Job Losses Related to Bankruptcy are Rising
Is the economy hot or cold? We ask that question a lot on our blog because the data is usually conflicting. Recently, we found out that the U.S. created a healthy 164,000 jobs for July 2019. However, we also learned that the Federal Reserve cut a key interest rate to apparently stimulate the economy. For every solid data point there is another that gives us pause.
Now we can add another data point that storm clouds are gathering on the horizon: the number of job losses due to bankruptcy has surged in the past year, up almost 40%. This means that many people are losing jobs not because a company is downsizing but because it is being put out of business altogether.
A Closer Look at the Numbers
According to Market Watch, the number of job losses related to bankruptcy came in at 42,937 for the first seven months of 2019. These numbers also represent a 20% increase over the number of bankruptcy-related job losses caused for the entirety of 2018.
Based on statistics, the numbers have not been this bad since the days of the Great Recession after the housing bubble burst. In 2009, during the teeth of the recession, 50,258 jobs were cut because of bankruptcy.
For the first 7 months of the year, bankruptcy was responsible for 11.6% of all jobs lost. As Market Watch notes, many of these losses are in the retail sector, which has been hit hard in recent years.
Is this News Really Bad?
All job losses are bad, but there are important caveats. For one, if jobs are continuing to be created, then some of those who lost jobs can just find new ones. It isn’t unusual that some businesses fail, even during a good economy.
Also, a tightened labor market means that some businesses cannot find the talent necessary to stay in business anymore. Weeding out weak businesses is a commonplace occurrence during an economic expansion. Provided workers can find new jobs, then these types of losses are not a crisis for the country.
Saving a Business with Bankruptcy
If a business files Chapter 11, it can continue to operate and could possibly come back even stronger. Although the company might temporarily shed some employees, it might hire them (or different employees) back in the future when the financial standing improves.
As with all economic data, only time will tell if the economy continues to chug along or whether we slip as a state or a nation into our next recession.
Speak to South Florida Bankruptcy Lawyers Today
Economic growth is uneven, and laid off employees might have trouble paying their bills. If you are feeling financially pinched, consider your options. A consumer bankruptcy might be just what you need to clear out debt and get back on your feet.
Nowack & Olson is a leader in South Florida, with over 20,000 people served. Contact our Plantation bankruptcy attorneys today to schedule a free consultation by calling 888-813-4737.