Shocking layoff news is overshadowing a bright job market.
Within weeks, mass layoffs primarily in tech, including at Twitter, Meta, Amazon, Salesforce, HP, Lyft, Doordash, and more, have flooded headlines. More than 50,000 workers in tech 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 has hovered around 1% of the workforce or around 1.4 million people. It’s even lower than pre-pandemic numbers.
Economists and business experts say recent layoff headlines are neither widespread nor indicative of trends in the larger workforce, yet they’re still getting talked about at high volume and great length, in part because they’re taking place at household name companies that are covered a lot in the media.
“These are very salient layoffs, even if they don’t affect that many people and are actually quite contained to tech and closely related industries,” says Julia Pollak, chief economist at ZipRecruiter. “They are loud. They are very public. They’re talked about all over social media.”
And after the Great Resignation and quiet quitting rocked the market, the new era of “loud layoffs” is having an outsized impact on how people feel about their jobs.
Layoffs are grabbing headlines but don’t represent the overall job market
Layoffs from companies like Meta and Amazon are getting a lot of attention not only because of how many customers use their services but also because the announcements feel like they’re coming out of nowhere. Consumer demand and profits boomed for online services through the pandemic, and leaders were told to grow at all costs. Amazon 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, as with Elon Musk publicly firing people over Twitter so fast that HR is having to bring people back.
Workers have been wondering how much longer they can have the upper hand in the labor market before things come crashing down, and this bump in the road feels like it could signal a big change.
But tech layoffs don’t really paint the full picture of the overall job market, which cooled slightly in October, as the Federal Reserve intended, yet still boasts roughly 10 million openings, 6 million hires, and 4 million quits. There are 1.7 job openings for every unemployed person looking for one, according to Labor Department data.
The slowdown isn’t entirely coming from the tech sector, which is a relatively small share of the labor market. (Job openings dropped in government and manufacturing in October.) Plus, those with in-demand skills are getting rehired elsewhere quickly, so many of these losses may never show up in government layoff data.
Why tech layoffs have a chilling effect: It’s ‘wrapped up with our economic aspirations’
Even though they’ve been concentrated so far, tech layoffs do have an outsized effect on worker sentiment. While just 4% of job-seekers most recently worked in the tech sector, 20% of job-seekers, in general, say they want to work in tech, according to ZipRecruiter’s latest job-seeker confidence index that surveyed 1,500 people.
That’s because even workers from other backgrounds are keen to find a way to get into the tech sector. A schoolteacher might want to shift gears and work for an education technology company for higher pay and better benefits, for example. “They’re looking at a way to get into this industry, and they’re seeing the opportunities shrink,” Pollak says.
“That’s one reason why these layoffs, even though they’re relatively small, have a chilling effect on everybody,” she adds. “The tech industry is wrapped up with our economic aspirations as Americans. It’s the iconic industry, like the auto industry was for Detroit way back when. It’s sort of the bellwether industry that shapes our moods, and a slowdown there is causing job-seekers more broadly to worry jobs are becoming less available.”
As a result, job-seekers across the board report they’re searching more intensely with greater urgency and are more likely to accept their first job offer without negotiating.
The tech industry is wrapped up with our economic aspirations as Americans.Julia PollakCHIEF ECONOMIST AT ZIPRECRUITER
Paige Scott, the senior partner at the executive search firm Kingsley Gate partners, has noticed a slowdown in both hiring intentions and candidates wanting to change jobs since September. Layoff news is “front and center” with the clients she works with, and “it’s all the starker when you think about the fact that everybody has been spending a lot of money on hiring through the Great Resignation.”
Job-seekers are being less risky, too, and asking more about how resistant a company is to a downturn, saying they don’t want to be in a “last in, first out” situation if the business takes a dive.
Layoffs are ‘less of a wave and more of a ripple’
Given the continued resilience of the job market and consumer demand, despite economic headwinds, economists and business experts agree mass layoffs aren’t likely to come for the rest of the labor market anytime soon.
Businesses may already be turning a corner. In November, 11% of HR leaders said they were planning layoffs in response to economic volatility, down from 16% in October, according to Gartner data.
“This round of layoffs is less an of wave and more of a ripple,” says George Penn, managing vice president of research and advisory at Gartner.
Instead, as of November, 52% of organizations say they’re slowing their hiring plans, and 22% have frozen hiring. Penn says businesses are choosing natural attrition (letting people quit or retire and then not backfilling the role) instead of going through a layoff.
He sees the current situation as more of a “great stabilization” in the job market and broader economy: Businesses pull back on their hiring intentions and take down job openings. Job-seekers get less choosy. And HR won’t have to fight over talent with sky-high salaries or signing bonuses.
So far, Scott says many of her clients aren’t walking back their staffing plans but are pushing them into 2023. Businesses could be more bullish about the future if they end 2022 on a high note and are buoyed by a successful holiday shopping season. So far, Black Friday weekend sales numbers show that’s proving to be the case. Employers and workers will have to see who’ll hold power in the job market in the new year.
“It’s a standoff,” Scott says. “We’re at this inflection point. There’s better equilibrium between the employer and the employee side. Now both parties are listening.”
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