The 2008 Great Recession changed everything. Well, no, actually…the COVID-19 pandemic changed everything. Wait, nope. Let’s try again. The 2025 post-pandemic business arena changed everything…I think?
Yeah, I know. It’s so hard to make sense of anything these days when we’re trying to predict what’s next for our enterprises. In all fairness, though, the past dozen or so years (let’s actually extend that to maybe, specifically, 17 years to include the financial crisis of the late aughts) have taught us that we shouldn’t be surprised by anything when it comes to the business arena, the pace of globalization, or the labor market.
Well, if an alien apocalypse starts tomorrow, that would be surprising. But, I digress.
In an interesting feature at the Wall Street Journal, Justin Lahart writes about how businesses are no longer “labor hoarding” in a scenario that is experiencing massive layoffs at some of the world’s largest brands (like Amazon and Target).
“[The glut of recent massive layoffs] is a shift that could have major repercussions for U.S. workers. Over the past two years, America’s businesses have become increasingly reluctant to bring new employees on, especially as more recent uncertainty over the direction of tariffs made it harder to plan ahead. But they have also been hesitant to cut the employees they already have, an example of what economists term “labor hoarding.”
The result has been a low-hire, low-fire environment, in which recent graduates and others trying to break into the job market have struggled, but workers who are already employed have been largely insulated.
Now things are looking a bit more like the 1990s, when many big companies were focused on eliminating workers they felt were no longer needed, according to Joseph Brusuelas, chief economist at RSM.”
While in and of itself a terrible phrase, there was a strong purpose in labor hoarding: keep as many strong skillsets across the greater organization given the continued ambiguity in the wider market. Skillsets mean expertise, and expertise translates into competitive advantages. During the pandemic, there wasn’t an option, unfortunately; uncertainty meant uncertainty in 2020 and cutting positions was the only way to eke out survival in the scary early months of COVID.
The past few years, though, brought something else that has permeated the very fabric of how we work: artificial intelligence. So, in addition to tariff-induced zaniness, trepidation about the state of the economy, and general unease with the first several months of a new presidential administration, businesses are now contending with how to proceed with the incredible power of AI and its many, many ramifications.
Does that mean that all of these layoffs are linked to AI somehow? That new, rampant automation and advanced artificial intelligence models are swallowing jobs?
Well, no, not exactly.
Are crazy-then-not-happening-then-oh-wow-they-actually-are-happening tariffs to blame?
Kind of?
Can we blame layoffs on a softening job market?
Probably?
Is there any responsibility given to the government shutdown and a lack of real labor market data?
I would think so, yes.
Let’s back up a moment, though. The real reason that we’re in a very, very weird labor market right now that is experiencing more-than-a-normal-amount of layoffs is…well, it’s just a weird labor market, okay?
(Weirder than my son and his friends’ obsession with the way-too-viral-it’s-not-funny “6-7” jokes? Possibly.)
- Tariffs = disruption. No matter where you sit on the political spectrum, the truth is that the Trump administration’s tariff policies have created havoc on American businesses. Costs paid on imports, which are then passed onto consumers, are actively causing massive ripples within numerous sectors. When businesses have to contend with higher prices for their key supplies and components, it’s going to hurt the bottom-line (and, even worse: when products continue to rise in price (inflation or not), consumers will respond with their wallets). This is a long-winded way of saying: additional costs or taxes cascade into higher-priced products which can erode sales which then destroy revenue which then…yeah, you guessed it, cause reductions in staff.
- Labor hoarding’s end is actually…real? Yeah, it sure is. Businesses know that the corporate market is an up-and-down game; it’s like an NFL shootout in some fashion, with whoever has the ball last is probably going to win. Right now, businesses unfortunately have the ball in their hands and control the game. If they feel that can take a risk and let some talented professionals go, well, there’s nothing stopping them. They feel they can afford to do so.
- The acceleration of AI is causing a workforce disruption, but it’s still very, very early. The rise of generative AI, agentic AI, and AI-fueled automation is both a tech and workforce story. Businesses are no longer asking if AI can replace certain tasks; they’re asking how fast it can scale. That means roles once considered “safe” are now under scrutiny. It’s not that AI is malicious (let’s ignore the Skynet jokes, okay?)…it’s just efficient. And efficiency in a cost-cutting environment is incredibly attractive from an executive leader’s purview. It’s the same ol’ story of automation: when new tech (like AI-led algorithms, models, etc.) can perform in seconds what typically takes humans hours to complete, that math starts to look pretty brutal.
- Unemployment hasn’t technically skyrocketed but the job market isn’t a source of confidence. Job postings…down. Hiring freezes…up. Lots of recruiter-led ghosting. Lots of frustrated jobseekers. As always, these issues are happening top-down; many businesses are hedging their bets to see how interest rates, global instability, inflation, etc. shake out in combination with anticipating a much better overall market in Q1 2026. During this wait, however, an easy attribute to scale down is unfortunately headcount.
- Data-led decision-making on pause? Even though we live in a veritable age of intelligence, many organizations still rely on government-fueled statistics to drive their hiring strategies. This means that the 40-day government shutdown and its delay of key labor reports, monitoring, and economic indicators translated into a “pause” on many recruitment and talent acquisition initiatives.