The era of “labour hoarding” — when companies held on to workers out of fear of not being able to rehire them — appears to be over. Firms that spent years hoarding staff during the pandemic’s tight labour market are now reversing course. Major names including Amazon, UPS, Target, and Meta have announced tens of thousands of layoffs, signalling a new phase of corporate cost-cutting, the Wall Street Journal reported.
A return to pre-pandemic patterns
This shift marks a return to the 1990s mindset, when layoffs were often seen as a sign of managerial discipline. Economists like Joseph Brusuelas of RSM note that firms once rewarded for trimming headcount now feel comfortable doing so again, as the post-pandemic hiring scramble eases. “We used to reward companies for letting people go,” he said.
Investors cheer layoffs
Markets have reacted positively to downsizing. Target’s stock rose after announcing cuts to 1,800 corporate roles, while Amazon’s shares jumped 1% on news of 14,000 layoffs. UPS saw its stock surge 8% following a report that it eliminated 48,000 management and operations positions. For investors, these job cuts signal efficiency and profit-margin protection amid tariff uncertainty and rising costs.
AI and tariffs reshape strategy
Several forces are driving this wave of layoffs — chief among them artificial intelligence and shifting trade policies. Companies are betting that AI will automate routine work, allowing them to run leaner. Meanwhile, uncertainty from US tariffs is making planning harder, pushing executives to trim costs. The Federal Reserve’s latest Beige Book found more employers reducing headcounts, citing weaker demand and AI-related restructuring.
Fewer hires, more exits
During the pandemic recovery, companies struggled to hire and were reluctant to fire, creating a “low-hire, low-fire” economy. But that dynamic has shifted. The unemployment rate has crept up to 4.3% from a 2023 low of 3.4%, and consumer confidence has softened — 64% of Americans expect higher unemployment in the next year, up from 32% last year.
The risk to the wider economy
If layoffs accelerate, the broader economy could feel the squeeze. The U.S. added just 22,000 jobs in August before the government shutdown delayed official data releases. Analysts warn that, with hiring already slow, a new round of cuts could tip the labour market from stagnation into contraction.
A turning point for workers
For now, the message from Corporate America is clear: the post-pandemic job security cushion is gone. Companies are no longer hoarding labour — they’re trimming it. The result could reshape the balance of power between employers and workers, bringing the US job market back to a leaner, more volatile era.
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