When will waves of layoffs drain this crazy job market?

Now we start (but a little).

By Wolf Richter for WOLF STREET.

Some are big tech and social media companies, while others are suddenly forced to conserve cash, such as BuzzFeed cutting 12% of its workforce or meal-delivery-penny-stock Blue Apron cutting 10% of its workforce today. will fire. Most of the announced layoffs were in the hundreds. Some were larger, such as Meta with 11,000; and Twitter, a general mess of layoffs, resignations, and please-returns. But they are still small numbers compared to the 153.5 million workers in the United States.

But historically, there are still a lot of jobs. While some workers at tech and social media companies are being laid off, industrial companies, automakers (which are investing heavily to build EV divisions) and others are desperately trying to hire tech workers.

Ford, for example, is cutting workforces at its older divisions, where sales have been falling, but hiring tech and engineering skills at its EV division, where sales are booming and having to start from scratch, including design and construction. vehicles, software, supply chains, factories, etc. These companies lacked tech talent because they couldn’t compete with the rich pay packages and stock options offered by companies like Twitter or Meta. But now they can attract talent.

Layoffs by US companies are global layoffs, and some of those cuts hit workers in other countries. For example, Twitter’s layoff numbers include layoffs in India, where it has razed its office. Twitter also terminated thousands of contractors, many of them in other countries.

Then there are H-1B visa holders. Tech and social media companies and other companies with technology divisions work closely with people from other countries who are in the US on H-1B visas. And layoff announcements include these. But these people only have 60 days to find another employer after their current employment ends. If they fail to do so, they are considered “out of status” and would theoretically have to leave the United States.

When H-1B visa workers are fired, they are not eligible for U.S. unemployment compensation and therefore do not appear in the unemployment insurance claims we will be looking at.

And once they leave the country, they no longer appear as “unemployed” on the monthly job report.

These are some of the reasons why we don’t see a big increase in weekly claims for unemployment insurance from the Department of Labor.

But the trend has changed directionAs “sustained claims” (unemployment insurance claims by people who still don’t have a job at least one week after their initial claim) have remained at historically low levels, they are now rising solidly.

Initial claims for unemployment insurance: 230,000 people filed initial applications for unemployment insurance with their state unemployment offices from Sunday through Saturday, the Labor Department said today. This was in the same low range as in previous weeks (slightly higher than last week, slightly lower than the previous week) and in the same low range as before the pandemic:

A long look at initial claims for unemployment insurance shows how low they still are. For the labor market to soften meaningfully, we would need to see initial jobless claims rise above 300,000. When recessions occurred (purple columns), initial weekly claims increased in the 350,000 range.

This suggests that most of the people who were laid off found work so quickly or were already waiting for a new job that they did not need to apply for unemployment benefits.

But some people are now finding it more difficult to find a new job. The number of people still filing for unemployment insurance — those who have yet to find another job — rose to 1.67 million at least a week after an initial claim, according to the Labor Department today.

That’s still historically low, as low as the lowest points just before the pandemic, and the lowest since the mid-1970s (when there were more people working).

But it shows that the trend has completely reversed, with some people having a harder time finding new jobs and staying on unemployment insurance a little longer. This is a sign that the labor market is tightening a bit:

Here’s a quick look:

The long view shows how low 1.67 million pending claims are historically. But it also shows that the trend is now up, completely reversing course. During the mild recession in 2001, those continuous claims rose to 3.7 million. During the Great Recession, that number rose to 6.6 million.

We have other indications that the labor market is tightening a bit, but it remains very tight. Weekly unemployment insurance claims are the most timely data we have. And they describe a labor market that’s still surprisingly tight, given all the layoff announcements, but starting to loosen up a bit to the point where some of the people who lost their jobs — and it may not be tech workers — have to lose their jobs. a little more to find a new job and stay on unemployment insurance a little longer.

If we stick to the “soft landing” analogy, the labor market isn’t going anywhere yet, but it’s losing some ground.

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