When companies decide to expand, the expansion often takes place with few or no additional workers; sometimes the number of employees declines. The wireless industry has grown rapidly over the past few years as more consumers use smartphones, wireless applications, and network technology. Revenue in the industry grew 28 percent between 2006 and 2011. Employment in the industry peaked at 207,000 employees in 2006, but productivity gains, consolidation, and outsourcing led to a decline of 20 percent of workers in the industry during that 5 year period.
Sprint Nextel Corporation has decreased its number of call centers from 74 in 2007 to 44 in 2010, with a corresponding drop in workers from 60,000 to 40,000. AT&T, Inc. and Verizon Communications, Inc. have kept their number of employees relatively constant over the past few years, but their revenues increased from $100 billion in 2008 to $122 billion in 2010.
In 2011, Prime-Line, Inc., a small building supply manufacturer located in Malvern, Arkansas, expanded its plant capacity. It did so by automating work that previously had been performed manually, resulting in a reduction in the number of employees by about one fourth. Expansion took place, but employment declined; jobs were not created.
Over the past four years, Macy’s, the large clothing retailer, has significantly increased its sales and profits. Its plans for 2014 are to invest its extra cash in online operations and to open eight new stores, but overall employment will be flat – again expansion with no job creation.
There are many other examples of expansions with little or no increase in hiring. Here in North Carolina there is a new toll road in the Raleigh-Durham-Research Triangle Park area. However, there are no toll booths on this road and thus no toll collectors and the new road resulted in minimal job creation; tolls are collected electronically. Drivers can set up an account with the North Carolina Turnpike Authority and install on the car windshield a N.C. Quick Pass electronic transponder that has a customer ID number. Overhead frequency readers communicate with the transponders and deduct tolls from a prepaid account. Overhead cameras will take photos of the license plates of cars that do not have the transponders, and the owners will be sent a monthly bill.
Stanley Furniture Industries is closing its Robbinsville plant, cutting one of its major product lines, moving its corporate headquarters to High Point, and cutting 400 employees. The decrease in corporate income tax rates did not improve the firm’s revenues; there was a loss of jobs, not an increase in jobs.
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