US Records Highest February Layoffs Since 2009, Led by Tech, Financial Sectors: Report

The US faced the worst February in terms of layoffs since 2009, according to data from outplacement firm, Challenger, Gray & Christman. A total of 84,638 planned job cuts were executed in the last month showing an increase of 3% from January and 9% from February 2023. This was the highest since February 2009, which saw 186,350 layoff announcements. While large tech companies led the charge in planned layoffs, others are also expected to cut more jobs in the coming future.

“Businesses are aggressively slashing costs and embracing technological innovations, actions that are significantly reshaping staffing needs,” Andrew Challenger, the firm’s labor and workplace expert, said in the official release.

Big Tech Leads the Charge Followed by Financial Firms

In the first month of 2024, layoffs hit a two-year high as technology firms cut jobs at the second-highest pace on record, according to a Reuters report. Coming to February, the tech industry still led the way with 28,218 cuts. While the number has fallen 55% from the same period a year ago, it is expected to possibly get words.

Giants like Microsoft Corp, Amazon, and Goldman Sachs Group cut thousands of jobs last month in a bid to ride out a demand downturn as consumer and corporate spending shrunk.

Furthermore, layoff announcements at financial firms have risen 56% compared with the first two months of 2023. In February, financial firms announced 26,856 cuts marking a significant jump from 17,235 cuts announced in the same month last year.

According to the report, other industries that have also ramped up job cuts include industrial goods manufacturing, up 1,754% from a year ago, energy industry, up 1,059% and education up 944%.

Reason Behind Layoffs and the Outlook for 2024

Challenger’s experts say employers primarily cited “restructuring” as the cause of layoffs. Meanwhile, a few companies cited store or plant closers and economic conditions as the reason.

In the case of the tech giant, Google, significant layoffs were announced in January as part of a large-scale reshuffling. The company said that it was shifting its focus towards the biggest properties. The company launched its AI program Gemini to compete with Microsoft and OpenAI, and it seems to be its biggest focus.

Big Tech rivals such as Microsoft, Apple, Amazon, and Meta have also announced layoffs this year as they ramped up their AI efforts. However, as per Challenger, AI was cited for just 383 cuts, and “technological updates” in general have been behind 15,000 reductions, or nearly as much as all the years combined since 2007.

The Challenger report also mentioned that tech companies are also implementing automation and robotics which has replaced several roles in the companies. Last year alone, AI was directly cited as the reason behind 4,247 job reductions, suggesting a growing impact of AI and automation on companies’ workforces.

In terms of hiring, in February, employers announced plans to hire 10,317 workers which was the lowest year-to-date total since 2009 according to Challenger’s data.

However, according to a CNBC report, the layoff numbers are not rolling over to the weekly jobless claims. This suggests that the current unemployment is short-lived, and workers can find new positions in other companies. The reports suggest that initial filings for unemployment insurance for the most recent week remained unchanged at about 217,000, exactly in line with Wall Street estimates.