(Photo by OLIVIER DOULIERY/AFP via Getty Images)
The Job Openings and Labor Turnover Survey, a snapshot of the job market, showed a labor market that is somewhat cooling down, the United States Department of Labor reported Wednesday.
Job openings fell in October, as demand for workers slowed down. The number of available positions in the U.S. fell to 10.3 million, from 10.7 million in September. The quits rate dropped to the lowest level in 17 months, as fewer Americans voluntarily left their jobs.
Ordinarily, job losses and slower growth are a bad thing. In the current economic climate, Jerome Powell, chair of the Federal Reserve Bank, announced his plans to raise interest rates and use other tools at his disposal to contract the economy, in an effort to beat inflation down from 40-year record high levels. Therefore, job losses are a positive indicator in the war against runaway inflation.
Since bad news about job losses is good news for investors, as there may not be as many high-interest rate hikes, as Powell suggested, the stock market soared 700 points after the news.
The impetus for the rise in share prices was due, in part, to Powell’s talk on Wednesday, “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.” The Fed chair added, “The time for moderating the pace of rate increases may come as soon as the December meeting.”
Jobs Need To Be Lost To Tame Inflation
Part of the program calls for businesses to reign in expenses as interest rates rise. The intended consequence is to prod firms to lay off workers to cut costs. The theory of the Fed is that if more people are unemployed, they’ll spend less money and inflation will slowly edge downward.
The recent JOLTS report indicates that Powell is meeting his objectives. The job market is cooling, albeit at a slow pace. Job openings, a sign of confidence that companies want to hire new talent, dropped by 350k last month. The U.S. had 10.3 million vacancies for the last month, a drop of 353,000 from September and down 760,000 compared to a year ago at this time.
The JOLTS report was released on the same day as large payroll processing company ADP’s monthly reporting on the labor force. According to ADP’s company clients, only 127,000 positions were recently added, compared to the 239,000 the payroll processor reported for October, the lowest total since January 2021.
Workers Are Not Quitting As Much
Over the last couple of years, the job market was so tight that workers felt emboldened to quit and switch jobs, in pursuit of more money and better opportunities. The data shows that employees are more cautious now that the economy is less robust.
The job quits rate is a measure of worker confidence. If a worker feels confident that there are many jobs available, they’ll be more apt to seek new opportunities. Unfortunately for job hunters and disgruntled workers, the quits rate declined, trending lower to 4.026 million, down 34,000 from a month ago and substantially lower than the record 4.5 million in November 2021 during the Great Resignation. This metric shows that workers are being more thoughtful and careful before changing jobs, or deciding to wait things out. There are still about 1.7 job openings per unemployed person.
Tech Layoffs Take Center Stage
The high-flying tech sector downsized more than 140,000 workers in 2022. Google CEO Sundar Pichai, foreseeing the challenges to its business, informed his team members in an all-hands meeting in July that they must step up their productivity. He advised them that the halcyon days of plenty were over. The tech giant and its peers now find themselves in a new hostile environment that will cause the industry to aggressively cut costs and find ways to work more efficiently with fewer workers.
Amazon announced in a November blog post that it would be conducting layoffs. The retailing giant will separate a reported 10,000 employees from payroll, according to the New York Times. Foreshadowing what was coming next, human resources was also part of the layoff. When HR people are downsized, it's a harbinger of future layoffs and hiring freezes.
One day later, CEO Andy Jassy warned employees in a corporatewide memo, “There will be more role reductions as leaders continue to make adjustments.” Jassy added that managers would be reviewing their teams and scrutinizing “workforce levels” to make the difficult decisions of who will stay or be asked to leave for the “long-term health” of the company. Jassy did not qualify the number of people who will be let go in 2023.
Meta CEO Mark Zuckerberg announced that 11,000 workers would lose their jobs. Meta has had to contend with its disastrous foray into the metaverse, privacy issues and the ascendancy of TikTok stealing its thunder and market share.
Elon Musk, the newly self-appointed “chief twit” at Twitter, feels the pressure to turn the social media company around fast. He acquired the tech platform for $44 billion, although Twitter has failed to be profitable for the last eight years. To reduce costs, Musk has reportedly cut 50% of Twitter’s staff, and workers are continuing to leave the social media platform.
Lyft is cutting 13% of its workforce—approximately 500 people. This will be the second round of layoffs for the ridesharing company this year. Digital bank Chime is laying off about 160 people—12% of its staff. Digital payments giant Stripe is cutting 14% of its workforce, CEO Patrick Collison wrote in a staff memo. The layoffs will impact more than 1,000 employees.
Real-estate platform Opendoor is cutting 550 jobs, CEO Eric Wu announced in a blog post. Oracle, the world’s largest database management company, laid off as many as 200 employees in its cloud infrastructure unit on November 1. This comes a week after the company "quietly" laid-off workers in another cloud division.
The list keeps growing. Salesforce, DoorDash, CISCO, Carvana, Roku, Coinbase, HP and others announced downsizing last month, according to Crunchbase.
