My 2 Cents | #13
What is happening with the layoffs in the US?
06/03/2024
Opinion of the Advisory Principal Gianfranco Miranda
We need to discuss a pressing matter: job layoffs. Being laid off is a common occurrence that has persisted since the inception of employment, but why is there currently widespread talk about layoffs in the technology, gaming, and startup sectors? What is the economic impact of these layoffs? 🤔
Let's delve into the numbers. In 2023, major US-based tech companies alone laid off over 200,000 talented individuals. These layoffs were attributed to company "reductions," shifts in leadership, and increased investments in AI. Some were driven by financial considerations and pressure from investors to reduce payroll. However, do these layoffs significantly impact the overall US employment rate? Not really. Tech layoffs are more closely tied to the industry's rapid pace of improvement and quick decision-making on a day-to-day basis. 📊 Since the pandemic, these ratios have ranged from 15,000 to 35,000 announcements per month from major companies. In 2024, substantial changes occurred in US tech companies, with at least 30,000 individuals losing their jobs as of February 2024. While news outlets focus on job losses, what about the jobs added to the overall American business landscape?
There has been job growth in recent months, with over 350,000 new jobs added to the economy by January. Why is this happening amid widespread layoffs? Let's talk about the pandemic.
When COVID-19 hit, companies struggled to meet online demand, operate at the required technological pace, and make necessary hires for roles in tech, e-commerce, digital marketing, and more. They invested in a workforce that, while not crucial to the core business, was essential for rapid growth. 📈 Now, four years later, as the economy returns to a "normal" state coupled with recent AI investments, companies are beginning to cut contracts and lay off excess workforce. This was anticipated by the human resources industry for some time.
🌐 While the tech sector is shedding jobs, there is increased demand for roles in health, professional and business services, accounting, engineering, law, and more. Hiring is on the rise. Even the finance industry, relying on AI and software solutions, is reconsidering its approach to acquire more talents capable of critical thinking 🧠, rather than merely inputting information for computers to process.
Rather than viewing layoffs as alarming, we should see them as necessary changes within the industry and signals for individuals to broaden their knowledge and identify where their skills are most needed. Now, more than ever, demanding roles that require human expertise are being prioritized across various sectors, including sciences, finance, professional and business services, among others.
