Looking at layoff and discharge rates—which are measured together in government data and include all involuntary job separations from employers—by industry over the past year, one group stands out as the most adversely impacted: the information sector, also known as tech and media.
From May 2022 to 2023, the information sector is the only sector in the U.S. workforce that had a higher layoffs and discharge rate than its historical averages—1.3% in the previous year compared to 1.13% in the 20 years before the pandemic. Every other major sector in the U.S. economy had either similar or considerably lower rates of layoffs over the past year than the previous twenty.
The information sector includes major companies like Microsoft, Salesforce and Oracle, famous studios and entertainment companies like Universal, ABC, and Lionsgate, as well as well-known media firms like NBC Universal, Warner Media, and Sirius XM. In total, the information sector is mostly a combination of big technology, entertainment, and media companies.
Key Takeaways
- Tech and media companies were the most impacted by layoffs over the past year, according to an analysis by Investopedia.
- The information sector is the only sector in the U.S. workforce that had a higher layoffs and discharge rate than its historical averages—1.3% in the previous year compared to 1.13% in the 20 years before the pandemic.
- After unprecedented spikes at the beginning of the COVID-19-induced recession, layoff and discharge rates in the U.S. have been at historically low levels since the beginning of 2021.
Across Industries, Layoffs Are Actually Still At Historic Lows
After unprecedented spikes at the beginning of the COVID-19-induced recession, layoff and discharge rates in the U.S. have been at historically low levels since the beginning of 2021. Even factoring in increases that started around March of 2022—coinciding with the Federal Reserve raising interest rates—firms are still letting employees go at rates considerably below pre-pandemic averages, a sign of continued strength in the U.S. labor market.
According to data from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, the rate of layoffs and discharges was at 1% of total employment in May 2023 for all non-farm U.S. workers. This made May 2023 the twenty-ninth straight month that the layoff rate was at or below the 2019 average of 1.2%.
However, the decreased layoff rate and a historically low 3.6% unemployment rate as of June 2023 is reportedly not being reflected in the news coverage that U.S. consumers are hearing about the labor market. Data from the University of Michigan’s Survey of Consumers shows in May 2023, only 8% of consumers reported hearing positive news coverage about employment compared to 32% that reported hearing negative news.
In fact, the survey shows that a higher percentage of consumers reported hearing negative employment news compared to positive news since August of 2021, despite major gains in employment in the U.S. economy over that time. Additionally, data from Google Trends shows that web search popularity for the term ‘layoff’ is still over three times higher compared to two years ago, as of June 2023.
Although large-scale layoffs are typically a sign of an impending recession, the negative employment coverage and consumer sentiment may have overshadowed data that still points to a relatively strong labor market. However, a disproportionate number of layoffs in one particular portion of the workforce may point to why news coverage of the job market has been more bad than good.
The Information Sector Does Not Represent the Entire Workforce
Workers in the information sector tend to be overrepresented in a handful of states such as Washington, California, and New York, where many of the technology and media corporations are headquartered. These are the only three states where the information sector made up more than 3% of the total non-farm workforce according to data from the Bureau of Labor Statistics’ State and Metro Area Employment, Hours, & Earnings survey.
According to Worker Adjustment and Retraining Notifications (WARN) that companies are required to file with the department of labor in each state when laying off employees, workers in the information sector have seen some significant layoffs. As of current writing, since April 2022, Meta has laid off 5,301 workers, Amazon has let go of 3,140 employees, and Microsoft has laid off 3,108, across Washington, California, and New York State.
While companies in the information sector have been laying off a substantial number of employees, it’s important to remember the industries in the sector are not the most accurate representation of the entire workforce.
The information sector comprises higher-paid workers—an average of $47.84 per hour compared to $33.58 for the total non-farm workforce as of June 2023—that are more concentrated in a handful of states. Additionally, the sector only makes up about 1.8% of the total U.S. workforce. Although major layoffs at big name companies in the information sector grab headlines, it doesn’t necessarily mean the U.S. workforce as a whole is in the same situation.
Methodology
Data on layoffs and discharges overall and by major industry sector is from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. Data on news items heard by consumers are from Table 24: News Items Heard of Recent Changes in Business Conditions of the University of Michigan’s Survey of Consumers.
Data on trending web searches for layoffs are from Google Trends ‘Layoff’ topic interest over time. Data on the size of the information sector and non-farm workforce by state is from the Bureau of Labor Statistics’ State and Metro Area Employment, Hours, & Earnings.
Data on company layoffs in Washington, California, and New York state since April 2022 are aggregated from the date that WARN notices were reported to the Washington State Employment Security Department, State of California Employment Development Department, and New York Department of Labor, respectively.
All analysis and underlying the visualizations in this article can be found and reproduced in this repository on GitHub.
