The news has been a continuous stream of seemingly conflicting narratives: Inflation is high, interest rates continue to rise and “recession fears linger.” Consumers are pulling back on spending. Consumer savings are drying up. And yet, employers continue to hire. The US added 1.1 million jobs over the past three months and ramped up hiring in January. Except, of course, for those that are instead laying off workers. The news has been dominated by a “stream of corporate layoff announcements, particularly in technology.” So what's the real labor market story?
The jobs boom is real, but it's happening in “often overlooked sectors of the economy.” These sectors, including restaurants, hospitals, nursing homes, and child-care centers, are “finally staffing up as they enter the last stage of the pandemic recovery.”
36% of all private-sector jobs are with employers in healthcare, education, leisure and hospitality, and other services such as dry cleaning and automotive repair. Those sectors added 1.19 million jobs over the past six months, accounting for 63% of all private-sector job gains during that time, up from 47% in the preceding year and a half.
The new jobs are more than offsetting cuts announced by huge employers such as Amazon and Microsoft. The tech sector accounts for just 2% of all private-sector jobs.
Experts say “recovery from pandemic-driven job losses likely will continue to drive employment growth this year.” The job gains in “everyday services” could “prop up the broader economy enough to avoid a recession.”
Read more via Wall Street Journal
The Conference Board Employment Trends Index increased to 118.74 in January, from 117.06 in December. The increase marks a “reversal of a short-lived declining trend in 2022.”
Hiring was “outsized and broadly based in the January employment report.”
The economy is seeing "significant job gains in industries where labor shortages have been most acute.”
Job losses “seem to be limited to the information sector, which include most tech companies.”
The number of employees working in temporary help services increased in January, after declining for two months.
Slower wage growth may be a “sign of rebalancing in the labor market.”
Read more via Conference Board
According to new research from Janco Associates Inc., the “job market for IT professionals shrank for the first time in over two years last month.”
The IT sector “lost 4,700 jobs last month,” according to Janco's analysis.
The research indicated that up until last month IT roles had been “largely” protected from announced “layoffs at major technology companies like Amazon and Alphabet.”
Janco says many IT roles that “continue to be cut or become automated are those in data center operations and telecommunications.”
Middle managers are also at risk in ongoing tech layoffs.
Even with the recent slowdown in the IT sector, over 100,000 IT jobs “remain unfilled due to a lack of qualified candidates, reflecting the IT skills gap in areas like cybersecurity and software development," according to Janco.
The number of UK workers hired into permanent roles continued to decline in early 2023, according to a survey of 400 recruiters by the Recruitment and Employment Confederation (REC) and KPMG.
Permanent placements of UK workers declined for the fourth month in a row, although the “pace of decline slowed.”
Temporary hires increased “at their fastest rate since September — a sign that companies are unwilling to make long-term commitments.”
The number of job openings for both permanent and temporary jobs continued to grow last month.
Neil Carberry, chief executive of the REC, said employers are “feeling confident to hire, even if they are leaning more to temporary hiring than normal in this uncertain environment.”
Read more via The Times (UK)
Professor who studies layoffs says not to underestimate ‘the downsides’:
Harvard Business School professor Sandra Sucher has been studying layoffs for years. Sucher warns that “companies often underestimate the downsides” of layoff events. Bad publicity is possible, Sucher says, but the downsides go well beyond just that. Layoffs can “lead to loss of institutional knowledge, weakened engagement, higher turnover, and lower innovation as remaining employees fear risk-taking.”
Listen via Harvard Business Review
Last week alone, numerous media reports were published detailing layoff announcements. From Boeing, to Zoom, to eBay, to Dell, to Paypal, anyone who pays any attention to the news likely saw multiple headlines about major companies laying off workers.
Experts say the constant stream of layoffs will have long-term impacts on workers' mental health. According to the American Psychological Association, hearing about layoffs on a “nearly daily basis” will have a “long-term, detrimental impact on workers’ mental health and emotional well-being.”
Workers who are laid off are likely to be concerned about financial insecurity and “fears of diminished future earning potential.”
Workers who aren't directly impacted by layoffs may be less likely to report feeling burned out. Those who aren't laid off, but who work at companies where layoffs are taking place, are also impacted.
In cases where workers feel blindsided, layoffs can create a “culture of fear, uncertainty, and a lack of faith in companies and corporate leadership.”
Even workers at firms where layoffs aren't taking place are likely to feel increased anxiety from simply hearing about layoffs at other companies.
Layoffs may negatively impact the motivation of workers who remain behind, creating a new class of ‘quiet quitters.’
Read more via Forbes
Some German companies see Silicon Valley layoffs as a great opportunity to recruit top talent.
Experts say Germany is in desperate need of skilled tech workers, and that German companies are actively trying to recruit tech talent.
In a LinkedIn post directed at recently laid off US workers, Judith Gerlach, digitalization minister in Germany's wealthiest region wrote: “I would like to cordially invite you to move to Bavaria.”
German companies aren't generally matching the salary numbers of Silicon Valley, but “cheaper healthcare and lower costs compared to hotspots like San Francisco can help.”
Experts say Germany's “penchant for red tape” could make it a challenge for companies to recruit laid-off tech workers. Companies are “already reporting months-long delays in securing appointments for their new hires to get work permits.”
“They fire, we hire.”
Read more via Economic Times
Long known as “profligate spenders,” tech companies are now looking to slim down.” Increasingly, the so-called “fat” being cut by tech companies consists of middle managers.
Layoffs are already impacting managers: Meta (Facebook) plans to cut “some layers of management,” according to a recent earnings call. Meta laid off 11,000 workers in 2022, and said those layoffs were “just the beginning.” Google employs “more than 30,000 managers,” according to recent reports. Google laid off 12,000 workers earlier this month.
Managers are burnt out from increasing pressure: Across industries, middle managers are “under increasing pressure” both from bosses (orders to "do more with less") and from direct reports, who are pushing back on return-to-office mandates.
Leaders are reassessing just how many managers is too many: Elon Musk noted that at Twitter, there “seem[ed] to be 10 people ‘managing’ for every one person coding.” Google once had managers overseeing teams of 25-30 direct reports, before going "to the opposite end of the spectrum.”
Experts warn of risks in cutting middle management: Experts say letting go of managers "doesn’t necessarily lead to efficiencies, and there’s no evidence, really, of productivity bumps.”
Read more via Bloomberg
According to new estimates from Goldman Sachs, Americans are spending the money they saved during the pandemic, and will have burned through most of it by the end of this year.
Goldman estimates Americans have “spent down about 35% of the extra savings they accumulated during the pandemic as of mid-January,” and that by the end of 2023, they “will have exhausted roughly 65% of that money.”
Americans were prevented from spending on eating out and traveling during 2020 and 2021, and as a result, “households amassed $2.7 trillion in extra savings by the end of 2021.”
Many Americans have tapped into savings amid cost of living increases.
One analysis of banking data showed that the median bank account balance of customers with income under $50,000 peaked in April 2021.
Germany: Over the last decade, Germany has seen a huge increase in foreign-born IT workers, according to a new study from the Cologne-based German Business Institute (IW). The study looked at STEM workers in Germany from 2012 until 2022, and found that the number of German passport holders working in STEM increased by 35.6%. But, when the study looked at those working in STEM jobs in Germany who did not hold a German passport, the increase was a whopping 171.7%. The percentage of Indian workers in STEM roles increased 558%. One notable statistic stands out: “A decade ago, there were about 3,700 Indians working in academic STEM professions in Germany, whereas today there are 25,000.” (The Local)
India: The Indian job market continues to show “resilience and stability,” despite IT hiring being down, according to the Naukri JobSpeak job index. The index increased 2% year over year in January, despite a 25% decline in IT sector hiring. The decline in IT hiring has been offset by a “hiring spree in the non-IT sectors such as insurance, oil, hospitality and banking.” (SIA)
Ireland: According to a new survey, average office occupancy has fallen to “10% or lower on Mondays and Fridays as the majority of employees opt to work from home.” Wednesday was found to be the “most popular day among workers to be in the office,” with occupancy rates hitting 61-70%. The survey further found that “76% of firms have not changed their office footprint.” (Bloomberg)
Saudi Arabia: Employers in Saudi Arabia have (somehow) increased employee engagement over the course of the pandemic, according to new data. Employee engagement has “seen a modest increase,” rising from 21% in 2019 to 24% in 2022. In 2019, 46% of Saudi workers described themselves as “extremely satisfied.” That figure increased to 50% of workers by 2022. (Gallup)
United Kingdom: Despite economic uncertainty, 40% of UK workers say they want to resign from their jobs, according to a new Mercer study. Broken down by sector, retail and hospitality workers are the group most likely to leave, followed by fully remote workers. Mercer further found that “more than half of employees say they feel exhausted on a given day.” (Mercer)