Blockbuster job growth in the past several months has coincided with high-profile layoff announcements by a number of large companies
Blockbuster job growth in the past several months has coincided with high-profile layoff announcements by a number of large companies.
So, how are both occurring at the same time? It’s not as contradictory as it might seem. Recent job cuts have been concentrated mainly in just a few sectors: technology, finance and media.
Relative to the U.S. labor force of 160 million people, layoffs so far have been dwarfed by consistently vigorous hiring — a monthly average of 248,000 jobs added over the past six months. The unemployment rate is still just 3.7%, barely above a 50-year low.
It turns out that many of the companies that are now shedding jobs had over-hired during the pandemic, when they thought the trends that emerged then — especially a surge in online shopping — would continue apace. As the economy has normalized, many of these companies have discovered that they no longer need so many employees and have responded with layoffs.
In January, American businesses and other employers added a blistering 353,000 jobs — the biggest monthly haul in a year. The government also revised up its estimate of job gains in November and December by a combined 126,000. The data provided compelling evidence that most companies, large and small, are confident enough in the economy to keep hiring.
Several of the companies that have announced layoffs are among the most well-known household names: Google, Amazon, eBay, UPS, Spotify and Facebook’s parent Meta. Not that they’ve been the only ones. Challenger, Gray & Christmas, a leading outplacement firm, reported this week that businesses announced 82,000 layoffs in January, the second-most for any January since 2009.
Here are some reasons why these seemingly disparate trends are coinciding:
In most industries, businesses have kept adding workers over the past three months.
