Mass Layoffs in American Companies
More than 305,000 jobs have been lost in the United States due to mass layoffs in American companies this year, according to Forbes magazine’s layoff tracker. These layoffs began with a wave of cuts in technology companies in January and have persisted stubbornly throughout the summer and fall, even as recession fears have eased and unemployment rates remain low.
Major Companies That Conducted Large Layoffs
Companies such as Amazon, Alphabet, Disney, Meta, Microsoft, and Salesforce have conducted large layoffs this year, even with low unemployment rates. Amazon laid off 10,000 employees at the end of last year and announced in January plans to lay off an additional 8,000 employees amid an “uncertain economy.” In March, the company laid off 9,000 employees, and in November, it announced plans to reduce “several hundred” more employees as part of an initiative to cut costs and improve business priorities.
Alphabet, the parent company of Google, laid off approximately 12,000 jobs in January, with CEO Sundar Pichai describing these layoffs as “difficult choices” to take advantage of “the tremendous opportunity ahead of us,” including the company’s investments in artificial intelligence. In January, Microsoft also conducted significant layoffs affecting 10,000 employees (less than 5% of the company’s workforce in Washington), and another 1,000 employees were lost in the sales and customer service division in July. Meta, which laid off 10,000 employees in January, laid off another 6,000 in May, increasing the total layoffs since the fall of 2022 to 21,000. CEO Mark Zuckerberg said in March that the company is in a “year of efficiency” that will help “improve financial performance in a challenging environment so we can execute our long-term vision.”
In January, Salesforce announced plans to lay off 7,900 employees (10% of the company’s workforce) amid a “difficult economic environment,” according to CEO Marc Benioff, even though the San Francisco-based company had hired 3,300 additional employees in September.
Impact on Unemployment Rates
Despite the painful layoffs in major tech companies, the overall unemployment rate remains very low. The U.S. labor market added 199,000 jobs in November, exceeding economist expectations and reducing the unemployment rate to 3.7%, which is well below the highest unemployment rate during the COVID-19 era of 14.7% in April 2020. The unemployment rate has remained below 4% since January 2022, while annual hourly wages have slightly increased, rising by 12 cents (a 0.4% increase) in November, according to data released earlier this month by the Labor Department. According to data from the Bureau of Labor Statistics, layoffs by non-farm employers have remained almost steady following the pandemic, returning to pre-pandemic levels after a significant spike in 2020.
Impact of Layoffs on the Automotive Sector
Major automakers in Detroit – Ford, General Motors, and Stellantis – laid off thousands of employees in the fall, attributing these layoffs to the impacts of the United Auto Workers strike. Many of these workers were rehired after the strike. During the six-week strike, which targeted specific manufacturing plants, Ford laid off more than 3,100 employees, while Stellantis – the maker of Jeep, Dodge, and Ram – laid off over 2,000 employees and General Motors laid off about 2,300 employees. Ford laid off another 1,000 employees in June, while General Motors laid off 940 more employees in July, and Stellantis laid off 1,225 employees earlier this month.
Impact
Economic Layoffs
Major American companies in technology, banking, manufacturing, and healthcare began cutting costs in the summer of 2022, leading to widespread layoffs at firms like HP, Amazon, Morgan Stanley, Goldman Sachs, and Meta. The layoffs were partly fueled by recession fears, exacerbated by the Federal Reserve’s interest rate hikes in an attempt to curb extremely high inflation. Approximately 125,000 employees were affected by mass layoffs in the United States between June and December 2022, according to Forbes’ layoff tracker for 2022. These layoffs continued into the first six months of 2023, with 194,000 people losing their jobs in significant layoffs in the U.S., continuing into the fall, even as inflation began to decline and the Federal Reserve paused its rate hike campaign – although prices remained higher than pre-pandemic levels. Rising interest rates, which help reduce inflation, also decrease demand for goods and services, often prompting companies to slow hiring or lay off employees. These market changes can impact sectors like banking and construction – Bank of America economist Michael Gapen told CNBC in August that slowing demand means “you’re likely to slow hiring, and there may be layoffs.”
The Big Numbers
More than 74,000 employees. This is the number of employees laid off in a series of major layoffs at American companies in January, the largest month for significant layoffs this year, according to Forbes’ layoff tracker. The number of employees laid off in January was more than double that of the second largest month, March, when nearly 35,000 employees were terminated, followed by July (more than 34,000) and April (about 28,000).
Further Reading
Here’s how to impress relatives with economic ideas this Christmas, according to Bank of America (Forbes)
125,000 people were laid off in major layoffs amid rising recession fears, according to Forbes tracker (Forbes)
2023 Layoff Tracker: Intel lays off 235 workers (Forbes)
Send me a safe tip. Bryan Bushard
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