Holiday Layoffs Are Becoming a Costly Trend Called Vibecession

The holiday season has many workers experiencing a new and unsettling trend — holiday layoffs. This has been a distressing reality for some, with companies across various industries announcing job cuts. Despite the season’s typically joyful spirit, it feels particularly harsh to witness layoffs.

Recent layoffs have crossed many sectors, from tech to finance. Etsy announced cuts to 11% of its workforce in mid-December, while State Street and Hasbro reported substantial job cuts. Spotify and Condé Nast also made headlines with their employee cuts. Similar trends are observed in the UK, with pharmaceutical companies, banks, automakers, and consulting firms also announcing significant layoffs toward the end of the year.

An economics professor from Stanford University, Nicholas Bloom, attributes these layoffs to anticipations of a potential economic downturn, a response which he terms a “vibecession.” This state suggests that actions are driven by sentiments or “vibes,” despite data not backing these anxieties. While there’s the perception of a weak economy due to inflation and a constricting job market, most indicators demonstrate the economy’s strength. Nevertheless, companies are making these moves largely in an attempt to boost their end-of-year profits.

Brooklyn Law School Professor Shirley Lin sees the situation differently. She argues that end-of-year layoffs have less to do with prevailing economic conditions and more with common business practices across industries. Companies often resort to cost-cutting measures, including layoffs, to present an improved financial performance at the end of the year. This, unsurprisingly, is intended to appeal to shareholders and new investors. Additionally, layoffs also allow companies to avoid paying out bonuses, which are often due at the end of the year.

While these layoffs are not a new phenomenon, Lin believes the currently active state of labor and growing interest in workers’ rights has brought these holiday-season job cuts into the spotlight. “Layoffs just before the holidays can damage company morale and its public image,” she stated. “The timing of these layoffs can seem particularly cruel, since worker productivity in the US has soared, but historically without similar levels of wage growth.”