Companies announced the highest level of job cuts in January since early 2023, a potential trouble spot for a labor market that will be in sharp focus this year, according to a report Thursday from Challenger, Gray & Christmas.
The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago.
It was the second-highest layoff total and the lowest planned hiring level for January in data going back to 2009.
Technology and finance were the hardest-hit sectors, with high-flying Silicon Valley leaders such as Microsoft, Alphabet, and PayPal announcing workforce cuts to start the year. Amazon also said it would be cutting as did UPS in the biggest month for layoffs since March 2023.
The cuts were “driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,” said Andrew Challenger, senior vice president of the firm.
Financial sector layoffs totaled 23,238.
The report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000.
According to Gallup's latest report on employee engagement, only 1 in 3 Americans is actively engaged at work. This disengagement is attributed to factors such as a lack of role clarity, poor management, and a decline in overall employee well-being. With the rise of remote and hybrid workplaces, confusion regarding job roles and responsibilities has become more prevalent. Managers, who are themselves experiencing burnout and disengagement, often lack the training to effectively manage a hybrid workforce. However, one crucial practice that can significantly boost engagement is providing meaningful feedback. While the majority of Americans are not engaged at work, it's important to note that neither engagement nor active disengagement is conducive to optimal performance.
Engaged employees tend to have lower rates of burnout and higher well-being, ultimately impacting productivity positively. Costing the U.S. economy a substantial $1.9 trillion in lost productivity, disengaged or not engaged employees highlight the necessity for a reevaluation of workplace practices. While it is realistic to acknowledge that not every aspect of a job will be enjoyable, there is a growing expectation, particularly among newer generations, for a job that provides a sense of purpose and opportunities for personal development. These expectations were magnified in recent years, and factors such as clear expectations and supportive management are crucial in fostering high levels of employee engagement across all generations.