Largest Layoffs Since 2020
Major Corporations Like Starbucks and Amazon Lead Job Cuts
Artificial Intelligence Replaces Entry-Level Office Positions
Major American corporations such as Starbucks, Target, and Amazon have been carrying out a series of layoffs, causing the labor market to freeze. Analysts say that the post-COVID-19 era of "low hiring and low layoffs" is collapsing, and with the rapid spread of artificial intelligence (AI) replacing entry-level office jobs, warning signals are flashing in the employment market.
Concerns are rising that the recent layoffs by major American corporations such as Amazon and Starbucks may signal an early warning of a labor market crisis. Photo by AP, AP Yonhap News
On November 3 (local time), Bloomberg News reported that Starbucks laid off 900 corporate office employees in September, while Target eliminated 1,800 jobs in October citing organizational efficiency. Amazon has decided to cut 14,000 office positions, citing the introduction of AI, while Paramount announced 1,000 layoffs due to the impact of a merger, and Molson Coors announced 400 layoffs due to sluggish sales.
These workforce reductions are not limited to individual corporate restructuring but are interpreted as a sign of instability in the U.S. labor market. Dan North, Chief Economist at Allianz Trade America, warned, "Prominent companies are carrying out large-scale layoffs," adding, "This may not be a random phenomenon."
According to outplacement firm Challenger, Gray & Christmas, the number of jobs lost in the United States through September this year reached 950,000, the largest since the 2020 pandemic. In particular, layoff plans announced after October are not included in this statistic, so the actual decrease is expected to be even greater.
The biggest impact has been seen in the public sector, with about 300,000 people laid off from government-related jobs. The technology and retail sectors have also begun large-scale workforce restructuring.
Experts have identified several factors behind the spread of layoffs: the acceleration of AI and automation technologies, cost-cutting pressures due to tariffs, and companies' profit protection strategies. Many large corporations are absorbing costs by reducing labor expenses and moving to replace entry-level office work with AI.
According to a survey conducted by LinkedIn earlier this year, more than 60% of executives responded that "a significant portion of the work currently handled by entry-level employees will be replaced by AI in the future."
Jerome Powell, Chair of the Federal Reserve, recently lowered the benchmark interest rate by 0.25 percentage points but assessed that "the labor market is cooling gradually, but nothing more than that," saying it is too early to conclude there is a recession.
However, experts pointed out that if the number of new unemployment claims rises above 260,000, "it will be a signal of real employment contraction."
Corey Stahle, Chief Economist at the job search site Indeed, warned, "If layoffs start to increase in non-tech industries, especially in transportation and retail, that will be the time to be truly concerned."
Amid economic uncertainty, companies are increasing short-term and temporary hiring rather than full-time positions. Noah Yosif, Chief Economist at the American Staffing Association, explained, "In recent months, demand for short-term hiring has recovered rapidly," and "there are increasing cases of filling gaps created by layoffs with temporary workers."
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