First-Quarter Job Cuts Jump by Nearly 400 Percent as Companies Struggle With Economic Conditions

Signage for a job fair is seen in New York City, on Sept. 3, 2021. Andrew Kelly/Reuters

Jobs cuts about quadrupled during the first quarter, registering the highest first-quarter cuts since 2020, according to data from a recent report, with worries about the economy and market being the number-one reason for the layoffs.

In first quarter 2023, U.S.-based employers announced 270,416 job cuts, which is a 396 percent increase compared to the 55,696 cuts in first quarter 2022, stated an April 6th report (pdf) by outplacement firm Challenger, Gray & Christmas, Inc. This is also the highest first-quarter job cut number since 2020, as well as the highest quarterly job cuts since third quarter 2020. Employers announced 89,703 job cuts in March 2023, up 15 percent from February and up by 319 percent from March 2022.

The number-one reason cited by companies for the job cuts was market or economic conditions, which contributed to 167,575 out of the 270,416 job cuts in the first quarter. Cost-cutting came in second, accounting for 24,825 cuts. Other major reasons included closing down the business, financial losses, demand downturn, and restructuring.

“We know companies are approaching 2023 with caution, though the economy is still creating jobs. With rate hikes continuing and companies reigning in costs, the large-scale layoffs we are seeing will likely continue,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas, Inc.

“The technology sector is leading all industries, and this talent is in demand across industries. In fact, 38 percent of all cuts are in the tech sector,” he added.

Based on the recently released ADP Employment Report, the number of new jobs added in March has decreased from the prior month. Private-sector employment increased by 145,000 jobs in March, compared to February’s 261,000 jobs.

Similarly, the increase in pay has also begun to decrease.

“Our March payroll data is one of several signals that the economy is slowing. Employers are pulling back from a year of strong hiring, and pay growth, after a three-month plateau, is inching down,” said Nela Richardson, chief economist at ADP.

Sector-Wise Layoffs

The tech sector announced 102,391 job cuts in first quarter 2023, up from just 267 job cuts in first quarter 2022. At present, the only other years when the tech sector announced more job cuts than the current year were 2001 and 2022. The industry is believed to be on course to exceed the 2001 record of the highest annual job cuts for the sector, when 168,395 people were laid off.

Over the past few months, major tech companies such as Alphabet (Google), Microsoft, IBM, and Meta (Facebook) have each announced massive layoffs and chopped off entire divisions.

In an interview with The Epoch Times, Elham Assadi, chief visionary officer at HR consultant Sedaa, said that the tech layoffs are a trend that “happens every 10 years or so in big or small chunks, depending on that decade’s economical precursors.”

“First, they fire the contract workers, then the employees. But they realize they still need to do the work. So, they hire new contract workers to save the 30 percent overhead—benefits for full-time employees—and show better numbers—to look profitable for auditors, especially if the company is set to go public,” she said.

The financial sector accounted for the second-highest job cuts, terminating 30,635 jobs in the first quarter.

Health care/products companies and manufacturers, including hospitals, came in third with 22,950 cuts, retail came in fourth with 21,426 job cuts, and services fifth with 16,612 cuts. The media industry accounted for 10,320 job cuts during this period.

Region-Wise Job Cuts

Region-wise, the biggest cuts in the first quarter were in the East, which saw 20,418 layoffs, followed by the West with 14,236 cuts, the South with 11,648 cuts, and the Midwest with 9,394 terminations.

California ranked as the top state with the most cuts, with companies laying off 106,679 people, followed by New York with 28,824, Washington with 22,382, Michigan with 17,499, and Texas with 15,151 cuts.

Meanwhile, companies only announced plans to hire 70,638 people in the first quarter, the lowest first-quarter number since 2016. Last month, hiring fell to its lowest March level since 2015.

The most hiring announcements in the first quarter came from the entertainment/leisure industry, where 17,317 hirings were announced. However, this was down 53 percent compared to the first quarter last year. Tech hiring, which came in second, dropped by 68 percent during this period.