Economist Says GM Layoffs Could Have 16,000 Job Ripple Effect

Flashy headlines of a booming economy are everywhere. Unemployment is at an all-time low since the 2008 recession. Automakers are raking in profits while new-car sales reach new heights. However, it’s difficult to see the approaching economic slowdown. GM layoffs were announced late last year a massive restructuring that also called for proposed plant closures, and the discontinuation of low-profit models. Gabe Ehrlich, director of the University of Michigan’s Research Seminar in Quantitative Economics, says Michigan alone could lose up to 16,000 jobs over the next two years related to GM’s layoffs, according to The Detroit News. 

The GM layoffs, which include both blue- and white-collar workers, could hurt employment growth in Michigan and other states that rely on manufacturing jobs from the Detroit automaker. GM has proposed five “unallocated” North American assembly plants; however, the company still has to negotiate the details with the United Auto Workers union this year. 

Two plants General Motors wants to close is its Detroit-Hamtramck Assembly and Warren Transmission factories, which could affect up to 1,900 workers between the two. GM is also proposing to layoff another 8,000 white-collar employees. The company hasn’t specified where these cuts would occur, but considering GM is headquartered in Michigan, the majority of those layoffs are likely to happen in the state. 

While layoffs are never welcomed, the state’s strong economy could help ease any pain felt by affected employees. Many should be able to quickly find a new job, offsetting any adverse side effects from the GM layoffs. But there is plenty of uncertainty going forward. Car sales will begin to slow along with the overall economy. As GM and other automakers tighten the purse strings, layoffs and plant closures could trickle down to suppliers, which is already happening. This could then ripple through the greater economy as working-class Americans are faced with financial uncertainty.