Amid declining sales, Gap announced Tuesday that it’s cutting about 500 corporate jobs at its offices in San Francisco, New York and Asia. It’s one of many companies, including Peloton, HBO Max and Wayfair, to lay off employees in recent months.
Marketplace often reports on layoffs as they happen, company by company. But let’s put what’s going on in a larger context: There’s a natural reason that layoffs grab our attention, said Betsey Stevenson, an economist at the University of Michigan.
“The stories always resonate with us because it’s scary,” she said. “It’s scary to be laid off. It’s scary to lose your job.”
It’s also scary when the narrative is that a recession might be coming. Naturally, people’s eyes are peeled for bad news. There are practical reasons for us to look at layoffs too.
“That can be one of the ways in which we get access to this data fastest,” Stevenson said.
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Company announcements are immediate, with bigger-picture numbers from the Labor Department lagging by more than a month. The last Job Openings and Labor Turnover Survey said 1.4 million people lost jobs in July. For reference, Stevenson said the U.S. typically averages around 2 million lost jobs per month.
Plus, layoffs in certain industries — like automobiles and what carmakers say about the job cuts — can be indicators of trouble ahead.
“When things are going bad, people are like, ‘Well, you know, I have a car. My car’s not perfect, but I don’t really need to replace it right now,'” said Yongseok Shin, an economist at Washington University in St. Louis.
Meanwhile, some industries are sometimes too volatile to study piecemeal. In tech, companies tend to expand and collapse quickly; hospitality always has a lot of turnover. And layoffs are generally a normal — if unfortunate — part of doing business.
“Some firms grow. Some firms were productive, but now they lose their market share and they have to downsize,” Shin said.
It seems we are in a period when risk is high and predictability is low. “This is a very unusual economic time,” said Cornell economist Erica Groshen, “and nothing’s been acting quite like it usually does.”
Consumer habits have swung wildly in the last few years. When COVID started, we stopped buying office clothes and started buying exercise equipment. We baked bread and remodeled our houses. Then, we dropped our video games and streaming subscriptions to relish in travel and eating out. And behind each of those trends are jobs.