Layoffs galore

Here’s the good news: Private employers are hiring.

In a preliminary report today, payroll processor ADP revealed that private companies added an average of 14,250 jobs per week in the four weeks ending Oct. 11. That’s a healthy rebound from last month, when ADP noted that private companies cut 32,000 jobs over the course of September.

Here’s the bad news: Public employers are firing.

Today, Amazon announced it’s laying off 14,000 corporate employees; UPS revealed it cut 34,000 jobs last quarter; and Chegg is slashing 45% of its workforce, or about 388 employees. They join Target (firing 1,800 corporate employees), and Paramount Skydance (cutting 1,000 jobs) in a broad effort among corporations to reduce headcount.

Is this good for stocks?

That depends.

UPS’ firings were well-communicated by management, and part of an effort to reduce overhead now that the company has ended its arrangement with Amazon, its largest customer. Shareholders applauded the move, and the stock rose 8% today (strong earnings helped, too).

Chegg’s announcement, however, came as an unpleasant surprise. It is seen as the latest sign that the online learning company is struggling to compete with AI, more desperation than calculated business maneuvering. Shares dropped 13.19% today.

Amazon falls somewhere in between. Management said it is trying to cut bureaucratic red tape and become more nimble in an effort to stay ahead of the competition. Investors seemed understanding, with shares rising just 1%.

Is this AI’s fault?

In the case of Chegg, yes, absolutely. UPS, however, seems unfazed by AI.

As for Amazon, the company didn’t specifically mention AI in its blog post. However, CEO Andy Jassy has previously said that AI efficiencies will mean the company will be able to get more done with fewer people, and today’s announcement was all about how the company wants to act more like a lean startup.

Jassy’s not the only one with big AI ideas: Management at Walmart, Airbnb, Intuit, Duolingo, Salesforce, Shopify, Klarna, JPMorgan, and Goldman Sachs have all gone on the record this year saying that they either plan to cut headcount or simply won’t hire as many people in the future, due to AI.

Here’s the worse news: Private employment growth is good, but layoffs from massive publicly traded companies will likely offset those gains, leaving the job market squished between an AI-shaped rock and a hard place.

Companies are hoping that AI creates efficiencies to boost profitability, which is great for investors. As for the economy, if these companies are firing people but then filling roles later on, everything will be OK. But considering that doesn’t seem to be the case right now, this could be the beginning of a very long, cold winter for the labor market.—MR