Feeling the hard times in Houston

October 2, 2008 4:40:17 AM PDT
New figures show mounting job losses across the country. And the latest figures have yet to reflect this week's meltdown on Wall Street. According to research from a Chicago-based placement firm, job cuts announced by U.S. employers climbed 33 percent in September compared to last year. The Labor Department comes out with its monthly report Friday, and analysts expect it will show the economy lost jobs for a ninth consecutive month.

The impact is being felt here in Houston, where many Carmax employees learned they were being let go Wednesday.

Most of the layoffs will come from Carmax superstores, where vehicles are reconditioned. On Tuesday night, we saw dozens of employees leaving just as their shifts were supposed to be beginning.

"They told us to come back tomorrow to have a meeting so they'll let us know what's going on," said employee Jean Pierre.

A company spokeswoman says they've seen dramatic declines since June. According to second quarter results released just over a week ago, total sales were down 13 percent.

At that time, Carmax President and CEO Tom Folliard said, "The slowdown in the economy and reductions in consumer spending power resulting from higher gasoline and food costs continued to create a difficult environment for our business."

Here in Houston, there are four Carmax stores. Of the 760 employees, 50 jobs are being cut.

As uncertainty continues to grow over the state of the economy, Adrianna Kugler, an economics professor at the University of Houston, says we'll start seeing less demand for all kinds of goods, especially in the car industry.

"Laying off people is one way for these companies to get liquidity," she told us. "So being that they're not getting credit from banks and financial institutions, they lay off people, they have more income coming in to spend on other things."

The company says it'll offer severance packages to all of those employees being laid off.

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