America wants the job market’s Great Freeze to thaw

Getty Images; Rebecca Zisser/BI

Amazon and other big companies have made recent headlines for layoffs.
However, the US is in an overall low-hire, low-fire job market.
It would take about 20 more Amazon-sized layoffs to get to a worrisome level.

Workers have been begging for the Great Freeze to thaw — but not this way.

With hiring largely frozen in the US, any uptick in firings could set off alarm bells. Just this week, Amazon slashed 14,000 jobs; Paramount laid off about 1,000; and UPS announced it’s shrunk by thousands more than expected this year.

It’s still a drop in the bucket — in terms of both Amazon’s overall head count and the broader economy — and there’s no guarantee that a wave of companies will follow suit. The overall labor market has been averaging 1.7 million layoffs a month, and we’re not in a recession yet.

However, new jobs are hard to find these days, and companies are abuzz with reasons to trim head count. Amazon, IBM, and Microsoft have all cited AI in cuts. Plus, there’s general tariff uncertainty, and a need to correct for pandemic overhiring.

It’s a swirl of factors that Federal Reserve Chair Jerome Powell is watching closely — especially as the government shutdown prevents the flow of official data.

“You see a significant number of companies either announcing that they are not going to be doing much hiring or actually doing layoffs, and much of the time they’re talking about AI and what it can do,” he said, in a Wednesday press conference following the latest interest-rate cut.

“It takes some time for it to get in there,” he added, referring to official government data, much of which is on hiatus during the government shutdown. “But we’re watching that really carefully.”

More than 20 additional Amazon-sized events would send the job market into a scary place

Firing contagion isn’t unprecedented. As Aki Ito wrote for Business Insider, Meta’s 11,000 job cuts in late 2022 kicked off a firing spree across Silicon Valley and Corporate America, eventually affecting more than 250,000 people.

However, the economists we spoke to weren’t too worried yet.

Guy Berger of Guild told Business Insider that these layoff waves over the past few years feel like “The Boy Who Cried Wolf.” He said it would take a lot of company layoffs “to move the meter.”

“These mass layoff announcements have not been representative of what most companies in the United States are doing; they’re outliers that get a lot of attention,” Berger said, adding, “maybe finally other firms start following their footstep, but so far it has not happened.”

Even if hiring stays frozen, it would take a lot of Amazon-sized events to really set off alarm bells: During the Great Recession, for example, layoffs were regularly over 2 million a month — 300,000 more than this year’s monthly average. That works out to around 20 Amazon layoff announcements’ worth of cuts a month to make things really scary.

Ernie Tedeschi of Yale’s Budget Lab said it would take a bit more.

“Layoffs in good labor markets still often flirt with 2 million (especially now that our population is larger),” he wrote in an email to Business Insider. “But the one time we broke 2.5 million was the legit scary months of early 2009.”

As Dana Peterson, chief economist at The Conference Board, said, the tech sector’s churn doesn’t reflect the full job market.

“C-suites are much more strategic than that, and they’re not going to just start doing something because other firms are doing it without a reason,” Peterson said. “We need to remember that there are still several industries that are suffering from labor shortages.”

These industries, like healthcare, will continue to need to staff up, especially as more people retire.

Claudia Sahm, the chief economist for New Century Advisors, said layoff announcements can at least give the direction, but not the magnitude, of what’s happening in the job market.

“Layoff announcements, first and foremost, are about the companies,” Sahm said. “They’re business decisions. And so Amazon’s a very large company, but it is not the US labor market.”

Have you been laid off or a hiring manager who has seen the workplace change? Reach out to this reporter to share at mhoff@businessinsider.com.

Read the original article on Business Insider

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