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July 2, 2009
Wells Fargo will not reveal how many employees in Sioux Falls will lose their jobs through layoffs announced Wednesday evening.
The layoffs come as worse-than-expected national unemployment numbers released Thursday sent stock markets into a tailspin.
“As a practice, we don’t give numbers,” said Kelly Sprecher, a Wells Fargo spokeswoman. “It’s a big company, and big companies have their advantages in that there are tons of positions open.”
She said some of the people whose jobs are affected by the cuts could be hired into other jobs within the company.
Wells Fargo spokesman Steve Carlson said the job cuts, which came from one of the bank’s three credit card divisions, are not related to recently-passed federal legislation that cracked down on lending practices some say bordered on predatory.
“Wells Fargo financial wouldn’t have been at the top of that list,” said Mary Medema, director of work force development for the Sioux Falls Development Foundation. “They’re not the definition of that.”
As of this spring, Wells Fargo employed about 3,600 people in Sioux Falls, according to Medema.
Overall, Medema said, the number of jobs related to credit cards in Sioux Falls might show a net gain over the last year and a half, because businesses like Wells Fargo continue to hire even as they lay workers off.
Besides, she said, “it’s hard to say whether they’ve really been credit card related jobs (lost) that are due strictly to the economy.”
Carlson said the layoffs this week came as the result of the demise of two credit products involving drawing on home equity lines of credit and ATM services.
“The centralized sales team in Sioux Falls also sold these products from a call center environment in the Wells Fargo Financial Cards home office,” Carlson said in an email.
Sioux Falls unemployment rates have fluctuated in recent months, hitting a high of 5.1 percent in March. May, the last month for which statistics are available, showed Sioux Falls at 4.8 percent unemployment. The state estimates the number of unemployed in Sioux Falls at 6,300.
“The problem with those numbers is that they’re not seasonally adjusted. Typically, the unemployment rate goes down in the summer,” said Ralph Brown, an economist at USD. Even so, he said, “they’ve gone up when typically they’ve gone down.”
Nationally, employers cut a larger-than-expected 467,000 jobs in June, driving the unemployment rate up to a 26-year high of 9.5 percent, suggesting that the economy’s road to recovery will be bumpy.
The Labor Department report, released Thursday, showed that even as the recession flashes signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain the economy is on solid ground. The Dow Jones Industrial Average dropped about 232 points Thursday on the news.
June’s payroll reductions were deeper than the 363,000 that economists expected and average weekly earnings dropped to the lowest level in nearly a year.
However, the rise in the unemployment rate from 9.4 percent in May wasn’t as sharp as the expected 9.6 percent. Still, many economists predict the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.
All told, 14.7 million people were unemployed in June.
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