Unprecedented job cuts: US sees 396% increase in layoffs, tech industry hit hardest
US employers have announced that over 270,000 people were laid off in the first quarter of 2023, marking a 396% increase from the previous year. According to a report by Chicago-based global outplacement and business and executive coaching firm, Challenger, Gray & Christmas, Inc., the total job cuts in March alone reached 89,703, representing a 15% increase from February and a 319% increase from March 2022. This marks the third time in 2023 that cuts exceeded the corresponding month from the previous year.
The technology sector was reported to have led all industries, with 38% of all cuts being made in this sector. With technology being a highly in-demand talent across industries, technology companies have announced 102,391 cuts so far this year, a significant increase from the 267 cuts made in Q1 2022. In fact, technology job cuts are already up 5% from the annual total of 97,171 in 2022, and are predicted to surpass the highest annual total for the sector recorded in 2001.
Financial companies came in second, having announced 30,635 job cuts this year, a 419% increase from the previous year. Healthcare, products companies, and manufacturers, including hospitals, also announced 22,950 cuts in the first quarter of 2023, a 65% increase from the previous year. Retail announced the fourth-most cuts with 21,426, a 1,125% increase from the same period in 2022.
The top reason for job cuts so far this year was market and economic conditions, accounting for 167,575 cuts. Cost-cutting came second with 24,825, while 22,109 were due to store, unit, or department closings. Financial loss was the cause of 9,870 job cuts, while 8,500 jobs were lost due to restructuring. Demand downturn was to blame for 7,944 job cuts in Q1 2023.
In addition, hiring plans fell to 9,044, marking the lowest total for March since 2015. So far this year, US employers have announced plans to hire 70,638, the lowest Q1 total since 2016. Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc., suggested that companies are approaching 2023 with caution, despite the economy still creating jobs. He believes that large-scale layoffs are likely to continue due to companies reining in costs and rate hikes continuing.