In the largest round of layoffs since this financial crisis began, Citigroup announced Monday that it would cut its global work force by an estimated 52,000 jobs in the coming months, either by attrition, outright layoffs or by selling some of its businesses.
In December 2007, Citigroup had 375,000 employees. By the middle of next year, the bank says that number will be weaned down to 300,000.
Half of the job cuts will come from overseas banking operations, and the other half, about 26,000 jobs, will be lost in the U.S. Industry analysts say the majority of these cuts are in mid-level positions; these are not Wall Street "fat cats," but everyday Americans.
"The vast majority of the people getting laid off, themselves, are not bad characters, you know, they were just doing their jobs," said David Trone, banking analyst at Fox-Pitt Kelton. "Then, of course, when their pay goes down, they spend less and it affects all Americans indirectly."
An unforeseen circumstance of layoffs is less tax revenue for the government.
In New York State alone, the top 16 banks paid $173 million in state taxes in June last year; this year, they paid just $5 million, and that was before the crisis really took hold.
As banks trim jobs and budgets, they will look to increase their revenues elsewhere, which could mean higher fees for customers on credit cards and loans.
Hiring Freeze Cripples U.S. Work Force
Michael Raynor, a father and husband from New Jersey, got laid of from his job a month ago and recently received his last paycheck. Now, Raynor gets his children off to school and then spends hours online sending out resumes.
"I just wish I could get a call, that chance to simply go in, shake a hand, and say, 'Hi, I'm Mike Raynor,'" he said on the prospects of landing a job interview.
His wife, Roseanne, an at-home mother for a decade, just took a part-time job to help with the family's income.
Employment analysts say that the number of circulating resumes in the finance industry, alone, is up dramatically. On the job Web site efinancialcareers.com, resumes are up 71 percent over this time last year, but job postings have dropped nearly 40 percent.
"Most of that drop has been felt in the last couple of weeks, so it's been quite dramatic," said Scot Melland, CEO of Dice Holdings, Inc., which operates efinancialcareers.com.
With the pool of unemployed quickly deepening, the search for work will be most excruciating for those with degrees and experience they're trying to match.
"You could see people having to really take jobs that are far below their training and their credentials," said Trone. "And lower paying jobs that are really life altering."