Recent layoffs are changing the landscape of the U.S. labor market

The current landscape of the U.S. labor market is shifting as Amazon announced it is laying off 14,000 employees. Moreover, UPS, Paramount, and Nestle are all planning layoffs as well. Lastly, Target has announced it will not hire seasonal workers, and it too will lay off workers. So, what is fueling this massive layoff?

Some of it is the switching jobs to be done by AI vs humans, but a lot of it is no-hire-no-fire plans, as well as tariffs eating into company revenue. The long-term unemployed numbers are the highest in three years. What does the job market look like in Arizona, and what does this mean for people looking for jobs?

Sean Ewen, Research Economist at Arizona State University’s L. William Seidman Research Institute, joined “Arizona Horizon” to explain the current landscape of the U.S. labor market.

According to Ewen, while the labor market is still strong, there are underlying weaknesses in the economy. Employment has slowed down drastically this year compared to last, as well as an increase in unemployment to 4.3%, the highest we’ve seen since 2021.

“From May to August we saw about 27,000 jobs created per month on net, that same number during the previous 12 months was about 150,000,” Ewen said.

The Federal Reserve has lowered interest rates to try to bring the jobless rate down, even though inflation rates have remained above the target rate of 2%. Lowering interest rates typically leads to inflation, so the fact that this was done to combat unemployment shows there is a problem at hand.

Looking forward, according to Ewen, he does not expect that AI has played a large role in the layoffs we are seeing. Even if in the future it could become a factor to cause large scale layoffs, it will not necessarily impact all industries.

“We think that fairly routine, but cognitive tasks are relatively more AI exposed than other things,” Ewen said. “HR professionals, or business analysts, they might see more AI exposure.”