| One view is that it's related to labor hoarding. A lot of people exited the labor market (disabled or killed by COVID, pulled the trigger on retiring, etc.). Unemployment was very low and it was very difficult to hire. And companies had opportunities for growth, but taking advantage of those opportunities required workers, which were hard to get. So companies responded by hiring whenever possible and keeping more employees around than they normally would. If there was less work to do, they'd reduce hours instead of letting employees go. Better to pay more labor costs now than to be stuck unable to get employees later. You pay a cost (larger payrolls) to reduce a risk. Hoarding can be kind of self-reinforcing because as everybody grabs what is available (job seekers), it becomes more scarce, so people want to grab up even more. But hoarding tends to stop eventually. Companies don't want to pay more for payroll if they don't have to. Once they feel the risk is gone, they'll aim to adjust things back to normal. Once layoffs start, they could have a domino effect on labor hoarding. If a bunch of companies do layoffs, then other companies think, "Well, if we did need to hire, we could get some of those laid off workers." And then they reevaluate their own situation. If this is what's happening, then it will take some time for it to play out. Eventually all the hoarding-related layoffs will have been done. |