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- The layoffs and discharges rate in January was 1.1%, which remains historically low.
- But highly visible companies are making job cuts, and that's dominating headlines.
- That's why it feels like everyone is getting laid off, even when the data tells a different story.
It's easy to assume that everyone is getting laid off right now. After all, layoff announcements and dire warnings from CEOs like Sundar Pichai and Mark Zuckerberg seem to be dominating headlines, and the economy.
But the reality of the situation is that layoffs are near historic lows. In fact, according to the latest data from the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) monthly survey, the layoffs and discharges rate was hovering at 1.1% in January, a slight increase from December's 1.0%. Although January's rate isn't the lowest since BLS started tracking this kind of data in December 2000 — that would be the 0.9% that appeared a few months in 2021 and 2022 — it's still extremely low historically.
Some tech-heavy parts of the economy have seen an uptick in layoffs, even as big job cuts have yet to emerge in the broader labor market. The professional and business services sector, which includes tech-related services, saw layoffs and discharges rise from 338,000 in December to 528,000 in January. The rate for this industry soared by 0.8 percentage point — from 1.5% in December to 2.3% in January.
"The layoff rate was up in the places you'd expect it to be up on a small magnitude," Aaron Terrazas, chief economist at Glassdoor, told Insider. "It ticked higher exactly in the industries that you'd expect to be most impacted. I think the hard reality is that the risk-intensive sectors that are most vulnerable right now are a small part of the national labor market."
There were 1.7 million total layoffs and discharges in January, according to Bureau of Labor Statistics data. While that's up from some off the historic lows seen in the last couple years, it's right around the pre-pandemic low of 1.6 million seen in September 2016.
"Something has changed," Julia Pollak, chief economist at ZipRecruiter, told Insider. "Companies in most industries appear to be a lot more reluctant to lay off or fire workers — even underperforming workers."
Of course, it's true that thousands of employees are getting laid off across the country. That's certainly left some workers in hard spots, and has roiled families and companies alike. And, to be sure, the number of layoffs and discharges did tick up by 241,000 from December to January.
But there's still a lot fewer layoffs than the American economy typically sees, even outside of a recession. What's happening is that, broadly, the economy and job market are booming, but the companies conducting layoffs are some of the most highly visible, and they're all following each other's leads.
Pollak noted that the ongoing low layoff figures could be in part a statistical mirage, as the JOLTS survey looks at a smaller slice of businesses than other major employment data sources, like unemployment claims and the monthly jobs report from the BLS. The survey has also been seeing a low response rate. Still, she noted the layoffs figures are consistent with those other strong labor market numbers.
"It does look as though we've shifted, and US workers have more job security now than they did before the pandemic," Pollak said.
Besides the layoffs and discharges rate, initial claims for unemployment insurance also can give some indication as to what layoffs look like. Initial jobless claims have slowly but steadily dropped for months, sitting at just 190,000 in the week ending February 25, far below the 2022 peak of 261,000 in mid-July.
So why do layoffs feel like they're everywhere?
Part of it is that they're concentrated in high visibility industries, like tech and journalism. The allure of Big Tech has hooked thousands of workers over the last few decades, pampering them with high salaries and perks. During the post-vaccine hiring wave, those companies were throwing money around, and salaries and hiring were skyrocketing.
As Pollak noted, BLS research finds that layoffs historically happen in companies with the fastest growth before cuts — and so, as tech ballooned during the pandemic, it's now deflating.
When one of the most aspirational — and visible, since almost everyone interacts with Big Tech daily — industries started making big cuts, it made big news.
"A lot of the layoffs that have been happening have been concentrated in the tech sector. We're talking about a lot of high-profile companies that are shedding jobs," Russell Weaver, director of research at the Cornell ILR Buffalo Co-Lab, told Insider. "That's one of the reasons why we see headlines about layoffs in the news so often, because we're talking about major corporations —Twitter, Meta, Facebook, Amazon, Disney."
The labor force is large, Weaver said, and when these layoffs come in hundreds, or even thousands, they're still comparatively not driving up the layoff rate. That's where the disconnect comes in: Job losses are small, but they're very concentrated.
"The layoffs are happening in industry and sectors that have a larger share of the discourse than their share of employment," Nick Bunker, economic research director at job site Indeed, told Insider. "That is part of the story in that they're high profile, but that doesn't mean they're representative."
While BLS data may show a low US layoff rate overall, tech layoff announcements are important, given Pollak said that tech and finance are "synonymous with Americans' aspirations generally." Pollak pointed to ZipRecruiter's Job Seeker Confidence survey, which found that, while 4% of respondents work in the tech sector, 20% want to actually work in that industry.
"What happens in tech may have an outsized salience to everybody, because it's sort of the pinnacle of the US economy," Pollak said.
And, geographically, those industries hold more sway in some areas than others.
"These high-profile industries that have had layoffs are certainly very prominent in some communities," Terrazas said. "They are a small part of the overall economy, but in a handful of markets, in a handful of cities, they are the dominant sector."
"Those markets are very exposed to tech layoffs, and tech plays a disproportionate role in the economy," Terrazas added. "But I think more importantly, I think tech and risk-intensive sectors play a disproportionate role in our collective imagination just because for so long they have been perceived as the frontier of innovation and have been driving growth for the past few years — if not the past decade."
And even those layoffs may be more about copycat behavior than a downturn felt across the economy.
Jeffrey Pfeffer, the Thomas D. Dee II Professor of Organizational Behavior at the Stanford Graduate School of Business, told Insider's Sarah Jackson that tech layoffs are more about companies copying each other rather than actually saving costs. In turn, those layoffs lead to fewer people spending, and thus creates the downturn companies were trying to head off.
"There's a lot of interest in how investors are perceiving market conditions. They're looking at each firm's actions and deciding, again, where to allocate funds," Weaver said. "Corporations are taking notice of what their competitors are doing, and they're doing the same, whether or not it's strictly necessary."
Not everyone in tech is getting hit by job cuts. Pollak told Insider that the layoffs at tech companies are "relatively small" and that "many companies also are not pursuing layoffs across the board."
Despite the layoff rate being very low, job seekers may still be concerned about these headlines. Terrazas said that, just as businesses are sensitive to risk, so too are job seekers.
"The past few years have been incredibly disruptive for people's lives, and I think many job seekers right now are hyper focused on stability," Terrazas said. "When they're looking at the job, when they're looking at what company they're going to invest their days and their life with, they are focused on a stable business outlook and a stable, healthy work environment."