US Layoffs Reach Two-Year High as Big Tech Cut Thousands of Jobs in January

By Bryan Jung
Bryan Jung
Bryan Jung
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
February 3, 2023Updated: February 3, 2023

American companies announced last month the largest number of layoffs since September 2020, after tech firms cut positions at the second-highest pace on record as they prepare for a potential recession.

The layoffs included 102,943 workers in January, more than twice the amount in December and up 440 percent from the same month in 2022, according to employment analytics firm Challenger, Gray & Christmas, Inc., on Feb. 2.

The tech sector made up 41 percent of the planned layoffs, while those at retailers and financial companies also climbed from a year ago, the report stated.

The January layoffs were the highest total for that month since 2009, when 241,749 were announced and the most since September 2020, when 118,804 job cuts were reported.

“We’re now on the other side of the hiring frenzy of the pandemic years,” said Andrew Challenger, senior vice president of Challenger, in a statement.

“Companies are preparing for an economic slowdown, cutting workers and slowing hiring.”

Although economy-wide layoffs remain generally low, an increasing number of companies have announced job cuts in recent months.

Layoffs Begin to Mount in White-Collar Positions

After a massive hiring surge during the pandemic, the tech sector slashed 41,829 jobs in January, the highest number of losses of any industry.

Amazon, for example, has started its biggest-ever round of layoffs in its history, which is expected to affect 18,000 workers around the globe.

Large tech firms such as Amazon, Microsoft, PayPal, and Alphabet are worried about a serious economic downturn, as consumer and corporate spending tumbles due to high inflation and rising interest rates.

Since November 2022, technology firms have announced 110,793 job cuts, the report showed.

The retail sector saw the second largest amount of losses, with 13,000 positions terminated in January, compared with virtually no layoffs the year before.

Consumer spending has begun to moderate in recent months after period of strong growth.

Even financial giants like Goldman Sachs Group have slashed positions, with the financial sector shedding 10,603 jobs in total last month, up from 696 a year earlier.

This was followed by the real estate industry, which cut 2,191 jobs during the period, while construction companies cut roughly 1,100 jobs in December.

Although the Federal Reserve slowed down the size of its interest-rate increases after several rounds of massive hikes, it is expected to continue with its hawkish policy to fight inflation, which companies fear will lead to an economic slowdown and further layoffs.

Broader Job Market Remains Steady

Despite the recent layoffs, the broader job market remains strong, with weekly jobless claims falling to their lowest level in nine months, to 183,000, the lowest figure since April, according to the Labor Department, on Jan. 26.

Last week’s report showed the unemployment rate remaining steady at near 50-year lows over the past two years, hitting 3.5 percent in December.

Economists project that the department’s latest jobs report, which will be released tomorrow, will show a gain of roughly 215,000 jobs in January.

The economy created 223,000 jobs in December, while unemployment rate is expected to rise from 3.5 percent in December to 3.6 percent, according to most estimates.

Meanwhile, the number of open jobs rose to 11 million in December, or 5.5 percent from the previous month, with 1.9 openings for every unemployed person..

Employers announced plans to hire 32,764 workers in January, primarily in the entertainment and leisure sectors, but the numbers of new hires are down 58 percent from the 77,630 during the same month last year and with a decline of 37 percent from the 51,693 from December, according to government data.

Reuters contributed to this report.