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- The labor market is incredibly strong.
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- [Narrator] It might seem like Fed Chairman Jerome Powell's
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view of the labor market doesn't jive
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with the layoff after layoff after layoff
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that is plagued to the tech industry.
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However, he's right, at least according
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to the Labor Department's recent jobs reports.
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Employers added over 260,000 new positions in November,
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the 23rd month in a row the economy has added them,
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and unemployment is under 4%, near the lowest on record.
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- So this is a great labor market in that sense.
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- There's this huge disconnect.
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You're hearing about companies
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like Amazon, Twitter, DoorDash layoff workers,
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and it feels like we're in the middle of a recession.
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- [Narrator] Here's why those big headlines
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aren't in sync with the overall job market.
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(light somber music)
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First, some of the recent layoffs
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aren't yet reflected in the data.
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For example, about 1.4 million people were laid off
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or discharged from their jobs in November,
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but that number may not include the entire month.
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- Some of this data does come with a lag.
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For example, some companies may have announced these layoffs
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too late in the month for them to be captured in the data.
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- [Narrator] For example, DoorDash's cuts on November 30th
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weren't reflected in the report,
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neither were Amazon's on the 16th or Carvana's on the 18th.
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Also, the Labor Department counts the layoffs themselves,
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not the announcements.
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- Companies may be saying
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that they're going to tighten their belts and lay people off
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but they simply haven't made those cuts quite yet.
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So that can lead to that lag.
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- [Narrator] The delay might be part of the reason
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the unemployment rate has stayed...
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- Near an all-time 50-year low: 3.7%
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- [Narrator] But there is more to it.
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- The jobs market
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is in a really really weird place right now,
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and there's this historic gap
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between the number of workers looking for employment
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and the number of jobs out there.
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- [Narrator] That gap
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is partly driven by a shrinking workforce.
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- The labor-force participation rate,
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the number of people out there looking for jobs
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and wanting to have a job, is historically low
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and actually ticked down in November.
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- [Narrator] One reason why fewer people are looking
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is that millions left the workforce
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during the Covid 19 pandemic starting in 2020.
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Roughly 2.6 million retired early
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and more people retired in 2020
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than had in the previous eight years.
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Others left for reasons like lack of childcare.
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Now there's about 1.7 job openings
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for every person looking for work.
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- So what we're seeing is intense competition
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for workers right now because you have this gap
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between the number of jobs out there
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and the number of people looking for jobs
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and that helps add to this low unemployment rate.
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- [Narrator] While Covid is affecting unemployment,
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tech layoffs aren't big enough to register
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but data quirks are just one factor.
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Another is that the job cuts are proportionally smaller
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than the headlines might have you believe.
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Looking at the numbers, Amazon and Meta announced layoffs
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of about 10,000 and 11,000 each.
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Snap said they'd cut 1,200 jobs.
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Shopify cited 1,000.
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And Netflix estimated 300.
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In the entire sector, about 50,000 job cuts
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were announced in November.
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(mouse clicks)
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To put that into perspective, there are
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more than 150 million people working in the US.
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The entire tech industry is just 3% of the whole.
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- You'd think it'd be companies in the S&P 500,
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the mega cap companies driving job growth in the US,
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but in fact, it's the small businesses
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driving more of the job growth.
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Companies within the S&P 500
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make up just 19% of employment in the US.
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- [Narrator] To be sure, tech layoffs did count
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for a large proportion of November's job cuts.
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And this year there were more than any year since 2002.
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- So these tech companies are market leaders.
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They are some of the biggest companies in the US,
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if not the entire world, and they also loom large
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over the public consciousness.
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I mean, think about the phones that we use,
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the computers that we use, where we online shop.
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You know, they are leaders in so many different ways.
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However, they just don't make up
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as big of a part of the labor market as we think.
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- [Narrator] Other sectors that lost jobs
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include retail and transportation and warehousing.
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But it's still unclear
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whether layoffs will continue in those sectors.
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Economists expect that additional interest rate hikes
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from the Fed may trigger more widespread layoffs.
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- So the tech industry is facing one of its biggest tests
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and one of its biggest downturns of the past decade.
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As the slowdown continues,
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we very well could see more tech layoffs ahead.
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(register beeps)
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- [Narrator] And as inflation remains high,
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additional layoffs will depend
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on how the job market reacts to Fed policy.
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(light somber music)
