Question

Amazon Will Add 100,000 Jobs as Bricks-and-Mortar Stores Turn to Rubble

Amazon says that it will hire 100,000 new employees in the next 18 months. Meanwhile, Macy’s, J. C. Penney, and other traditional retailers are closing stores and laying off workers. And the workers that Amazon is hiring aren’t the ones being laid off by Macy’s and J. C. Penney.

Source: The New York Times, January 13, 2017

Why will the decisions reported in the news clip increase unemployment and what type of unemployment will increase?

Answer 1

It has been stated that Amazon will hire 100,000 new workers. This will reduce the unemployment. But at the same time, many traditional brick and mortar stores are laying off the workers.

The number of workers being laid-off are much greater than the number of workers being hired by the Amazon.

So,

The net impact would be the increase in unemployment.

Therefore, the decisions reported in the news clip would increase unemployment.

Traditional retailers are laying-off workers. Some of these lay-offs are normal lay-offs as part of normal labor turnover experienced in an industry.

Such workers would be considered as frictionally unemployed.

However, there would be many laid off workers whose skill set may not match the job skills needed by the employers like Amazon.

Such laid off workers would be considered structurally unemployed.

Thus,

Both frictional and structural unemployment will increase.