The story behind layoffs at one small business
Every week all across this country, thousands of American workers file for unemployment — what’s called a new or ‘first-time’ claim for jobless benefits. That means, in most cases, they got laid off from their job through no fault of their own.
Last week, it was precisely 220,000, up a smidgen by 1,000 from the previous week. Jobless claims have been pretty steady lately, and are holding pretty close to the pre-pandemic average.
But, the point is, even if we’re not seeing a big spike in new jobless claims (which could translate to a higher unemployment rate — we’ll get that tomorrow in the November Jobs Report) every one of those layoffs has a story behind it, of slack or changing demand for the goods or services the business doing the laying-offs sells.
And in this unpredictable post-pandemic economy, some of those changes are coming fast and furious. Like at Patchwerks, a musical instrument store in Seattle that’s on that roller coaster right now heading down.
Tom Butcher is co-owner of Patchwerks, which specializes in synthesizers and electronic instruments. Early in the pandemic, the store was shuttered and half the staff laid off.
But when they reopened, business went through the roof, as Butcher told me heading into the holidays in 2020.
“Things have been going pretty well for us,” he said. “This summer we saw record sales. A lot of people are just staying home. They’re looking at ways to bring themselves joy at home, maybe learn a new instrument.”
That lasted for a year or two. But when I spoke to him earlier this week, he was singing a different tune.
“We’ve been seeing demand erode — maybe 18 months,” he said.
Butcher has a good idea why: “Now the relief money is gone, and people are back at work and maybe they’ve already spent money on their hobbies, their music equipment,” he said.
It’s not just his business experiencing this. Retail sales at sporting goods, hobby, music and book stores have stalled out.
And Butcher and his partner have been cutting back. They went from being open seven to just four days a week, they cut the online marketing budget, and lowered their labor costs.
“Yeah, unfortunately we had to do staff layoffs. We did a round last year, and then a smaller round a couple of months ago. This time around we made some painful cuts, some people we really didn’t want to let go, we had to let go,” Butcher said.
The company peaked at 20 employees. Now, there are six.
Butcher may sound downbeat, compared to the boom times when I interviewed him early in the pandemic. But, he says, “If we can be smart and survive through this period, we’ll be so much better positioned on the other side. But now it’s a waiting game — when will the customers come back, and what will they want to buy?”
They’re ready to wait it out.
Butcher says he and his business partner have both now taken full-time tech jobs in Seattle, so they don’t have to pull money out of the business to pay themselves.
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