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