Job Losses Across Industries Rise Amidst Economic Downturn
Tech and media layoffs have been making the headlines lately, but they only account for a small portion of the U.S. workforce at 5%. Other industries, such as auto, manufacturing, and financial services, have also been cutting jobs. The Federal Reserve has also been slowing the economy down, leading to a deepening of the unemployment rate.
According to Manuel Abecasis, a Goldman Sachs economist, the Labor Department’s job openings report may not be capturing the recent upturn in layoffs. Abecasis used data from the Worker Adjustment and Retraining Notification Act (WARN) to calculate the 1.1 percent layoff rate for the period, which is 0.2 percentage points higher than the official JOLTS report. This comes to around 1.65 million job losses.
Since the turn of the millennium, the Bureau of Labor Statistics has monitored the percentage of the workforce that is let go per month. Typically, 1.5% of the non-farm private labor force is laid off or discharged from their job. The past 12 months have only seen one month with more than 1% of the private labor force being laid off.
Overall, there were 10.45 million job openings at the end of November, according to preliminary numbers from the Bureau of Labor Statistics. This is compared to 5.7 million unemployed Americans, making there 1.8 jobs for every unemployed person. The quit rate is also at 2.7%, down from recent highs but still well above pre-Covid levels.
Given the current backlog of vacant roles and drop in labor force participation, American businesses are likely to continue to struggle to hire for months to come. Abecasis’ research serves as a warning sign to Federal Reserve policymakers, as it indicates that the job market may not be invulnerable to the downturn story.
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