To follow tech industry news in 2022 was to be bombarded with headlines about layoffs. Heavyweights such as Amazon and Meta trimmed staff by the thousands, while employees at once-ascendant unicorns like Stripe also met the same fate. You would be forgiven for getting the general impression that certain factors—like pandemic-era over-hiring, perchance?—led to a cataclysmic string of layoffs last year.
The reality, laid bare by government data aggregated by ZipRecruiter, indicates a different picture: Layoffs hit an over 20-year low last year across the entire US economy. This isn’t to say that massive layoffs didn’t occur, but rather that the headlines focused on rupture in one industry, rather than the broader labor market.
Beneath the headlines. VC investment in Big Tech boomed during the pandemic, which is perhaps why the rash of layoffs drew so much attention. Speaking of tech layoffs last year, ZipRecruiter’s Chief Economist Julia Pollak told CNBC: “These are very salient layoffs, even if they don’t affect that many people and are actually quite contained to tech and closely related industries…They are loud. They are very public. They’re talked about all over social media.”
Various industry leaders and experts have been warning of a looming recession, so much so that throughout 2022, various CEOs were “falling over themselves to say we’re falling into a recession,” Moody’s Analytics Chief Economist Mark Zandi told CNBC late last year.
Quick-to-read HR news & insights
From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.
The layoffs weren’t reflective of a broader downturn, and instead were sparked by very specific circumstances, Daniel Altman, chief economist at Instawork, explained to HR Brew over email: “Some tech companies faced a whipsaw of constrained funding and lower-than-anticipated demand,” as the economy veered away from pandemic conditions.
Looking beyond tech, things were markedly different. According to ZipRecruiter, which cited data from the St. Louis Fed, layoffs were the lowest in 2022 since records began in 2000. In January, for example, the US economy added 504,000 jobs, defying economists’ projections, as unemployment fell to a 50-year low of 3.4%.
Is it all too rosy? Still, questions remain, chiefly concerning the quality of jobs being added. According to the Bureau of Labor Statistics, the majority of jobs added in January were in leisure and hospitality—an industry that hemorrhaged employees during the pandemic. As Peter Philips, economics professor at the University of Utah, told Marketplace: “In January, the industry that created the most jobs was a low-wage industry.”—SB