Amid Mass Layoffs, Job Market Is Strong — So Where Are the Jobs?
Microsoft recently announced that it was laying off 10,000 workers to trim costs. On the same day, Amazon began its wave of 18,000 job cuts. Other tech companies — including Meta, Salesforce, Google and Twitter — also have announced massive layoffs over the past couple of months.
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The waves of layoffs have alarm bells ringing over the possibility of a recession in effect, yet there’s one clear sign indicating that we seem to not be in a recession, at least not yet. The job market is strong.
In November, 263,000 new jobs were created in the U.S., according to the Bureau of Labor Statistics. In December, 223,000 new jobs were created — a slight easing but still positive. This all prompts the question: What is going on? Where are these new jobs being created, and what is causing the massive layoffs in tech?
Tech Sector May Have Hired Too Aggressively in 2021
“Many tech companies are shifting their strategy from growth to profitability and cutting workforces to adjust, as we’ve seen over the past several months,” said Sania Khan, chief economist at Eightfold AI. “This isn’t unexpected. As the Fed increases interest rates, the sectors that are most sensitive to interest rate hikes — like housing or tech — are the ones to see an employment slowdown first.
“Tech firms ranging from crypto to e-commerce to fintech are becoming more conservative with their funds and executing layoffs as demand cools,” Khan said. “These firms hired aggressively in 2021, skipping the necessary strategic workforce planning measures, and instead focused on playing catchup with the rising pandemic level demands. However, with revenue down and grim forecasts ahead, they are now cutting positions.
“With data compiled from Layoffs.fyi, our analyses indicate recent staffing cuts have more significantly impacted those in tech roles, talent and operations. The hardest hit were software engineers, recruiters, product managers, marketing managers and operations managers.”
What It Means for Tech Professionals
“Does this mean that these [tech] roles are not in demand? Should those impacted by these layoffs look into alternate career paths?” Khan said. “On the contrary, Eightfold insights indicate that four of the five roles are on a rising demand trend, meaning it’s an emerging role that hasn’t been adopted at scale yet. In essence, those impacted by recent layoffs still have in-demand roles in the marketplace, and job seekers have plenty of opportunities to pivot across different industries.”
Khan said Eightfold data matches findings of the US Bureau of Labor Statistics, projecting that data scientists, information security analysts and web developers will be among the 10 fastest-growing roles through 2031.
“These three positions are regarded among the best recession-proof positions,” Khan said.
Where Is Job Creation Happening?
We know that thousands of tech jobs are being massacred, and we also know that, at the same time, a couple hundred thousand jobs are being created in the U.S. in general. In what fields are they?
Jon Hill, CEO of The Energists, an executive search and recruiting firm, said, “Many new jobs are being created in hospitality, for example, but many of these aren’t ‘new jobs’ compared to 2019. Rather, they’re a response to the fact that people are returning to leisure and travel outside their home, and so the industry is adding staff to meet that returned demand.
“It’s a similar story with the job growth in the healthcare sector, which has been strained to keep up with the needs of the public since 2020 and is continuing to need talent today. It’s difficult to make any predictions on job rates in these industries because their current job creation rate is being influenced by outside factors.”
According to recent data from Veris, the industries that saw the most job openings in November 2022 were:
Professional and business services: 2,026,000 openings
Healthcare and social assistance: 1,937,000
Leisure and hospitality: 1,519,000 openings
Accommodation and food services: 1,339,000 openings
Retail trade: 887,000 openings
Will There Soon Be a Recession and Mass Joblessness?
Over the next five years, we could see a kind of uneven job creation as a consequence of the global disruptions caused by the pandemic.
“Any event on that scale is going to have a ripple effect on society for years after,” Hill said, “and the unpredictable employment landscape today is one of those.”
What about a recession that big tech seems to be so aggressively preparing for? Will we see one of those? Will the labor market be sent reeling?
“The job market is likely to soften slightly in the middle of this year, but I don’t think we’ll see the kind of high unemployment rates that some economists were predicting or even recommending,” said Dr. Daniel Altman, chief economist at Instawork. “The question is whether eroding savings and inflation will bring more people back into the labor force — then there would be more competition for positions and probably more jobless people as well.”
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