Layoffs on the Rise as Job Market Remains Tight
By Layoffs in the U.S. are on the rise, although the official data lags behind current news reports.[0] According to Manuel Abecasis, a Goldman Sachs economist, the layoff rate is 0.2 percent higher than the 0.9 percent rate reported in the November JOLTS report, corresponding to around 1.65 million job losses.[1] Abecasis looked at layoff notices filed under the Worker Adjustment and Retraining Notification Act (WARN) to calculate his 1.1 percent layoff rate.[2]
Data from the St. Louis Federal Reserve shows that in the last five months of 2022, employers cut 110,800 temporary workers, including 35,000 in December, the largest monthly drop since early 2021.[3] Many economists view the sector as an early indicator of future labor-market shifts.[4]
Since 2000, the Bureau of Labor Statistics (BLS) has monitored the percentage of the workforce that has been laid off in any given month.[5] In the course of a typical month, about 1.5% of the non-farm private sector workforce is let go or discharged from their employment.[5] If this number approaches 2.0 percent or above, it is an employer’s market and if it approaches 1.0 percent, a candidate’s market or a tight labor market.[5] The labor market has remained consistently tight since the start of 2021.[6]
In the past 12 months, there has only been one month where more than 1.0 percent of the private labor force was laid off, and prior to 2021, the BLS did not have a single month on record where fewer than 1.3 percent of the private labor force was laid off.[5] This indicates that the labor market is still incredibly tight.[1]
With a backlog of unfilled positions and a decrease in the number of people in the workforce, US companies are likely to have difficulty recruiting for the foreseeable future.[5] James Knightley, chief international economist at ING, told the Wall Street Journal Tuesday that these layoffs are a “real warning sign” that the job market may not be invulnerable to the downturn.[4]
Preliminary numbers from the Bureau of Labor Statistics show that there were approximately 10.45 million job openings at the end of November.[3] According to the latest data from BLS, there are 5.7 million unemployed Americans, which is approximately 1.8 jobs for each unemployed American.[7] The rate of quitting remains at 2.[7]
0. “Innovative Measure of U.S. Layoffs Suggests Fed Right to Stay Course” Pound Sterling Live, 20 Jan. 2023, https://www.poundsterlinglive.com/economics/18077-innovative-measure-of-u-s-layoffs-suggests-federal-reserve-right-to-stay-course
1. “Job openings data is missing a recent upturn in layoffs, Goldman economist says” Morningstar, 17 Jan. 2023, https://www.morningstar.com/news/marketwatch/20230117167/job-openings-data-is-missing-a-recent-upturn-in-layoffs-goldman-economist-says
2. “Goldman Economist Says US Layoffs Were Far Higher Than Labor Department Reported” The Epoch Times, 19 Jan. 2023, https://www.theepochtimes.com/goldman-economist-says-us-layoffs-were-far-higher-than-labor-department-reported_4994276.html
3. “‘Real warning sign:' More layoffs could be coming for U.S. employees” HRD America, 24 Jan. 2023, https://www.hcamag.com/us/specialization/recruitment/real-warning-sign-more-layoffs-could-be-coming-for-us-employees/433936
4. “Temp worker layoffs seen as possible warning sign of oncoming recession” Greater Baton Rouge Business Report, 24 Jan. 2023, https://www.businessreport.com/business/temp-worker-layoffs-seen-as-possible-warning-sign-of-oncoming-recession
5. “Despite Layoffs, It's Still a Workers' Labor Market” HBR.org Daily, 30 Jan. 2023, https://hbr.org/2023/01/despite-layoffs-its-still-a-workers-labor-market
6. “US labor market remains tight despite tech layoffs” Greater Baton Rouge Business Report, 30 Jan. 2023, https://www.businessreport.com/business/us-labor-market-remains-tight-despite-tech-layoffs
7. “The job market is ‘softening' but still causing headaches for employers” The Business Journals, 30 Jan. 2023, https://www.bizjournals.com/bizjournals/news/2023/01/30/job-openings-state-hiring-market-labor-business.html
