Companies aren't as quick to the layoff trigger these days.

Why it matters: It's good news for workers. Layoffs are traumatic life events that can take years to recover from financially.

• And it's one reason the labor market has held up better than economists expected after the Federal Reserve started hiking interest rates.

Flashback: When the pandemic hit, employers were quick to fire — laying off many people — more than 13 million in March 2020 alone, the highest number over the past 24 years. (At the height of the Great Recession, the number hit 2.7 million.)

• But in the recovery that followed, re-hiring proved daunting.
• Worker shortages were widespread in 2022. Remember stores closing early because there weren't enough people to hire? Or long lines and slow service at your favorite restaurants? Hiring bonuses for dishwashers and gas station attendants?

The impact: Many business leaders learned a lesson. And that meant that many employers held on to workers even amid years of rate hikes and endless recession talk in 2023.

• Outside of the tech industry, which over-hired during the frothy ZIRP times, companies stuck with their teams, Rich Lesser, global chair of Boston Consulting Group, tells Axios.
• "I think a large part of that was because of COVID. They saw how hard it was to remove and then rehire talent," says Lesser.
• The mood among managers: "It took me so long to get this labor force, I'm not letting them go," says Ron Hetrick, a senior economist at Lightcast, a labor market analytics company.

By the numbers: In 2024, the average number of workers laid off per month was 1.6 million, per government data.

• That's compared to an average of 1.9 million per month in 2019 considered a very healthy year for the labor market.
• Though companies have slowed hiring — and the unemployment rate has ticked up — they've been more reluctant to let people go, something Axios' Neil Irwin and Courtenay Brown have been tracking since 2022.

The big picture: A lower rate of layoffs could be a more permanent condition. The U.S. is facing a potential shortfall of millions of workers in the coming decade in industries like health care, retail, and the skilled trades — sectors that need actual humans, where AI won't make as much of a dent.

• A new report from Lightcast calls it a "storm" on the horizon, and warns that it could be "the largest labor shortage the country has ever seen." The report echoes similar findings from McKinsey earlier this year.

Between the lines: Just like employers, policymakers will likely have to change their mindset, too. Immigration in 2023 helped ease labor shortages — but that's a controversial topic in Washington.

‍The bottom line: It's possible that if economic conditions worsen, CEOs will increase layoffs, says BCGs Lesser.

• "But I think companies are much more cautious than they were in say 2009, when at the first sign of trouble there was more temptation to 'whack whack whack,' and start cutting people. This was not at all what we saw in the last couple years."

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