US companies announced 82,307 job cuts in January — more than double the number in December — and layoffs are expanding beyond tech companies and media. About half the companies that have announced layoffs in the first two months of 2024 are in finance and other industries.
Some of the companies cutting jobs this year include Alphabet/Google, Amazon, Cisco, Citigroup, Citrix, DocuSign, eBay, Estée Lauder, Grammarly, Instacart, iRobot, Levi Strauss, Macy’s, Mattel, Microsoft, Morgan Stanley, Pixar, NASA, Nike, Okta, Paramount Global, PayPal, REI, Rivian, Salesforce, Snapchat, Toast, Twitch, UPS, Unity Software, Wayfair, and Zoom. (In addition to Computerworld’s layoff tracker, you can get details about recent cuts from TechCrunch and Layoffs.fyi.)
Inflation vs. jobless claims
Given that jobless claims remain low it might seem incongruous to hear about a new round of cuts almost every week. With a few exceptions, the layoffs have been small and largely localized to tech, finance, and media. But the pace of layoffs has increased, and jobless claims may soon start to creep upward.
There’s another reason jobless claims have remained low. In economic theory, high inflation is generally accompanied by a tight labor market — the condition we’re experiencing now. (Conversely, low inflation usually pairs with higher unemployment.) The Federal Reserve has done what it can to control inflation by raising interest rates, which in turn slowed spending because the cost of borrowing increased.
The steep rise in inflation began during the pandemic, when severe disruptions to supply chains, manufacturing, and shipping meant the supply of many products was, in some cases, significantly reduced. On top of that, wars broke out in the Ukraine and Middle East, and shipping in the Red Sea has been plagued by raids. So, those global pressures on supply chains and shipping (and prices) have continued.
One trend, many causes
The effects of high interest rates and inflation can pressure businesses, affecting a company’s value, profits, cash flow, and sales. Companies and consumers alike are trying to spend less, and organizations that might once have passed along cost increases to customers are holding back. That leaves layoffs as an attractive way of cutting costs.
Companies have other reasons for embracing job cuts. Publicly-traded US firms want Wall Street to see them as being committed to cost cutting in 2024 to potentially buoy their stock prices. According to CNBC, “corporate leaders [are trying] to show Wall Street that they’re aggressively countering inflation-fueled expense increases and adjusting as consumer demand normalizes.”
Some companies are rebalancing after deciding they over-hired during the pandemic. Mark Zuckerberg, Meta founder, chairman, and CEO, speaking on Morning Brew Daily, said: “In some ways, becoming leaner makes a company more effective.” A lot of companies are still in the mode of figuring out how lean and efficient they should be. Maybe they also think they should be a somewhat different shape to do the best work that they can, Zuckerberg said.
Other companies are evaluating their productivity levels and using layoffs as a way to free up money to invest in AI hardware; they’re also setting new productivity goals by embracing much-needed skills, such as experience with generative AI.
Companies sometimes take a public relations and/or investor relations hit when laying off hundreds or thousands of employees out of the blue. But when so many others are doing the same, the blowback can be blunted. (Since Wall Street has been supportive of the layoffs, there’s been little need for air cover.)
Perhaps the most attractive reason to lay off employees is offered by the example of the soaring profits set by Meta and Amazon. Both were early to the business of laying off tens of thousands employees in 2023, and both seem to be doing just fine.
That said, solid earnings or profits apparently offer little protection for employees from job cuts. Paramount Global culled 3% of its workforce globally just days after Paramount’s CBS network garnered record-breaking advertising sales for Super Bowl 58, according to CNN.
All in all, it seems layoffs are the new normal, according to Jeff Shulman, professor at the University of Washington’s Foster school of Business. Moreover, these job cuts could finally be the stick that breaks the back of the remote work movement.
Coping with a layoff
There’s nothing so unnerving as having a figurative Sword of Damocles dangling over your head while you wait to hear whether your job might be affected by cuts. Some companies like Amazon and Alphabet are conducting ongoing reductions — it’s like a death of a thousand cuts. But remember that when a position is eliminated, there’s no death involved.
And there is certainly life after a layoff. I’m living proof of that.
For those who wind up on the short end of the layoff equation, there’s much you can do to bounce back and rebuild your career. Here are some helpful resources:
5 steps to preparing for a potential layoff
By preparing in advance for a possible layoff, you can ward off the most stressful outcomes if it happens.
1. Save aggressively and pay off loans. Even if your company offers severance packages, the most important thing you can do to prepare for a potential layoff is to have a rainy day savings account to fall back on. Save aggressively. Consider using an online bank account that lets you automatically transfer a set sum every month or every two weeks. Avoid big purchases, especially those that involve loans. You should have enough savings to cover at least four months of all your recurring monthly bills. In addition, work on paying down existing debt such as credit cards and car loans.
2. Develop a side hustle. Look for additional ways to bring in money. Does your business offer freelance possibilities? Consider putting out feelers and get yourself some weekend work to bolster that savings account.
3. Make a plan for healthcare. If you’re using your company’s healthcare insurance, does your partner have healthcare coverage? Most plans have a set enrollment period, but they’ll usually waive that in the event of a layoff. If you can, find out what your options are under your spouse’s plan.
4. Consider a career change. Is there a different career in tech you’ve always wanted to pursue? Now would be a good time to explore it. Training on business uses of generative AI or prompt engineering, for example, could put you in a better position to retain your current job or to get a new one. Consider getting that training now. Some employers are willing to pay in the neighborhood of 35% to 45% more to employees with genAI experience.
5. Put out feelers to key contacts, but be careful! Start this process by updating your LinkedIn profile. Your first step should be to make sure that profile-update notifications aren’t being sent to your connections. For example, you’re probably connected to your boss on LinkedIn — so, you don’t want to broadcast that you are looking for a job. That might make you a candidate for a layoff.
To turn off profile-update notifications, go to the LinkedIn website and click the “Me” icon in the LinkedIn toolbar. Choose Settings and Privacy and then Visibility. Then scroll down to “Share profile updates with your network” and make sure it is turned off.
Then reach out to trusted contacts to begin your job-search process — and be sure to ask them for confidentiality.
Copyright © 2024 IDG Communications, Inc.
