Some of the nation’s biggest retail and tech employers, including Walmart, Amazon and Facebook parent Meta, have cut thousands of white-collar jobs in recent weeks. It comes amid heavy job cuts across the media world, including at CNN and Gannett newspapers. (Amazon founder Jeff Bezos owns The Washington Post.)
There have been many layoffs at corporate levels, keeping front-line and customer-facing staff at bay. While some retailers are still hiring heavily for the holiday shopping season, they have pulled back as they adjust to rising labor costs.
Tom Essaye, president of Sevens Report Research, said PepsiCo’s cutbacks indicate that more of the sector is expecting tough financial times.
“It really confirms a lot of other signs that we’re headed for a potentially pretty significant economic slowdown,” he said.
That’s even as the nation’s job market remains resilient as the Federal Reserve tightens interest rates to crush inflation. The U.S. economy added 263,000 jobs in November, according to a Bureau of Labor Statistics report released Friday — down slightly from October but still above historical norms. The confusing economic picture has economists divided on whether a recession will hit the US next year.
Still, high-profile layoffs and hiring slowdowns are still happening, particularly in the tech and media industries, including Disney, AMC and Cisco. BuzzFeed said in a statement Tuesday that it will cut about 12 percent of its workforce. Amazon is expected to cut about 10,000 corporate jobs, a major turnaround after the e-commerce giant’s massive year-over-year growth. Meta said it would cut 11,000 jobs, while Google and others reported slowing hiring.
It’s unclear whether tech and media layoffs are a harbinger of a recession, but the spread to other industries has some analysts and observers growing cautious.
A large-scale hiring freeze and job cuts among white-collar workers began in earnest this summer, with technology companies particularly hard hit. Several experts say tech companies have hired more than they should have in the past few years, when capital has been freely available and the pandemic has boosted profits for many big tech firms.
Tens of thousands of tech workers laid off this year could mark the end of a historically strong decade for the industry, and economists say there could be spillover effects to other businesses as the economy shows signs of slowing.
According to the Journal, PepsiCo’s cuts will target its beverage division in Purchase, New York, and its snacks and packaged foods business, headquartered in Chicago and Plano, Texas.
A memo to employees explained that the cuts were meant to “simplify the organization so we can operate more efficiently,” the Journal reported. The cuts follow what company leaders described as strong third-quarter results; revenue is up nearly 8 percent year-to-date.
Retail analyst Neil Saunders said in an emailed statement that the cuts may not be large in number, but what they point to is “more of a failure.”
“If a company that has performed well in recent quarters with strong earnings and revenue cuts its workforce, it is likely that others will consider similar moves,” he said.
During the most recent quarterly earnings call, Chief Executive Ramon Laguarta said the company’s brands are “extending to higher price points” and that consumers are following.
While inflation can sometimes make more money for companies, even as production costs rise, Essaye noted that higher prices will eventually squeeze demand.
PepsiCo’s biggest competitor, Coca-Cola Co. announced last month that it would offer voluntary buyouts to some employees.
PepsiCo, which makes snacks like Doritos and Lays in addition to soft drinks, did not immediately respond to The Washington Post’s request for comment.
“For now, many firms are taking small steps with their workforce as they wait to see how 2023 will shape up,” Saunders said in a statement. “But if things get worse, the pace of layoffs could be even more significant. “It is not inflation, but it can become the main economic problem in 2023.”