Now starting to (but only a little).
By Wolf Richter for WOLF STREET.
There have been countless announcements of layoffs, some of them from big tech and social media companies, others from companies losing money per year that suddenly need to save money – for example, by BuzzFeed earlier this week to lay off 12% of employees , or today at meal-delivery-penny-stock Blue Apron to lay off 10% of the company’s employees. Most of the announced layoffs were in the hundreds. Some were larger, such as Meta with 11,000; and Twitter, a total mess of layoffs, quit and please come back. But these are still small numbers compared to the 153.5 million employees in total in the United States.
But there is still a historically large number of vacancies. Although some workers at tech and social media companies are being laid off, industrial companies, automakers (they̵[ads1]7;re investing heavily to build their electric car divisions) and others are desperately trying to hire tech workers.
Ford, for example, is trimming the workforce in its older divisions, where sales are declining, but hiring technology and engineering talent in its EV division, where sales are booming, and where it has to start everything from scratch, including designing and building vehicles, software , supply chains, factories, etc. These companies have been starved of technical talent because they could not compete with the rich pay packages and stock options offered by the likes of Twitter or Meta. But now they might be able to attract talent.
Termination notices from American companies are global layoffs, and some of these redundancies affect employees in other countries. For example, Twitter’s layoff numbers included layoffs in India, where it axed its office. Twitter also canceled thousands of contractors, many of them in other countries.
Then there are H-1B visa holders. Technology and social media companies, and other companies with technology divisions, are heavily staffed with people from other countries who are in the US on H-1B visas. And the layoff notices include them. But these people only have 60 days to find another employer after their current employment ends. If they cannot, they are considered “out of status” and in theory must leave the United States.
When workers on an H-1B visa are laid off, they are not eligible for unemployment compensation in the United States, and therefore do not appear in the unemployment insurance claims that we will look at.
And once they leave the country, they no longer appear as “unemployed” in the monthly jobs report.
This is among the reasons why we have not seen a large increase in the weekly requirements for unemployment benefits from the Ministry of Labour.
But the trend has changed directionas “continuing claims” (unemployment insurance claims by people who have not yet found a job at least one week after the first claim) are now solidly increasing, but still historically low.
Initial requirements for unemployment benefits: 230,000 people filed an initial claim for unemployment insurance with their state unemployment offices in the week through Saturday, according to the Labor Department today. This was in the same low range as in the previous weeks (slightly up from last week, slightly down from the week before) and in the same low range as before the pandemic:
The long view of first-time claims for unemployment insurance shows how low they still are. For the labor market to soften meaningfully, we need to see the number of initial unemployment claims rise above the 300,000 mark. When recessions occurred (purple columns), the number of first weekly claims increased through the 350,000 range.
This shows that most of those who were made redundant found a job so quickly or already had a new job waiting in the wings that they did not need to apply for unemployment benefits.
But some people now find it more difficult to find a new job. The number of people still claiming unemployment insurance at least one week after their initial claim — people who have not yet found another job — rose to 1.67 million, according to the Labor Department today.
This is still historically low, about as low as during the lowest points just before the pandemic, and far lower than anything since the mid-1970s (when there were many fewer workers).
But it shows that the trend has turned solidly, that some are struggling to find a new job, and that they are on unemployment benefit for a little longer. This is a sign that the labor market is becoming a little less tight:
This is the short overview:
The long overview shows how historically low the 1.67 million continued claims are. But it also shows that the trend is now rising, having reversed a solid course. During the mild recession of 2001, these continuing claims rose as high as 3.7 million. During the Great Recession, they jumped to 6.6 million.
We have had other indications that the labor market is becoming a little less tight, but still very tight. The weekly unemployment insurance claims are the most timely data we have. And they depict a job market that is still incredibly tight, given all the layoff announcements, but is starting to loosen up a bit where some of the people who lost their jobs – and they may not be tech workers – have to look a little longer to find a new job and stand on unemployment benefits just a little more.
To stick with the “soft landing” analogy, the job market isn’t quite landing yet, but it’s losing some altitude.
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