More people reconsidering before quitting? By Wolf Richter for WOLF STREET.
Actual layoffs and layoffs in the U.S. — not just announcements of layoffs by global companies that may not even be happening in the U.S. — is one of the top points picked up in today’s Bureau of Labor Statistics Job Vacancy and Labor Turnover Survey (JOLTS): After after months of slowly zigzagging upwards from the tightest job market lows, they bounced higher in January.
Even in the best of times, companies lay off or fire employees every day, which is part of normal attrition in the vast US labor market. Between 2011 and 2019, there was an average of 1.8 million layoffs and layoffs per month. In good times, most of these workers find new jobs quickly. But in bad times, the influx of new unemployed people increases, while companies cut hiring and unemployment rises. That’s not happening yet.
In January, layoffs and layoffs rose to 1.72 million, the highest since December 2020, after rising for months from historic lows of around 1.4 million in 2021 and 2022. Layoffs and layoffs have now reached the lower end of the pre-pandemic range. There is a clear pattern for the return to normal – a sign that the labor market is getting a little less tight:
People who still think before quitting? In the tight job market of the past two years, one of the phenomena has been that workers found out there are better jobs that paid more or had better working conditions or less commuting, and they massively gave up their current job to take a better job, which led to a huge exodus of workers. This arbitrage by the newly empowered workers spread wage increases throughout the economy as employers had to up the ante to hire and retain staff.
The number of workers who quit their jobs, after months of gently zigzagging downwards, fell more sharply in January, hitting its lowest level since May 2021, from around 4.5 million in late 2021 and early 2022 to 3.88 million.
The pre-pandemic record was 3.55 million in January 2020, already pointing to strong churn in a tight labor market. So that’s still a historically high number of layoffs in a still-tense job market, but it shows some of the frenzy is fading:
The drop in layoffs from the super-high levels a year ago to still historically high levels could be a sign of changes in the labor market, including:
Employers are no longer upping the ante as they used to and are offering less incentive to workers elsewhere to quit their current jobs to get off the ship. Less enticing job opportunities in tech and social media, as we’ll see in a moment. Reduced employee confidence that they will find a better job.
Job vacancies remained at the same high levels in January as they have been for the past two years: 10.82 million seasonally adjusted and 10.77 million non-seasonally adjusted – down from the pre-pandemic range of 7,200. This metric shows no signs of the labor market becoming less tight.
This data is not based on online job postings, but rather surveys sent to 21,000 companies asking them how many job openings they actually have, how many employees they actually hired, how many employees they fired or fired, how many people they have who quits etc.
What is happening is that in some industries, particularly “Information”, where some of the social media and technology companies are classified, job vacancies have disappeared, while in other industries, like the huge “Professional & Business Services” sector, job vacancies have disappeared Rose.
The sector with serious harm for job offers is “information”. The small sector employing only 3 million includes web search portals, data processing, data transmission, information services, software publishing, film and sound recording, broadcasting including over the Internet and telecommunications. Many tech and social media companies are categorized in it (others are part of the huge and very broad Professional and Business Services sector). “Information” is where many of the layoff announcements were made.
Jobs in the “information” sector rebounded somewhat after a nearly 50% plunge in December – the biggest drop since the dot-com bust – in line with noise across the data series, and remained well below for the year frenzied levels past two years. January’s 143,000 job listings were down 38% year over year:
On the other hand, job offers in “Professional & Business Services” increased and remained in the astronomical field. This is a huge category including some technology companies employing 22.4 million people in these sub-sectors: Professional, Scientific & Technical Services; Company and business management; administration and support, and waste management and remediation services.
Job vacancies rose to 2.18 million, very much in astronomy and barely below the March 2022 peak:
After over hires in tech and social media…. What CEOs of tech and social media companies are now admitting in their mea culpa blog posts is that they hired too much during the pandemic to expand for a future that hasn’t come, and that they are now hiring a Trimming part of the extended workforce to get their costs back under control.
What’s also happening is that the startup bubble has imploded and those companies that are burning money like there’s no tomorrow are no longer getting VC funding and those that made it out of the IPO or SPAC window have been crushed in the public markets and can no longer raise funds from the public. And they need to downsize to slow the cash burn, to push back the day of reckoning — the day of the money — a little further.
But what this data, along with the rest of the jobs data stack, also shows is that most of the rest of the jobs market is still largely on cloud nine.
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