March 23, 2020

Amazon’s hiring laid-off small biz workers. What does that mean for the long-term labor market?

Amazon and other big employers are hiring small business employees who’ve been laid off, but that could drive their old employers out of business.

With millions of shoppers stuck in their houses, Amazon is becoming an even more important destination for consumers. 

Rising order volumes will test the company’s supply chain and delivery infrastructure — and give it a chance to bite off an even bigger chunk of the ecommerce market.

But Amazon could also reshape the LABOR landscape

Last week, Bezos’ behemoth — which already had ~400k employees in the US — announced plans to hire 100k more.

And it’s not just Amazon, either…

  • Walmart, which had 1.4m US employees, will hire 150k more
  • Instacart, which had ~130k US employees, will hire 300k more
  • Dollar General, which had 135k US employees, will hire 50k more
  • Domino’s, which had 120k US employees, will hire 10k more
  • CVS, which had 290k US employees, will hire 50k more
  • PepsiCo, which had 90k US employees, is hiring 6k more
  • Kroger, which had 453k US employees, is hiring 10k+ more

But the hiring binge is possible thanks to… big layoffs

Until recently, the labor market was historically tight: Just 2 months ago, the unemployment rate hovered around 3.5%, a 50-year low.

Then the pandemic erupted. Analysts now predict that 1m people — mostly restaurant workers and other service-industry employees — will lose their jobs this month alone.

Is the hiring frenzy a good thing? 

Opinions are mixed. In the short term, the boom could help workers who lack benefits like health insurance.

But in the long term, it’s harder to predict how such a rapid consolidation will impact the economy. Some critics are concerned it could kill off small businesses while bolstering the behemoths.

Big Bezos made it seem like he expects workers to go back to their “old jobs” when the coronavirus dust settles: 

  • “We hope people who’ve been laid off will come work for us until they can go back to the jobs they had,” he wrote 2 days ago on Instagram. 

That’s easy for Bezos to say: With billions of dollars in free cash flow, Amazon has enough money to weather a long storm. 

But research from JPMorgan Chase shows half of small businesses only have enough cash saved up to stay open for 27 days or fewer — which means that, for most small business workers, the “jobs they had” won’t exist anymore if the crisis goes on for more than a month.

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