Lots of people lose jobs even in a "good economy"
We need free markets + full employment + a strong safety net
With media layoffs once again in the news, I’ve noticed a resurgence in the doomer narrative that claims the labor market must be in bad shape because we’re constantly hearing about layoffs.
We saw this last year when prominent technology companies announced layoffs, but as I wrote then, the United States is a large country and there are always companies doing layoffs. In fact, despite the many newsworthy layoffs in 2022, the overall volume of layoffs was below average. A year later, we’re again reading about newsworthy layoffs, but the overall volume was still below average in 2023. Companies are hanging on to their workers.
This does raise the interesting question of why it seems like we hear more about layoffs these days.
One reason is almost certainly that a company’s noteworthiness doesn’t necessarily correspond to the number of people it employs. Meta, for example, has about 10 times the market capitalization of Lowe’s, and is a cultural influence in a way that the Pepsi to Home Depot’s Coke could never be. But Lowe’s has more than quadruple the number of employees. These big tech companies are so successful in part because the powerful scale effects of software mean they can grow their revenue disproportionately to their cost base, while for Lowe’s to grow, it needs to open more stores and hire more people, which holds profit margins down.
Media industry layoffs themselves are the apogee of this trend. The Wall Street Journal laying off 20 staffers in its DC bureau is a national news story, whereas Cava opening one restaurant in San Diego is barely even a story in San Diego.
That’s just a reality; some sectors of the economy get more attention than others. And the nature of capitalism is that even when “the economy” as a whole is doing well, some individual businesses, and even whole sectors of the economy, will be suffering. It’s not possible to have an economy that’s growing and dynamic without failures and losses. And if you think about it for a minute you’ll see that you wouldn’t want a legal framework that ensures nobody’s employer ever goes out of business or needs to close a location.
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