Final answer:
Mass layoffs by large companies contribute to greater economic decline due to the multiplication effect of unemployment and lost wages on output. This not only directly affects laid-off workers and their families but also impacts local economies and overall consumer spending.
Step-by-step explanation:
Mass layoffs by large companies such as Boeing or General Motors are a concern because unemployment and lost wages are multiplied into larger declines in output. When firms slow down production due to economic downturns, they often need to reduce their workforce, which leads to significant financial and personal hardship for the employees and their extended families. Beyond the individual impact, there is a broader economic effect — as those laid off have less money to spend, this decreased consumer spending contributes to a further slowdown in the economy.
Moreover, the termination of employment relationships can also lead to a loss of wage increases, or in more severe cases, wage cuts for those who remain employed. Such economic disruption affects not only the directly affected workers but also the local communities where these workers live and spend their income, as the reduced spending power cascades through the local economy. For instance, when automotive companies cut ties with dealerships, the economic repercussions are felt throughout the local economies surrounding these dealerships.