What you need to know about Amazon’s corporate layoffs
Amazon will lay off 14,000 employees as it invests in AI and robotic automation.
Driven by cost-cutting and greater adoption of artificial intelligence, employers cut more than 150,000 jobs in October, the largest wave of layoffs in more than 20 years, a Challenger, Gray & Christmas report said on Thursday, November 6.
Technology companies are cutting the most jobs to cut costs, followed by retail and service industries, according to the outplacement firm. Companies such as Amazon, UPS, and Microsoft have recently announced job cuts.
In another sign of a softening labor market, the number of layoffs in October rose 175% from a year earlier to 153,074, the highest level since 2003, Challenger, Gray & Christmas said.
Andy Challenger, chief revenue officer at Challenger, Gray & Christmas, said in a statement: “Some industries are correcting course after the pandemic-induced hiring boom, as the adoption of AI, softening consumer and business spending, and rising costs are driving tightening and hiring freezes.” “The labor market may loosen further as those currently furloughed find it harder to secure new roles quickly.”
Layoffs have soared to more than 1 million so far this year, up 65% from last year to this point, due to what Challenger, Gray and Christmas called the “DOGE impact”: massive cuts to federal employees and government contractors, and the loss of federal funding to private organizations and nonprofits.
The year-to-date number of layoffs is the highest since 2020, when more than 2 million jobs were cut through October. Challenger & Gray & Christmas said this year was the worst year for announced layoffs since 2009.
Mr. Challenger said it was surprising to see such a large wave of layoffs in the fourth quarter, a time when companies typically avoid announcing layoffs.
Additionally, more companies announced layoffs in October, Challenger said. Outplacement support companies are aware of 450 layoff plans, up from fewer than 400 in September. This is more than the approximately 350 people announced in March, when the most layoffs were announced.
“The prospect of announcing layoffs in the fourth quarter is particularly unfavorable at a time when job creation is at its lowest level in years,” Challenger said.
With official data collection suspended during the government shutdown, investors are paying close attention to data from private sources such as Challenger to understand what’s happening in the labor market.
Federal Reserve officials have expressed concern about the job market, and the central bank has lowered benchmark interest rates twice since September. This action lowered the Fed’s benchmark interest rate to a range of 3.75% to 4%. Some economists believe there could be another rate cut at the Fed’s December meeting, but Fed Chairman Jerome Powell said a third straight rate cut is not guaranteed.
Labor market watchers have downplayed Challenger reports, saying they have historically been “inadequate in predicting future labor market conditions.”
“But against the backdrop of a thin labor market, these company layoffs represent a greater labor risk than the tech layoffs of 2022, when these workers were quickly scooped up to other industries,” Vanguard said in a statement. “However, we ultimately expect labor supply constraints that persist over the next three years to help offset the effects of job losses due to cyclical and technological pressures.”
