The year 2023 witnessed a substantial surge in the number of layoffs announced by US employers, as per a report by Challenger, Gray & Christmas. The study stated that US companies declared 721,677 job cuts in 2023, which marks a staggering 98% surge compared to the previous year’s figure of 363,832 layoffs. With this, the pace of job cuts accelerated rapidly, pointing towards the current labor market’s softening due to high interest rates and stubborn inflation.
The study reported that the technology industry underwent the highest number of job losses in 2023, shedding 168,032 employees. The figure shows a 73% increase from the previous year, almost reaching the annual record of 168,395 cuts declared in 2001. On the other hand, retail companies played an enormous role in the year’s layoffs, cutting 78,840 positions, reflecting a 274% increase from the layoffs announced in the same period in the prior year. The report stated that even though retailers exercised caution and flexibility in their hiring, they still need to “be on their toes” this year.
“Labor costs are high,” said Andy Challenger, senior vice president of Challenger, Gray & Christmas. “Employers are still extremely cautious and in cost-cutting mode heading into 2024, so the hiring process will likely slow for many job-seekers and cuts will continue in the first quarter.”
Hospitals and health care product manufacturers represented a significant portion of job cuts, as 58,560 positions were eliminated in 2023, showing a 91% increase from the layoffs announced in 2022. The primary reason cited for these job losses was deteriorating economic and market conditions, with the country still struggling with high inflation, a sharp spike in interest rates, and persistent geopolitical tensions. Additionally, companies blamed the closures of stores and artificial intelligence for the layoffs, further adding to the challenge.
The report suggests that the problem could worsen in 2024 as the labor market continues to soften under current conditions. Job cuts would likely continue, given the situation, which poses a significant challenge for the nation’s economy.
The year 2023’s figures should point towards a red flag for policymakers and employers as they work towards the nation’s economic recovery. With many companies planning to hire more workers in the long run, the layoffs in most sectors have resulted from the economic and market conditions, making it challenging for many businesses to survive in the long run.
