The U.S. economy shed more than a quarter of million jobs in the first quarter of 2023 led by more than 100,000 tech sector layoffs. On the other hand, the broader job market remains resilient and historically tight.
CNBC reported on April 6, 2023, that layoffs are up nearly fivefold so far this year with tech companies doing most of the damage. Among the headlines:
- Planned layoffs totaled 89,703 in March, an increase of 15 percent from February.
- So far, 270,416 job cuts have been logged in 2023, an increase of 396 percent in the first quarter of 2022.
- The tech sector, which was still hiring a year ago, led the way with 102,391 cuts so far – a staggering 38,487 percent increase over a year ago.
- Following tech, the other sectors that logged the most job cuts: financial, health care, and retail employers.
Companies Recalibrate Head Counts, Tighten Belts
“A stream of companies have announced layoffs in recent months as they recalibrate head counts and tighten belts amid concerns about a slowing economy,” reported the Wall Street Journal on March 29, 2023.
While tech company layoffs – such as Facebook parent Meta, Google parent Alphabet, and Microsoft – made the most job cut waves early in the year, other industries are now starting to follow their lead.
“The downsizing has shifted beyond high-growth technology companies to other parts of the economy, with companies including Dow Inc. and 3M Co. announcing cuts,” said the Wall Street Journal.
Broader U.S. Labor Market Continues to Add Jobs
The flip side of the jobs cuts news is that the broader U.S. labor market is continuing to add jobs in 2023.
The Department of Labor Bureau of Labor Statistics (BLS) reported on April 7, 2023, that the U.S. unemployment rate changed little in March, resting at a historically low 3.5 percent.
“Employment continued to trend up in leisure and hospitality, government, professional and business services, and health care,” said the BLS release. “Both the unemployment rate, at 3.5 percent, and the number of unemployed persons, at 5.8 million, changed little in March. These measures have shown little net movement since early 2022.”
Reuters reported that the new BLS statistics meant that the U.S. economy was still churning out jobs at a brisk clip but that wage pressures were subsiding.
Have the Cows Come Home to End the Jobs Party?
"Rather than an abrupt and jarring end to the jobs party of the past couple of years, the nation's job market is instead gradually turning the lights back up and music down in a mostly smooth transition from weekend to weekday that looks, for now, to be largely sustainable and healthy," Nick Bunker, head of economic research at the Indeed Hiring Lab, told Reuters.
Reuters says that economists expect the labor market to loosen up considerably starting in the second quarter as companies respond to more slowing demand caused by the higher borrowing costs brought on by Fed interest rate increases.
There is even speculation that some of the companies announcing layoffs will ultimately retain staffing levels they started the year with by the close of 2023.
“While these announcements make waves, they can serve more as a message than a blueprint. Some companies that have announced big cuts in the past have ended up employing nearly as many people a year later,” reported the Wall Street Journal.
U.S. Companies that Cut Tech Jobs in the Past Month
The Crunchbase Tech Layoffs Tracker shows the following notable job cuts since March 2023:
- Ohio-based Hyland Software announced on April 3, 2023, it would lay off 1,000 employees or 20 percent of its overall workforce.
- The first round of layoffs at Walt Disney, announced on March 27, 2023, will ultimately lead to 7,000 job cuts according to a company-wide memo.
- Video Game maker Electric Arts announced on March 29, 2023, it has started laying off employees earlier in the quarter, and that job cut would extend into the next fiscal year with some 789 positions eliminated.
- Ohio-based CoverMyMeds said it would cut 815 jobs between March 29 and April 14, and close its Arizona office.
- Luxury EV maker Lucid announced on March 28, 2023, that it was restructuring with 1,300 employees to be laid off or 18 percent of its workforce.
- Austin-based job site Indeed announced that approximately 2,200 employees would be let go on March 22, 2023.
- CNBC reported on March 20, 2023, that Amazon will lay off more than 9,000 workers in the coming weeks. This comes on top of the already 18,000 positions cut since November.
- Facebook parent Meta CEO Mark Zuckerberg announced to employees on March 14, 2023, that the company will announce restructurings and layoffs in its tech group in late April and in its business groups in late May. Overall, expect some 10,000 people to be laid off and another 5,000 open roles to not be filled.
In other sectors, especially manufacturing, employers are still struggling to fill jobs.
“We hear every day from our member companies—of every size and industry, across nearly every state—they’re facing unprecedented challenges trying to find enough workers to fill open jobs. Right now, the latest data shows that we have over 10 million job openings in the U.S.—but only 5.7 million unemployed workers,” wrote Stephanie Ferguson, Director, Global Employment Policy and Special Initiatives, U.S. Chamber of Commerce. “We have a lot of jobs, but not enough workers to fill them. If every unemployed person in the country found a job, we would still have 4 million open jobs.”