Job Cuts Are Up Almost 400% This Year As Jobless Claims Rise

Topline

Job cuts are approaching levels not seen since the pandemic began in 2020, as major cuts in the technology and financial industries are starting to show their impact on the economy and soften the labor market.

Facebook’s parent Meta announced 11,000 layoffs, the largest cut this year.

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Key Facts

Employers have cut roughly 270,400 jobs so far this year, a 396% jump from this time last year, according to a new report from Chicago-based outplacement firm Challenger, Gray & Christmas.

In March alone, there were 89,700 layoffs, up 15% from February and 319% from March last year.

The stark increase reflects a downward trend toward levels not seen since the earliest days of Covid-19; it’s the highest first-quarter job loss rate since 2020.

To compare, this year’s first quarter saw about 76,300 fewer jobs lost than the first quarter of 2020 and 308,100 fewer than in 2009 after the mortgage crisis.

Big Number

38%. Out of all layoffs this year, that’s how many took place in the tech sector, which is by far the hardest-hit industry for job cuts, per the Challenger report. Giants like Amazon, Google and Facebook parent Meta set the tone in late 2022, each firing more than 10,000 workers. With a spike in layoffs starting in the fall of 2022, the tech industry is on track to surpass the highest annual total for job cuts in the sector, which was 168,400 in 2001. Financial companies were second behind tech, making up 11% of all layoffs.

Key Background

More than half of all job cuts this year were attributed to market and economic conditions, per the Challenger report, reflected in the announcements made by major tech players. The earlier days of the pandemic were a promising time for tech companies, as the world moved online to accommodate social distancing, but now that people are returning to a more in-person normal, tech firms are being forced to recalibrate and balance some of the intense growth they underwent over the past three years. The war in Ukraine, two bank collapses and relentless interest rate hikes are also playing a role in companies’ cost-cutting efforts.

Surprising Fact

The number of Americans filing for unemployment benefits is also rising and was actually higher last week than previously reported, the Labor Department announced Thursday. Jobless claims for last week were revised up 48,000 due to a revised method of analyzing the data, which the Labor Department updated because of the pandemic’s diminishing impact on seasonal changes in the labor market. The higher unemployment level indicates a softer, but still strong, labor market, and begins to show some of the impacts from these layoffs.

Crucial Quote

“A rising trend in claims has been a key missing part of the labor market story, but it is now clear layoffs are increasing,” Pantheon Macro chief economist Ian Shepherdson said in a statement. “These data alone won’t stop the Fed from raising rates again in May, but they are a warning sign that should not be ignored.”