Should recent layoffs at major companies worry you? Experts weigh in
Mass layoffs at corporate giants like Amazon, UPS and Verizon in recent weeks have drawn attention to a sluggish labor market and stoked fears that job losses may spread.
The high-profile cuts have coincided with stubborn inflation and wobbly economic performance, threatening to worsen a cost-of-living crunch if paychecks dry up.
It is likely too early to panic, however, some economists told ABC News. While the layoffs reflect a weakened labor market and AI adoption in some corners of the tech industry, they added, the prospect of wider job losses remains highly uncertain.
A thick fog clouds the outlook due to a weeks-long delay in the government’s release of gold-standard monthly hiring data. A clearer picture will emerge on Thursday with the release of jobs data for September, though the Trump administration has indicated October figures may never be published.
For now, the unemployment rate has continued to hover at historically low levels and the economy has suffered only minor job losses, even if years of uninterrupted job gains appear to have passed.
"Unemployment is very low – it’s hard to do a lot better,” Philipp Kircher, a professor of industrial and labor relations at Cornell University, told ABC News. “How some of the current weaknesses will play out is much harder to tell.”
Last month, Amazon announced plans to lay off about 14,000 corporate employees, saying the company aimed to thin out bureaucracy and invest in “our biggest bets,” such as artificial intelligence. On the same day, UPS said the company had cut 14,000 management positions this year, while slashing an additional 34,000 operational roles.
UPS sought to "create a more efficient operating model that was more responsive to market dynamics," the company said.
Verizon is set to cut 15,000 workers within the coming days, marking the largest layoff in the telecom company’s history, the Wall Street Journal reported last week.
Such layoffs can be devastating for the employees directly involved and understandably concerning for workers across the economy, but the job cuts amount to a small fraction of the nation’s workforce, Cory Stahle, an economist at Indeed Hiring Lab, told ABC News.
“We look at tens of thousands of people being laid off as a big number,” Stahle said. “It’s important to understand that we’re talking about tens of thousands of workers out of about 160 million people employed nationwide.”
Jobs data for the month of August -- the most recent on record -- found about 163 million people are currently employed in the U.S., the Bureau of Labor Statistics said.
Headline-grabbing layoff announcements often overshadow hiring initiatives undertaken elsewhere at around the same time, often offsetting the job losses, Ioana Marinescu, a professor of labor economics at the University of Pennsylvania, told ABC News.
“You can’t look at a few companies,” Marinescu said. “You need to look at the full picture and whether job losses are happening."
The U.S. economy tallied more than 50 consecutive months of job gains until a dip in June. The nation returned to employment gains in August, adding 22,000 jobs, a relatively small sum.
While economists downplayed alarm about imminent far-reaching job losses, they acknowledged a labor market slowdown with legitimate cause for concern.
The U.S. economy added 911,000 fewer jobs over the 12 months ending in March than previously estimated, the BLS said in September, issuing a sharp downward revision of its job totals. The figure, which exceeded economists' expectations, appeared to be the largest revision ever recorded.
“The layoffs are a reflection that this is a slowing labor market,” Stahle said. “These companies are saying, ‘Hey, maybe we need to scale back on head count.’ There are clear reasons why job seekers should be worried about that.”
Several of the companies announcing layoffs, particularly the tech firms, cited AI as a reason for the job cuts. While AI-related job losses remain limited, the management decisions raise concern over future impact in the event of wider AI adoption, some economists said.
“So far that’s something we haven’t seen at scale, but it’s something I’ll be watching over the coming year or so,” Marinescu said.
Jobs data to be released on Thursday may offer a clue about whether high-profile layoffs amount to a blip or an alarm bell, economists said.
“I’ll be waiting to have a clearer picture of which industries are losing jobs – or not,” Marinescu said.
