WASHINGTON — Blockbuster job growth in the past several months has coincided with high-profile layoff announcements by a number of large companies.
So, how are both occurring at the same time? It’s not as contradictory as it might seem. Recent job cuts have been concentrated mainly in just a few sectors: technology, finance and media.
Relative to the U.S. labor force of 160 million people, layoffs so far have been dwarfed by consistently vigorous hiring — a monthly average of 248,000 jobs added over the past six months. The unemployment rate is still just 3.7%, barely above a 50-year low.
It turns out that many of the companies that are now shedding jobs had over-hired during the pandemic, when they thought the trends that emerged then — especially a surge in online shopping — would continue apace. As the economy has normalized, many of these companies have discovered that they no longer need so many employees and have responded with layoffs.
In January, American businesses and other employers added a blistering 353,000 jobs — the biggest monthly haul in a year. The government also revised up its estimate of job gains in November and December by a combined 126,000. The data provided compelling evidence that most companies, large and small, are confident enough in the economy to keep hiring.
Several of the companies that have announced layoffs are among the most well-known household names: Google, Amazon, eBay, UPS, Spotify and Facebook’s parent Meta. Not that they’ve been the only ones. Challenger, Gray & Christmas, a leading outplacement firm, reported last week that businesses announced 82,000 layoffs in January, the second-most for any January since 2009.
In most industries, businesses have kept adding workers over the past three months. Manufacturers, for example, added 56,000 in November, December and January combined. Restaurants, hotels and entertainment companies gained nearly 60,000 over that time. Health care providers — hospitals, doctors’ offices, and dentists — added a whopping 300,000.
They’re not all low-paying jobs, either: A sector that the government calls professional and business services, a sprawling category that includes accountants, engineers, lawyers and their support staff — has 120,000 more jobs than it did in October. Federal, state and local governments, which regained their pre-pandemic levels of employment in September, also added nearly 120,000 jobs over that period.
The job cuts, by contrast, have been more concentrated. The Labor Department doesn’t track technology jobs specifically, but Friday’s jobs report pointed to signs of the industry’s struggles: The unemployment rate for workers in what the government calls the “information” sector, which includes media and tech workers, jumped to 5.5% in January from 3.9% a year ago.
Many high-tech companies that went on hiring binges in 2022, as the economy accelerated out of the pandemic recession, miscalculated the longer-term demand for their products and services.
A raft of other data confirm that overall, the job market is fundamentally healthy.