Shocking layoff news overshadows a bright labor market.
Within weeks, massive layoffs, mostly in tech, including at Twitter, Meta, Amazon, Salesforce, HP, Lyft, Doordash and more, grabbed headlines. More than 50,000 tech workers lost their jobs in November, compared to 12,600 in October, according to Layoffs.fyi.
To be clear, overall layoffs remain historically low. Throughout 2022, the monthly layoff rate has hovered around 1% of the workforce, or about 1.4 million people. That’s even lower than pre-pandemic numbers.
Economists and business experts say recent layoff headlines aren’t widespread or indicative of broader workforce trends, but they continue to be the subject of high-volume, long-running discussions. , partly because they take place in well-known companies that are covered a lot in the media.
“These are very significant layoffs, although they don’t affect as many people and are actually quite limited to tech and closely related industries,” says Julia Pollak, chief economist at ZipRecruiter. “They’re loud. They’re very public. They’re talked about all over social media.”
And after the Big Quit and Quiet Quits shook the market, the new era of “loud layoffs” is having an outsized impact on how people feel about their jobs.
Layoffs grab headlines but don’t represent entire labor market
Layoffs from companies like Meta and Amazon are getting a lot of attention, not just because of the number of customers use their services, but also because the ads seem to come out of nowhere. Consumer demand and profits for online services have exploded during the pandemic, and executives have been urged to expand at all costs. Amazon has doubled its workforce throughout the pandemic from 798,000 workers in 2019 to 1.6 million in 2021, for example.
Then there’s the messiness of it all, like with Elon Musk publicly firing people on Twitter and so fast that HR has to bring people back.
Workers are wondering how much longer they can have the upper hand in the labor market before things fall apart, and this bump in the road feels like it could signal a big change.
But the tech layoffs don’t really paint the full picture of the overall labor market, which cooled slightly in October, as the Federal Reserve had predicted, but is still around 10 million openings, 6 million hirings and 4 million resignations. There are 1.7 job openings for every unemployed person looking for one, according to data from the Labor Department.
The slowdown is not entirely coming from the tech sector, which represents a relatively small share of the labor market. (Job openings fell in government and manufacturing in October.) Plus, those with in-demand skills are quickly being rehired elsewhere, so many of those losses may never show up in layoff data. of the government.
Why tech layoffs are a chilling effect: It’s ‘concluded with our economic aspirations’
Although they have been concentrated so far, layoffs in the tech sector are having an outsized effect on worker sentiment. While only 4% of job seekers most recently worked in tech, 20% of job seekers overall say they want to work in tech, according to ZipRecruiter’s latest Job Seeker Confidence Index. which interviewed 1,500 people.
Indeed, even workers from other backgrounds want to find a way into the tech industry. A teacher may want to switch gears and work for an education technology company for higher pay and better benefits, for example. “They’re looking for a way to get into this industry, and they see the opportunities shrinking,” Pollak said.
“That’s one of the reasons why these layoffs, even if relatively small, have a chilling effect on everyone,” she adds. “The tech industry is tied to our economic aspirations as Americans. It’s the iconic industry, like the auto industry was for Detroit at the time. It’s sort of the flagship industry that shapes our moods, and a downturn there is causing job seekers more broadly to worry that jobs are becoming less available.”
As a result, job seekers in all fields report that they search more intensely with greater urgency and are more likely to accept their first job offer without negotiation.
Paige Scott, a senior partner at executive search firm Kingsley Gate partners, has seen a slowdown in both hiring intentions and candidates wanting to change jobs since September. News about the layoffs is “front and center” for the clients she works with, and “it’s all the more stark when you consider how much money everyone spent on hiring during the Great Resignation. “.
Job seekers are also less risky and more questioning a company’s resilience to a downturn, saying they don’t want to find themselves in a ‘last in, first out’ situation if the company takes a dive. .
Layoffs are ‘fewer waves and more ripples’
Given the continued resilience of the labor market and consumer demand, despite economic headwinds, economists and business experts agree that massive layoffs are not likely to happen anytime soon for the rest of the labor market.
Companies may already be moving on. In November, 11% of human resources managers said they expected layoffs in response to economic volatility, up from 16% in October, according to Gartner data.
“This round of layoffs is less of a wave than a ripple,” says George Penn, director vice president of research and consulting at Gartner.
Instead, in November, 52% of organizations said they were slowing their hiring plans and 22% froze hiring. Penn says companies are choosing natural attrition (letting people quit or retire and not fill the role) instead of going through a layoff.
He sees the current situation more as a “great stabilization” of the labor market and the economy in general: companies are reducing their hiring intentions and suppressing job offers. Job seekers are less demanding. And HR won’t have to fight for talent with sky-high salaries or signing bonuses.
So far, Scott says many of his clients aren’t backtracking on their staffing plans, but pushing them back to 2023. Companies could be more optimistic about the future if they end 2022 on a high note. and supported by a successful holiday shopping season. So far, the Black Friday weekend sales figures show that’s the case. Employers and workers will have to see who holds the power in the labor market in the new year.
“It’s a dead end,” Scott says. “We are in this inflection point. There is a better balance between employer and employee. Now both parties are listening.”
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