Now it starts (but only a little bit).
By Wolf Richter for WOLF STREET.
There have been countless layoff announcements, some from big tech and social media companies, others from companies that are constantly losing money and suddenly needing to save money — like BuzzFeed earlier this week to lay off 12% of its employees, or today by meal-delivery penny-stock Blue Apron to lay off 10% of its employees. Most of the announced layoffs were in the hundreds. Some were larger, like Meta at 11,000; and Twitter, a total mess of layoffs, resignations and please come back. But they’re still a small number compared to the 153.5 million total US workforce.
But there is still a historically large number of vacancies. Even as some workers are laid off at tech and social media companies, industrial firms, automakers (they’re investing heavily in building their EV divisions), and others are desperate to hire tech workers.
Ford, for example, is reducing its workforce in its legacy businesses, where sales are declining, but is hiring technical and engineering talent in its EV division, where sales are booming and where everything has to start over, including design and build vehicles, software, supply chains , factories, etc. These companies lack technical talent because they cannot compete with the bountiful salary packages and stock options offered by Twitter or Meta. But now they could attract talent.
Layoff announcements by US companies are global layoffs, and some of these layoffs hit employees in other countries. For example, Twitter’s layoff numbers include layoffs in India, where the company gutted its office. Twitter also fired thousands of contractors, many in other countries.
Then there are the H-1B visa holders. Tech and social media companies, as well as other companies with tech divisions, are heavily staffed with people from other countries staying in the US on H-1B visas. And the layoff announcements include them. But these people only have 60 days to find another employer after their current job ends. If they cannot do this, they are considered “out of status” and would theoretically have to leave the United States.
When workers are fired on an H-1B visa, they are not eligible for US unemployment benefits and therefore do not appear on the unemployment insurance claims, which we will look at.
And once they leave the country, they no longer appear as “unemployed” in the monthly job posting.
These are some of the reasons we haven’t seen a big increase in weekly unemployment insurance claims through the Department of Labor.
But the trend has changed directionas “continued claims” (unemployment insurance claims from people who have not found a job at least a week after their initial application) are now growing at a solid rate but remain historically low.
Initial claims for unemployment insurance: 230,000 people filed initial claims for unemployment insurance with their state employment offices in the week to Saturday today, according to the Labor Department. This was in the same low range as the previous weeks (slightly higher than last week, slightly lower than the previous week) and in the same low range as before the pandemic:
A long look at the initial applications for unemployment insurance shows how low these are. For a noticeable weakening of the labor market, the number of initial applications for unemployment benefits would have to rise above the 300,000 mark. As recessions emerged (purple columns), weekly initial claims increased to 350,000.
This shows that most of those who were laid off found a job so quickly or already had a new job in the pipeline that they did not have to apply for unemployment benefits.
But some people are now having a harder time finding a new job. The number of people still applying for unemployment insurance at least a week after they first applied — people who have not yet found another job — rose to 1.67 million today, according to the Labor Department.
This is still historically low, about as low as during the lows just before the pandemic and far lower than anything since the mid-1970s (when there was much less employment).
But it shows that the trend has clearly reversed, with some people having a harder time finding a new job and staying on unemployment insurance a little longer. This is a sign that the job market is getting a little looser:
This is the short view:
Long term shows how historically low the 1.67 million continuing claims are. However, it also shows that the trend is now up after a solid trend reversal. During the mild recession of 2001, those continuing claims rose to 3.7 million. During the Great Recession, they rose to 6.6 million.
We have other signs that the labor market is getting a little less tight, but remains very tight. The weekly unemployment insurance claims are the most recent data we have. And they show a job market that’s still amazingly tight given all the layoff announcements, but is beginning to loosen up a bit, leaving some of the people who lost their jobs — and they might not be tech workers — to have to look a little longer to find one find a new job and stay on unemployment insurance for a little longer.
To stay with the “soft landing” analogy: the job market is not yet landing, but is losing some ground.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it very much. Click on the beer and iced tea mug to learn how:
Would you like to be notified by email when WOLF STREET publishes a new article? Sign up here.
