Top Recruiting Firm For Corporate America: Layoffs Are Up Almost 400% Year Over Year, Tech Up Almost 39,000%

Top Recruiting Firm For Corporate America: Layoffs Are Up Almost 400% Year Over Year, Tech Up Almost 39,000%

tech layoffs

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Layoffs were up almost 400 percent in the first quarter of 2023 compared to a year ago, and tech companies led the way with a 38,487-percent increase in job cuts for the same period, approaching levels of the dot-com-crash era.

Year to date, job cuts have risen to 270,416, with tech layoffs representing 102,391 of those so far in 2023. Tech layoffs are already more than 5 percent higher than the annual total of 97,171 for all of 2022, executive recruiting firm Challenger, Gray & Christmas reported Thursday.

The rate of layoffs exceeded analysts expectations, and revised Labor Department figures released Thursday are a potential indicator that the labor market may be weaker than expected

However, unemployment remains relatively low at 3.6 percent in February, according to the Labor Department, and employers are still struggling to fill available jobs. The U.S. added “a stunning” 501,000 jobs in January and “a stellar” 301,00 jobs in February, The Hill reported.

The dot-com crash of the early 2000s caused more than 1 million job layoffs in Silicon Valley, and many companies went under overnight, New York Times reported.

“It was a blood bath, and it went on for years,” said Jason DeMorrow, a software engineer who was laid off twice in 18 months and was out of work for more than six months. “As concerning as the current downturn is, and as much as I empathize with the people impacted, there’s no comparison.”

Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a press release that he expects the large-scale layoffs to continue in 2023 as interest rate hikes continue and companies try to reign in costs.

The economy is still creating jobs, but job openings have begun to fall. U.S.-based employers announced 89,703 job cuts in March, up 15 percent from February. 

“The technology sector is leading all industries, and this talent is in demand across industries,” Challenger said. “In fact, 38% of all cuts are in the tech sector.”

After tech sector layoffs, financial companies ranked No. 2 for the most job cuts this year with 30,635, up 419 percent compared to the 5,903 job cuts announced in Q1 2022. Health care or health product companies and manufacturers, including hospitals, ranked No. 3 with 22,950 job cuts in the first quarter of 2023, up 65 percent from the 13,923 cuts announced in the same period last year.

Retail announced the fourth-most cuts in 2023 with 21,426, a 1,125 percent increase from 2022 — “a possible sign of decreased expectations for consumer spending,” Challenger, Gray & Christmas reported.

Federal Reserve officials expect the unemployment rate to reach 4.5 percent by the end of 2023, representing millions of layoffs. Some lawmakers have criticized the Fed’s approach, arguing that the central bank is engineering a recession, The Hill reported.