Do Layoff Announcements Mean Hiring Gets Easier?

The short answer is “no”…but our all-present media is eager to shout across their broad reach all about companies continuing to announce layoffs in the thousands.

In recent months Microsoft, Google, Meta, Salesforce, UPS, and Citicorp are just some of the mega-employers who have reduced staff. Many of these are tech companies that have re-calibrated project priorities making some employees expendable who have specialty skills that don’t fit the new direction. As just one example, Meta’s Mark Zuckerberg said recent job cuts were based on reducing management levels so his company could become more efficient. Zuckerberg also said tech jobs peaked during the pandemic because there was such an increase in retail traffic online.[i]

Are There More Layoffs Now Than Before?

When we compare recent job cuts to historical data we find this:

1. Monthly layoffs during much of the current economic recovery have bounced around between 1.3 million and 1.8 million. During the pre-pandemic economic expansion, this figure trended between 1.6 million and 2 million…so our current layoffs are actually lower.
2. The 1.6 million layoffs represent just 1.0% of total employment. This layoff rate has ranged from 0.9% and 1.2% for most of the current recovery. During the pre-pandemic economic expansion, this figure trended between 1.1% and 1.4%.
3. To get to 1.6 million layoffs, a lot of companies have to make a lot of layoffs. For example, 1,600 companies announcing 1,000 layoffs gets you to 1.6 million. That is to say, the layoffs reported in the news may just reflect an ongoing phenomenon in the economy.[ii]

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Further Reading: January Numbers Prove Recruiting Alone Is Dog-Chasing-Tail

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Which Industry is the Surprise Layoff Player?

The answer is healthcare. Consider this scramble of data:

• Over 100 healthcare companies laid off workers in 2023[iii], comprising 60,000 jobs and nearly double to number of healthcare layoffs during 2022[iv]. 
• Yet recent studies of healthcare CEO’s priorities consistently put employee retention at the top.
• And part of this is because our Bureau of Labor Statistics consistently reports most of the fastest-growing jobs are in healthcare.

While some of this data conflicts, a few underlying facts explain it all. Most hospitals are strapped for cash, especially after stretching their resources and paying for agency nurses during COVID-19.

Yet these same hospitals need every nurse they can find and retain because baby boomers are aging and they comprise such a large chunk of the U.S. population. This nursing shortage is even more compromised because our median nurse age is 46 whereas our total population median age is 39.

As just one example, a brand new, completely ready Phoenix hospital has delayed its opening for a full six months, in part because they cannot find enough clinical staff to open their doors[v]. Another report tells us that Arizona will need nearly 30,000 additional nurses by 2025[vi]…which is just a few months away.

So the solution to hospitals’ financial woes is to beef up clinician staffing to welcome baby boomer’s increasing health needs. So non-clinician staff jobs must be reduced or solved with technology in order to pay for those increased clinical jobs in the short term.

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Further Reading: Are Spans of Control a Predictor of Turnover?

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How Quickly Can Laid-Off Workers Get Re-Hired?

This discussion must start with our having 9 million open jobs and a near-historically low 3.7% unemployment rate. And the pandemic-driven work-from-home trend is playing a major role in many workers bouncing back quickly because millions of jobs can be done from anywhere, even across oceans. The total number of layoffs combined with the overall national unemployment rate would have to rise much further before one would think that layoffs are problematic for our workers to find and keep jobs.  

One year ago we were assured a recession, that rising interest rates tied to inflation and other factors would greatly slow our economy. Economists are surprised that our economy remains so strong while overlooking the one factor that drives us forward…which is we don’t have enough workers. Full employment combined with record-high pay increases to compete for those workers has resulted in persistently high consumer spending, causing corporate and individual pockets to be flushed with cash. Layoffs as a result of re-shuffling corporate priorities are typical, even in these rich times. And unfortunately for many of our readers, these layoffs are not a signal that hiring will slow.

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Looking for new ideas and ways to improve your new hire retention but not sure where to start or how to convince your executives? Write me: DFinnegan@C-SuiteAnalytics.com or connect with me to have a one-on-one conversation on ways you can get started today on your journey to cut turnover.

[i] https://www.yahoo.com/tech/mark-zuckerberg-explains-why-many-204418295.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAMHy3ytkEd6-DEHavz-UC6u2SdllSR4CcsmwiHEVbzVXusKBMlwoedr4_WJjsLzJdynLhHG8_-LJK0C7v1uSej9GQ8kkFqLP1Rmg53pKv8FK2drESSjyMJ4dMrltdxz6FJAS-CydFveuiNtw6d93sq5IMo9kNdL_a8sLB66SMIdZ

[ii] https://finance.yahoo.com/news/too-early-to-call-impact-of-layoffs-on-macro-economy-145756728.html

[iii] https://www.beckershospitalreview.com/finance/17-hospitals-health-systems-cutting-jobs-february-2023.html

[iv] https://qz.com/healthcare-industry-layoffs-pfizer-amazon-health-1851231629

[v] Phoenix-based Valleywise Health is pushing back the opening of its $603 million flagship hospital by six months as the health system deals with labor shortages and issues in the supply chain, Phoenix Business Journal reported Nov. 22.

[vi] https://www.beckershospitalreview.com/nursing/why-arizona-could-soon-have-the-nations-worst-nursing-shortage.html