1. Microsoft has also begun layoffs
According to reports, Microsoft plans to start layoffs this Wednesday, and the layoffs will be significantly greater than the rounds of layoffs in the past year.
Since the second half of last year, the wave of layoffs in Silicon Valley has continued to heat up. Even Microsoft, which does not easily lay off employees, has joined the army of layoffs, showing that the US technology industry has really entered a cold winter.
The wave of layoffs in the financial industry has also intensified. At the beginning of the new year, Goldman Sachs launched the largest layoffs in history; BlackRock, a well-known asset management company, also plans to lay off about 500 people worldwide, accounting for 2.5% of its total workforce.
It is worth noting that while the high-paid white-collar workers in the United States were laid off, the lives of many blue-collar workers became more nourished. Judging from the salary growth rate reflecting the contradiction between supply and demand, the year-on-year growth rate of hourly wages of low-income residents last year was significantly higher than that of middle-, high- and high-income residents.
When the recession hit in the past, blue-collar workers were the first to receive notices of layoffs, but this time it was white-collar workers with good wages in large companies who suffered. What is going on?
2. Cutting off white-collar workers is unusual
Low-income workers have historically been the most vulnerable when recessions hit. During the 2001, 2007-09, and 2020 recessions, blue-collar workers in the U.S. hospitality, manufacturing, construction, and retail industries all had higher unemployment rates than white-collar workers.
The most recent one is the impact of the epidemic in 2020. According to data from the Labor Department, the number of non-agricultural employment in the United States will decrease by 9.4 million in 2020, the largest decline since the data is available. Low-wage workers have been hit the hardest during the pandemic. Most unemployed.
However, the impact of the epidemic came and went quickly. In May 2020, US employment began to recover. The four months of May, June, July and August of that year created the largest monthly employment growth in US history.
The release of recruitment demand is extremely fast. Comparing the total number of non-agricultural employment in different industries with that in December 2019, it can be found that the demand for labor services in the United States has recovered all the lost ground since the impact of the epidemic as early as June 2022. There is no shortage of work.
But the problem is that the structure is not balanced. The three industries of commerce and transportation, information technology, and professional business services have entered an overheating stage. As of the latest December 2022, the employment of information technology and professional business services has declined slightly under the tide of layoffs, but compared with their respective total employment in December 2019, they still increased by 5.8% and 4.8%, respectively.
Overhiring has paved the way for the current wave of white-collar layoffs. Taking the technology industry as an example, driven by optimism such as working from home and the stay-at-home economy under the epidemic, the number of employees of US Internet giants has experienced a significant excess growth. In the year from September 2021 to September 2022, the number of employees of Microsoft, Meta and Google parent company Alphabet has increased by more than 20%. become a great drag.
On the other hand, in industries with low wages and close contact, the recovery of employment numbers lags behind. Take the leisure and hotel industry, which has suffered the most layoffs during the epidemic, as an example. Although the number of employees has grown steadily in recent years, there is still a gap of about 720,000 compared with before the pandemic. This is the largest employment deficit among all industries in the United States.
3. Why can’t the blue-collar workers come back this time?
The employment supply gap in low-wage industries is difficult to fill, which is related to many factors.
First, the overall labor supply in the United States has declined. The current U.S. labor force participation rate is 62.3%, significantly lower than at the end of 2019, and many people have withdrawn from the labor market.
This is largely due to early retirement. Federal Reserve scholars Montes, Smith, and Dajon released a working paper at the end of November last year, showing that in the current supply gap of 3.5 million people in the United States, excess retirement contributed more than 2 million people, and the remaining nearly 1.5 million people were caused by the epidemic. Deaths, reduction in immigration, population aging and many other factors lead to
The epidemic poses the greatest health threat to the elderly. The age of the baby boomers born between 1946 and 1964 in the United States has reached 59 to 77 years old, and most of them have exceeded the traditional retirement age of 65. They are concentrated on early retirement and the baby boomers are turning to retirement. Reduce labor supply.
On the other hand, even those who have returned to work, under the influence of the long-term epidemic, are also facing various problems such as repeated infections, memory loss, and physical decline, which suppress the employment supply in the United States in disguise. As shown in the figure below, the number of employed Americans who are unable to work due to illness has increased significantly compared to before the epidemic.
In the context of insufficient overall supply in the labor market, structurally speaking, the sharp drop in immigration has intensified the difficulty of recruiting workers in the low-end and mid-end service industries. The proportion of immigrants in the United States engaged in education, health care, leisure hotels, construction and other low-end industries accounted for nearly three-quarters. However, in 2018, during the Trump administration, the US immigration policy was tightened. As of 2021, the number of net immigrants in the United States has dropped from More than 1 million fell back to around 250,000.
In addition, during the epidemic, the U.S. government has made multiple rounds of large-scale fiscal transfer payments to the resident sector. This part of excess savings is mainly concentrated in low-income groups in the United States. The disposable income of low-income groups has increased significantly, which has also reduced their willingness to work. (For details, see “Savings are “emptied”, low-income labor “running” returns)
On the whole, although the number of employed people in the United States has surpassed that before the epidemic, many of the extra employees are concentrated in high-paying fields such as technology and finance, while the supply gap is in the low-paying service industry. It is difficult for job seekers to quickly match with jobs, resulting in The U.S. labor market is caught in a double-plagued dilemma.
4. Follow-up of white-collar layoffs?
White-collar employees who have been laid off can find jobs quickly.
According to the research of the Wall Street Journal and the human resources company ZipRecruiter, as the current number of vacancies remains high, about 83% of the unemployed labor force in the wave of layoffs since the second half of last year can be reemployed within 3 months. U.S. employment data matched.
However, it is worth noting that Li Chao of Zheshang Securities pointed out that there may be “downward compatibility” in the process of reemployment, such as layoffs in high-paying industries such as IT, and shifting to relatively low-paying industries such as retail. (According to ZipRecruiter statistics, the proportion of cross-industry reemployment is about 25%).
If white-collar workers really start to take away blue-collar jobs, the next question is whether white-collar layoffs will also spread to blue-collar industries? Especially in the field of over-recruitment during the epidemic.
Employment in the construction industry may be worthy of attention. As of December last year, the number of employment in the construction industry increased by 3.3% compared with before the epidemic, and high interest rates are rapidly cooling the US housing market, which may face greater pressure to lay off workers.