Shocking news of layoffs is overshadowing a bright job market.
Within weeks, mass layoffs primarily in technology including Twitter, Meta, Amazon, Salesforce, HP, Lyft, Doordash and more have flooded the headlines. More than 50,000 tech workers lost their jobs in November, up from 12,600 in October, according to Layoffs.fyi.
To be clear, overall layoffs remain historically low. Throughout 2022, the monthly layoff rate hovered around 1% of the workforce, or about 1.4 million people. It is even lower than pre-pandemic numbers.
Economists and business experts say recent headlines about layoffs are neither pervasive nor indicative of trends in the broader workforce, but they are still being talked about at high volume and at length, in part because they are taking place at big-name companies that are covered a lot. in the media.
“These are very significant layoffs, even if they don’t affect that many people and are actually quite restricted to technology and closely related sectors,” 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 Great Layoff and quiet layoffs rocked the market, the new era of “loud layoffs” is having an outsize impact on how people feel about their jobs.
Layoffs are making headlines, but they don’t represent the broader job market.
Layoffs at companies like Meta and Amazon are getting a lot of attention not just because of how many customers use their services, but also because the ads seem to come out of nowhere. Consumer demand and profits for online services have surged during the pandemic, and leaders have been told to grow at all costs. Amazon doubled its workforce during the pandemic from 798,000 workers in 2019 to 1.6 million in 2021, for example.
Then there’s the confusion of it all, like Elon Musk publicly firing people over Twitter and so quickly that HR is having to bring people back.
Workers are wondering how much longer they can have the upper hand in the job market before things come crashing down, and this bump in the road looks like it could signal a big shift.
But the tech layoffs don’t really paint the full picture of the overall job market, which cooled slightly in October, as the Federal Reserve intended, but still has about 10 million jobs, 6 million hires and 4 million exits. There are 1.7 job openings for every unemployed person looking for one, according to Labor Department data.
The slowdown is not coming entirely from the technology sector, which is a relatively small part of the job market. (Jobs dropped in government and manufacturing in October.) Also, those with in-demand skills are being rehired elsewhere quickly, so many of those losses may never show up in government layoffs data.
Why tech layoffs have a chilling effect: It’s “wrapped up with our economic aspirations”
Even if they have been concentrated until now, layoffs in technology have an outsized effect on worker sentiment. While only 4% of job seekers have recently worked in the tech sector, 20% of job seekers overall say they want to work in tech, according to the latest job seeker confidence index from ZipRecruiter, which surveyed 1,500 people.
That’s because even workers from other backgrounds are eager to find a way into the tech sector. A teacher might want to switch gears and work for an educational technology company for higher pay and better benefits, for example. “They’re looking for a way into this industry and they’re seeing the opportunities shrink,” says Pollak.
“That’s one of the reasons why these layoffs, even if they are relatively small, have a chilling effect on everyone,” she adds. “The technology industry is involved with our economic aspirations as Americans. It’s the iconic industry, as the auto industry was for Detroit in the past. more largely to worry about less and less available jobs.”
As a result, job seekers report that they are looking harder with greater urgency and are more likely to accept their first job offer without negotiating.
Paige Scott, senior partner at executive search firm Kingsley Gate Partners, has noticed a slowdown in hiring intentions and candidates looking to change jobs since September. News of the layoff is “front and center” with the clients she works with and “is even more glaring when you think about the fact that everyone is spending a lot of money on hires via the Great Resignation.”
Job seekers are also being less risky and asking more about a company’s resilience to a downturn, saying they don’t want to be in a “last in, first out” situation if the business takes a dip.
Layoffs are ‘one less wave and one more ripple’
Given the continued resilience of the job market and consumer demand despite the economic headwinds, economists and business experts agree that mass layoffs are unlikely to occur in the rest of the job market any time soon.
Businesses may already be turning a corner. In November, 11% of HR leaders said they are planning layoffs in response to economic volatility, down from 16% in October, according to Gartner data.
“This round of layoffs is less a wave and more a ripple,” says George Penn, manager vice president of research and consulting at Gartner.
Instead, in November, 52% of organizations said they are slowing their hiring plans, and 22% froze hiring. Penn says companies are choosing natural attrition (letting people resign or retire and then not filling the role) over going through a layoff.
He sees the current situation more as a “major stabilization” in the job market and the wider economy: companies are pulling back on their hiring plans and eliminating job openings. Job seekers become less demanding. And HR won’t have to fight for talent with sky-high salaries or hiring bonuses.
So far, Scott says, many of his clients aren’t pushing back on their staffing plans, but pushing them into 2023. Businesses may be more optimistic about the future if they end 2022 on a high and buoyed by a successful holiday shopping season. . So far, the Black Friday weekend sales figures show this to be the case. Employers and workers will have to see who will hold power in the job market in the new year.
“It’s an impasse,” says Scott. “We’re at this tipping point. There’s a better balance between employer and employee. Now both parties are listening.”
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