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May 27, 2024

Massive Surge in US Job Cuts Signals Economic Troubles Ahead

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Feb 3, 2024

US employers announced 82,307 job cuts in January 2024, more than double the number in December 2023 and the highest monthly total since November 2020, according to global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. This sudden and dramatic increase could indicate broader economic troubles ahead.

Technology and Financial Sectors Hit Hardest

The technology and financial sectors accounted for 54,943 of the job cuts in January. Top companies announcing layoffs included Amazon, Salesforce, Google, Microsoft, Meta, and Goldman Sachs. Many of these companies had gone on major hiring sprees during the pandemic but are now pulling back.

Raj Subramaniam, CEO of FedEx, explained the reasoning behind cost-cutting measures:

“While the headlines about job cuts create panic, the reality is companies hired too many people during Covid, particularly in areas like technology, banking, crypto, and transportation/delivery services.”

The tech industry had already cut 97,171 jobs in 2022. January saw another huge wave, with 57,938 tech job cuts announced.

Consumers Cutting Back

With high inflation persisting and fears of a recession looming, consumers began cutting back spending towards the end of 2022. Retailers entered 2023 with excess inventory and started making job cuts in areas like procurement, supply chain, and corporate roles.

Macy’s, for example, cut 2,000 jobs on January 5th – much higher than initially expected. Other retailers making cuts include The Gap, Amazon, and Wayfair.

This pullback in spending is impacting transportation companies as well. FedEx, for instance, is cutting up to 10% of its staff. Uber is laying off 2,000 employees in its second round of job cuts since last August.

Bleak Outlook for 2023

Andrew Challenger, Senior VP of Challenger, Gray & Christmas, warned:

“If companies expect a recession or an economic downturn, they cut jobs preemptively.”

With inflation still high, consumers cutting spending, and recession indicators flashing, companies are battening down the hatches for a difficult 2023. This means more job cuts are likely in the coming months across many sectors.

Here is a table summarizing some of the major layoffs announced in January:

Company Industry # of Job Cuts
Amazon Tech 18,000
Salesforce Tech ~8,000
Goldman Sachs Finance 3,200
Microsoft Tech 10,000
Meta Tech 11,000
FedEx Transportation up to 10% of staff
Macy’s Retail 2,000

Government Efforts to Slow Layoffs

In response to the troubling jobs reports, the Biden administration highlighted the still-low layoff rate and record job openings.

As Labor Secretary Marty Walsh tweeted:

“Job cuts remain near historic lows even as companies have announced layoffs to start 2023. There were 10.458 million job openings at the end of December 2022.”

US Treasury Secretary Janet Yellen also asserted that the overall labor market remains strong, though she expressed some concern over the tech sector:

“I think there is some adjustment happening in the tech sector of the economy, these very rapid hiring that you saw during the pandemic is being re-evaluated.”

Support for Laid-Off Workers

With massive waves of layoffs across major industries like tech and finance, tens of thousands of American workers are facing unemployment. Thankfully, job openings remain high, which provides opportunities for transitioning workers.

Career coach Daisy Dowling advises laid-off workers to move quickly in reaching out to contacts and applying for new roles:

“It’s really important as soon as you are laid off to get right out there and start talking to people. When you’ve been laid off, especially if it’s a mass layoff, you’re up against others with similar skills sets.”

Networking is critical, as most jobs are filled via personal connections and relationships. Joining industry groups, attending events, and connecting with peers on LinkedIn are all important strategies.

It’s also essential for workers to take care of their mental health during a difficult transition like job loss. Speaking to close friends, family members, mentors, and mental health professionals can help process the emotions and stress.

While the headlines are alarming, support systems and opportunities exist. With planning, perseverance, and support, workers impacted by current layoffs can get back on their feet.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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