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.
A shorter answer is greed. Public companies leaders don’t get bonuses and will get fired if they miss a profit opportunity so take most new opportunities and hire away. As soon as things don’t pan out, they then will lose their bonus and get fired themselves if they don’t show rich investors they’re cutting back–amd they outsource the consequences.
Something to consider when evaluating job opportunities are layoff history-- it’s pretty easy to find and gives you an idea of the company’s stability and internal judgement and practices. Some companies do layoffs every year, “time to get my q1 bonus” and others plan, execute and consider carefully around their employees.
This.
