We all need income to survive and prosper and most people get it from working for someone else. Working for someone else includes all salary ranges and for the majority of people it can be a very good life. There are always a few who hate working for someone else and start their own business to be the boss. However, it is important to note many small businesses fail for a wide range of reasons which is why it is easier to say I want to be the boss than work for someone else. Given the majority work for someone else, as long as there are opportunities in the workplace it is okay.

In an article by Ben Casselman of The New York Times News Service, he takes a look at layoffs. What is going on with them, how do you look at layoffs and is there any other perspective to take. Layoffs are much easier to look at when you have income or are working.

Historically, the large layoffs seen in the press come only once an economic downturn was well under way. The Great Recession officially began in 2007, after the housing bubble burst, and unemployment began to rise but it was not until late 2008 and the onset of a global financial crisis that employers began to cut jobs in earnest.

The reason economists say is a straight forward reason – layoffs are disruptive, expensive and bad for morale. So companies wait until they have very limited options or no choice to save costs.

Parker Ross, global chief economist at Arch Capital, says it is costly to lay someone off. Both in terms of the layoffs and the rehiring. Many companies may prefer to retain workers rather than risk being short staffed again if sales rebound.

What really distinguishes a recession is not job losses, but a slowdown in hiring.

Robert Shimer, a University of Chicago economist, noted in a 2012 paper, when a hiring manager decides not to fill a position, that does not tend to make headlines. But those decisions multiplied across the country can lead to rising joblessness. Mr. Shimer found roughly 3/4’s of the fluctuation in the unemployment rate results from shifts in the hiring rate.

In 2022, after the pandemic lifted employers were hiring back people and about 500,000 people found jobs. The number in 2023 was 116,000 jobs.

Economists caution that the slowdown in hiring does not mean that a recession has begun or is inevitable. There are signs it is harder to jobs.

Linking to dividend paying stocks, for both companies and individuals when there are slowdowns in the economy having very little debt is a good thing. Having savings and investments is even better, because in each slowdown there are opportunities. On the stock market, prices can fall and having the patience to find very good value is the key when the economy picks up again or goes through its normal cycle. In the article, the author suggests you see the employment rate differently as long as you are okay, you likely can. Sometimes by seeing something in a different lens than the general public, you see more opportunity.

There are more questions than answers, till the next time – to raising questions.