WASHINGTON (AP) – Despite blockbuster job growth in recent months, several large companies have also announced high-profile layoff plans. The occurrence of these seemingly contradictory trends has left many people questioning how they can both happen at the same time.
The answer lies in the fact that recent job cuts have been concentrated mainly in just a few sectors: technology, finance, and media. While layoff announcements by companies like Google, Amazon, eBay, UPS, Spotify, and Meta’s parent company Facebook have garnered attention, the overall job market remains robust.
In January, American businesses added a staggering 353,000 jobs, providing compelling evidence that most companies, large and small, are confident enough in the economy to keep hiring. The data suggests that job gains and job cuts are happening in different industries – with most sectors continuing to add workers, while layoffs have been more concentrated in specific industries such as technology.
The high-profile job cuts also involve many layoffs that aren’t implemented immediately, like UPS’s announcement to cut 12,000 jobs over an extended period. While layoffs can be distressing and disruptive, they don’t significantly impact the overall job market in the vast U.S. economy.
It’s clear that layoffs don’t necessarily mean the economy is weak. Many companies that are now shedding jobs had over-hired during the pandemic and are now readjusting their workforce to align with the economy’s post-pandemic reality. This illustrates how companies tend to shed jobs for various reasons, including changes in their business strategy, maintaining or boosting profit margins, or miscalculating longer-term demand for their products and services.
Overall, seeking unemployment benefits remains at a very low level, and private-sector companies continue to add workers, reinforcing the notion that the job market is fundamentally healthy. This data, along with various indicators of job market health, points to a complex and dynamic job market with both positive and negative trends happening simultaneously.