By William Dupor, Assistant Vice President and Economist
General Motors recently announced that it would reduce salaried and salaried contract staff by 15 percent. This includes ceasing productions at two U.S. assembly plants: one in Detroit and one in Warren, Ohio. Since the company currently employs about 101,500 workers in the U.S., a 15 percent reduction would result in a loss of approximately 15,200 jobs. Note that my calculation, which is computed as 15 percent of 101,500 jobs, differs slightly from numbers being reported in some media outlets, which suggest a reduction of around 14,000 jobs.
This blog post places the projected GM job losses into the broader perspective of the historical record of employment change in that industry. The solid line in the figure below plots the change in total employment in the motor vehicle and parts industry over the past 30 years, which is compiled by the Bureau of Labor Statistics. The change in employment is calculated over six-month intervals (i.e., the first half or the second half of each calendar year).
There are notable aspects of the graph:
The dashed line in the figure reflects a simple calculation (not intended as a forecast) of how the GM decision might affect this industry. The calculation is based on the following assumptions:
The GM job restructuring plan, together with the back-of-the-envelope assumptions on how other jobs in the industry might be affected, implies a significant decline in employment. However, the job losses are not nearly as large as those that occurred during or preceding the previous three recessions.
1 Note that my calculation, which is computed as 15 percent of 101,500 jobs, differs slightly from numbers being reported in some media outlets, which suggest a reduction of around 14,000 jobs.