Amid a wave of Big Tech layoffs, the U.S. economy added more than half a million new jobs in January, the Labor Department said Friday. How did that happen?
The tens of thousands of layoffs in tech and the media industry do appear somewhat in the data for the information industry, which showed a net loss in jobs for the second month in a row. There were 5,000 jobs lost in information, according to Bureau of Labor Statistics data, but the numbers show that most industries added jobs last month, for a total of 517,000 new positions.
That’s despite large layoff totals from Big Tech companies, which announced thousands of layoffs last month. They include Google parent Alphabet Inc.
GOOG,
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which is slashing 12,000 jobs, or 6% of its workforce; Microsoft Corp.
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which is cutting 10,000 jobs, or less than 5% of its workforce; and Salesforce Inc.
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which is cutting 8,000 jobs, or 10% of its workforce.
For more: More than 86,000 tech-sector employees have lost their jobs since the start of the year
Economists who spoke to MarketWatch on Friday stressed that the strong U.S. jobs numbers reflect tech’s small share of the overall economy, and also that the tech companies are global and have employees outside the country.
“We shouldn’t over-read tech layoffs as a sign for the overall labor market,” said Michael Boskin, an economics professor at Stanford University.
To support that notion, an analysis of the data by the Computing Technology Industry Association, or CompTIA, shows that the tech sector’s net job loss in January was 1,600, after the Bureau of Labor Statistics revised its November employment data. (The agency may also make seasonal adjustments to January data.)
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That could be because some of those tech companies are also still hiring, which would somewhat counterbalance the layoffs.
“Typically, the layoffs announced account for less than 1 percent of their total workforce, and do not tell us how many new hires these companies are making,” said Ann Harrison, dean at the UC Berkeley Haas School of Business, adding that net employment at some tech companies may not have changed at all.
The numbers may also reflect the demand for tech workers who were laid off late last year. Maurice Obstfeld, an economics professor at UC Berkeley, said some tech companies are slashing jobs they added during the past couple of years because of the COVID-19 pandemic, “and many of the released workers can find jobs quickly and easily elsewhere, given the still strong labor market.”
See also: Tech layoffs may be continuing, but these skills are still in high demand
The overall U.S. unemployment rate of 3.4% is now at a 53-year low, while the unemployment rate for information is 3.9%, down from 4.2% in January 2022, showing that the overall labor market is still tight.
The question now, according to Boskin of Stanford, is “how much do these tech layoffs spread elsewhere, to areas which didn’t experience much of a hiring surge during the COVID period?”
Among the jobs added in the U.S. last month were 82,000 in professional and business services, which may include some jobs in the tech industry. Professional, scientific and technical services accounted for half of that number, or 41,000 new positions. Last year, job growth in this category averaged 63,000 a month, according to the government.
Other industries that lost jobs last month were motor vehicles and parts, as well as utilities.
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Credit: marketwatch.com