COLUMBUS, Ohio (WCMH) – As if inflation costs are not putting enough stress on people’s wallets, now major companies are starting to feel the burn, too.
On Tuesday, Columbus-based Victoria’s Secret & Co. announced 160 management employees will be laid off in the coming weeks due to restructuring. This will result in an estimated $40 million in cost reductions starting in the fiscal year 2022.
Victoria’s Secret’s cuts come less than a week after OhioHealth announced it will be laying off more than 600 employees.
However, the unemployment rate is still considerably low in central Ohio compared to the last few years.
Economists say it does cost money to run a business, and it costs money to pay employees.
Businesses are now having to figure out where their limit is.
“Well, the problem with rising prices — and they are rising almost everywhere in the economy — is that businesses have to do something with them,” said David Berson, senior vice president and chief economist for Nationwide Insurance. “They can either raise their own prices if their input prices are going up or they can cut their profit margins.”
Berson said he doesn’t attribute the layoffs directly to inflation, but the high prices aren’t helping. He said with high prices, people will start wanting raises. He said this could cause a wage/price spiral which means since the prices are up, people will want to keep up with those prices. Then businesses will be forced to choose if they can keep up with those wage hikes or if they pass.
“If wages start to rise more quickly than prices, with prices staying high, then we have to be concerned about a wage/price spiral,” Berson said. “We are not quite there yet.”
Berson predicts we could get there in 2023 if the federal government can’t bring down prices.
“Unemployment will go up during the next recession whenever it is. A lot, hopefully not,” Berson said.
He said we are not on track to have a recession as bad as the great financial crisis in 2008.
If this is the case, resources like Ohio Means Jobs are here to help.
“We have a bunch of different workshops that we offer,” said Scott Johnson, job center operator for Ohio Means Jobs. “Everything from basic financial literacy, resume builders, interview prep.”
People can also stop in the resource center to use the internet to file for unemployment or apply for jobs. The center also has a matching service to connect job seekers with a company they want to work for.
“Just come see us,” Johnson said. “You’ll talk to our team at the front desk, and we will start to help you figure out what you want to accomplish and then we will get you connected with the right organization.”
Johnson they’ve helped more than 7,000 people in the last few months. People are able to visit the center by both walk-in and appointment.