is increasingly turning to the underemployment rate, rather than the unemployment rate.
It’s the same old denominator problem. Unemployment looks not bad (relatively speaking) at first glance – it was flat at 10.2%. But 661,000 people left the US labor force last month and a similar number of jobs were lost. Had the denominator remained constant, unemployment would have been 10.4%. Overall, 1.7 million Americans left the workforce in the second half of 2009, which was a 1.1% decline, and the workforce as a percentage of total population hit the lowest point since 1985.
That could make for an interesting contrast – the unemployment rate may increase as disaffected people become optimistic about their prospects and re-enter the workforce, even as jobs aren’t actually opening up at the same rate. So higher unemployment may well be a positive indicator, to the extent it results from an increase in the denominator, rather than another decrease in the numerator. In other news, ignorance is strength and war is peace.
But last year is last year, and we’ve already recounted its failings vis a vis law-firm layoffs.
What’s happening now? After the jump.
At the broader level, things were slightly better in the legal sector, according to the most-recent Bureau of Labor Statistics report the legal sector lost 2,100 jobs from November to December on a seasonally adjusted basis.
As we showed in the year-end review, the pace of layoffs dropped off dramatically over the latter half of the year, although we expect that to have been the result of the season more than economics. Don’t be surprised by additional stealth layoffs as review season begins, a trend Cahill Gordon seems to be at the forefront of already. (And this wouldn’t be the first time the firm has stealthily laid off junior associates).
There’s a numerator/denominator issue going on at law firms similar to that in unemployment: non-equity partners. First, their ranks increased over the past decade, as firms raised the bar for true partnership, now the individuals stuck in between associatedom and partnership are making it toward the front of the headsman’s line. They’re increasingly being told to either step up their rainmaking or look for other opportunities elsewhere.
The next few weeks are more likely to be dominated by compensation topics, as firms thaw and unthaw salaries, and finalize bonuses.
The first week of the new year has already been busy. Venable is all over the place, Latham & Watkins came through with true-up raises, Morrison & Foerster paid market bonuses, Pillsbury is cutting salaries, and a host of other firms are progressing salaries as normal.
You tell us what direction law firms are headed, based on those data.
As we look ahead, we’ll take a quick look back: the text of the inaugural edition of This Week in Layoffs:
Unfortunately, our expectation that the layoffs would start off slowly was proven wrong. On Wednesday, word came out about a midsized English firm, Freeth Cartwright, that was laying off 45 staff and 15 lawyers. We thought that was the first crack in the dam, then we heard about Kirkland & Ellis’s laying off 25.
That was just the beginning. Thursday saw
- Clifford Chance lay off up to 80 in London;
- Baker & McKenzie lay off six in New York;
- Dickstein Shapiro lay off ten in New York and Washington; and
- Parker Poe lay off 13 in Charlotte.
The first week of 2010 has gone slightly better.
25 people laid off by major law firms this week, month, and year (all associates).
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