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 News Item:

Office Depot, which merged with OfficeMax last November, announced plans last week to close 400 stores. The stated reason was to eliminate overlap in particular locations. The announcement did not include information about the number of employees who may be laid off.

This week, Staples, #1 in the office supply retail sector, announced that it will close 225 stores. Again, no mention of jobs cuts was made.

As I pointed out in an earlier post, the problems of these two companies illustrate why referring to businesses as “job creators” is problematic. There are real business reasons for these giants to downsize: Competition from on-line retailers and bricks-and-mortar alternatives such as drug stores has reduced sales. Nevertheless, the closing of 625 retail locations will probably mean the loss of thousands of jobs.

Economics 101 (again): Demand in the marketplace is the true engine of job creation.