U.S. Employers Lay Off 90K In March, Led By Tech And Finance Companies

ACROSS AMERICA — Led by the technology and financial sectors, U.S. employers planned to lay off nearly 90,000 workers in March, a sharp increase from February and an astronomical increase from the same time a year ago, according to a report Thursday from outplacement firm Challenger, Gray & Christmas.

The March layoffs bring the number of job cuts so far this year to 270,416, an increase of 396 percent from the same period a year ago. Job cuts in March were 15 percent higher than the month prior and job losses for the first quarter haven’t been this high since Q1 2020.

The layoffs are a signal that U.S. employers are paying attention to the Federal Reserve Board’s efforts to tame inflation by cooling the economy through interest rate hikes.

More job cuts can be expected, Andrew Challenger, the senior vice president of Challenger, Gray & Christmas, wrote in the report.

“We know companies are approaching 2023 with caution, though the economy is still creating jobs,” he wrote. “With rate hikes coming and companies reigning in costs, the large-scale layoffs we are seeing will likely continue.”

Tech Crunch

Layoffs have been mounting for months in the technology sector, which is responsible for 38 percent of all staff reductions, according to the report. That industry has bled 102,391 jobs so far this year, a staggering 38,487 percent increase front the same period a year ago.

Many tech companies hired aggressively during the pandemic. IBM, Microsoft, Salesforce, Twitter and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November. Layoffs are typically a final effort by companies to cut costs.

In 2023 alone, tech companies have shed 5 percent more jobs than in all of last year, and future cuts could make it the worst year for the sector since the dotcom bust in 2001.

The top reasons employers cited for cutting jobs were market/economic conditions, cost-cutting, and store, unit or department closings. Other reasons were financial loss, restructuring and lowered demand.

Financial companies have cut 30,635 jobs this year, a 419 percent from 5,903 cut in Q1 2022. The health care/products companies and manufacturers, including hospitals, and retail and services industries have also cut jobs at accelerated rates this year.

The retail cuts so far this year — a 1,125 percent increase from Q1 2022 — could be a sign of decreased expectations for consumer spending as the economy slows, the report noted.

California led all states in job layoffs in Q1, followed by New York, Washington, Michigan and Texas.

In a separate report Thursday, the Labor Department said the number of Americans applying for unemployment aid has exceeded 200,000 a week since early February, higher than original estimates.

A “flurry of layoff announcements so far this year has begun to show up in these data,” Stephen Stanley, chief U.S. economist of Santander U.S. Capital Markets, wrote in a research note.

Hiring Growth Slows

Another Labor Department report on Tuesday showed U.S. job openings slipped to 9.9 million in February, the fewest since May 2021. And on Wednesday, the payroll firm ADP reported that the nation’s private employers added 145,000 jobs in March, down sharply from 261,000 in February. Pay raises also weakened for workers, according to the ADP Research Institute.

ADP’s figures often diverge, from month to month, from the government's more comprehensive jobs report, which provides a more granular review of the labor market, though the two tend to converge over time.

On Friday, when the government issues the March jobs report, analysts expect it to show that employers added a solid 240,000 jobs last month.

In February, the government reported, employers added a robust 311,000 jobs, fewer than January’s huge gain but enough to keep pressure on the Fed to keep raising rates to fight inflation. The unemployment rate rose to 3.6 percent, from a 53-year low of 3.4 percent.

The Associated Press contributed reporting.