As Powell said, the labor market is rebalancing; it’s still tight, but it’s not out of whack anymore.
By Wolf Richter for WOLF STREET.
Just briefly here, because we’re tracking actual employment counts versus widely trumpeted and scary layoff announcements. Alphabet is our example. Google has announced a series of layoffs. In January, it confirmed the layoffs of several hundred more employees, on top of those in prior layoff waves. The big kahuna announcement came in January 2023, with 12,000 layoffs. These are announcements of global layoffs, not US layoffs. In its annual report (10-K), released yesterday, it disclosed $2.1 billion in “employee severance and related charges” for 2023.
But it also disclosed that its total headcount increased a tad to 182,502 employees globally in Q4, the second quarter in a row of small increases. It did show a big drop in Q2 last year of 8,913, but has since then added to its headcount. Since the headcount peak in Q1 2023 (190,711), total headcount has only dropped by 7,732 employees.
This shows that Google is laying off people through the left door but is hiring other people through the right door, with the overall effect of a relatively small workforce reduction that brought the headcount back to where it had been in roughly mid-quarter of Q3 2022:
But the layoff announcements have had a much bigger effect on the worker bees: They re-explained to them who the boss is. Apparently, they’d become somewhat confused about that amid the huge hiring binge and “labor shortages” during the pandemic.
Over the three years from the beginning of 2020 through the headcount peak of Q1 2023, Alphabet had added 71,812 employees to its headcount, having increased its headcount by 38% in three years, which is huge for an already big company like that.
Other big tech and social media companies, and companies like Amazon that are partial tech companies, have done the same thing: Go on an unprecedented hiring binge all at the same time.
Success was measured in how many people per quarter these companies could hire, and hire away from each other, and these aggressive efforts to fatten up the headcount by chasing after workers and offering them all kinds of deals led to huge churn in the workforce and apparently to some confusion among the workers who the boss is. And suddenly they didn’t want to go to the office anymore when they were asked to, and they were clamoring for a better work-life balance, etc., which endlessly aggravated the CEOs.
But since mid-2022, the massive announcements of layoffs have thrown some cold water on this dynamic. Voluntary quits plunged, churn normalized, employees stuck it out when things didn’t go their way, pay increases moderated, and now there are reports the actual layoffs are hitting workers disproportionally who’re working remotely. This is a sign, as Fed Chair Powell said yesterday, the labor market is rebalancing, it’s still tight, and the pay increases are still strong, but it’s not out of whack like it had been.
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