Economists Describe Soaring Corporate Profits Amid Rising Layoffs as a ‘Jobless Boom’
As U.S. corporate profits soar and the stock market reaches new highs, the nation is witnessing a paradox of rising layoffs. Nearly 1 million jobs have been eliminated in 2023, the highest number since the pandemic-induced job cuts in 2020. This discrepancy has led economists, like Chen Zhao of Alpine Macro, to term the situation a “jobless boom.”
Understanding the ‘Jobless Boom’
The concept of a “jobless boom” highlights the unusual relationship between corporate earnings and workforce reductions. Traditionally, layoffs increase when companies experience financial struggles. However, Zhao points out that current circumstances deviate from historical trends. Major companies are laying off thousands while still reporting record profits, raising eyebrows across the economic landscape.
For example, Amazon’s decision to cut 30,000 jobs, despite solid financial performance, exemplifies this trend. Zhao attributes some of this phenomenon to the rapid integration of artificial intelligence (AI) in various industries. AI is enhancing productivity but concurrently diminishing the demand for human labor.
The Impact of Artificial Intelligence
- AI adoption is primarily driven by the need for efficiency across sectors.
- The technology sector was the first to embrace AI, which is now spreading to other industries.
- While the economy appears stable, demand for workers has plummeted to near-zero growth levels.
During much of 2025, the labor market provided some job security. This period was characterized by “no hire, no fire” conditions. Yet, recent shifts necessitated the Federal Reserve to lower interest rates in response to potential employment growth risks. Fed Chair Jerome Powell emphasized that layoffs among large companies are being closely monitored.
Current Employment Dynamics
The Department of Labor’s monthly employment reports have been delayed due to a governmental shutdown, resulting in missed updates on crucial labor market statistics. However, alternative measurements, such as those from ADP, indicate a slower growth in private sector hiring. In October, private businesses reported the addition of 42,000 jobs, a modest uptick amid previous slower months.
Bill Adams, the chief economist at Comerica Bank, commented on the stagnation of employment opportunities. Although some sectors showed modest growth, overall employment likely remained stagnant after accounting for federal job losses.
Why Unemployment Remains Low
Despite the surge in layoffs and stagnation in hiring, the unemployment rate has not spiked. As of August, it stood at 4.3%. This stability is attributed to a shrinking workforce, driven by the retirement of the baby boomer generation and reduced immigration. Zhao notes this has created a stagnant demand and supply dynamic in the labor market.
Contrary to the narrative that AI is solely responsible for job losses, some experts argue that businesses are merely adjusting post-pandemic staffing levels. Art Pappas, CEO of Bullhorn, highlights that many companies may have overhired during the pandemic, and now feel more confident about making cuts.
Conclusion
As companies find themselves in a unique labor market, the balancing act between job creation and layoffs continues to evolve. The combination of technological advancement and economic adjustment has led to unprecedented circumstances, prompting further scrutiny from economists and policymakers alike.
