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How is the job market good when it seems bad?

Key takeaways

  • Headlines are filled with big-name companies laying off staff.
  • Yet the low unemployment rate has barely budged, with about 2 job openings for every job seeker.
  • Both can be true because layoffs are mostly isolated to small parts of the larger labor market.

Chris Laino, 39, had been working at a major tech company for less than a year when he learned that he was being laid off. In January 2023, supervisors told him that he was being let go along with others in his department, and it had nothing to do with his performance. "I thought, well, that's great, but I still have to pay a mortgage," he recalls.

News reports about other companies reducing their workforces made sense to Laino—but not the rosy job market news. "What they say on TV about right now being the lowest unemployment rate is nice, but not when you are unemployed," he says.

It's a weird time for today's job seekers. There are as many headlines about stellar monthly jobs data as there are about layoff announcements. Since fall 2022, dozens of companies, primarily in tech, have done mass layoffs—defined as shedding one-third of their workforce or at least 500 workers within 30 days, according to data from, a staffing agency specializing in tech talent.1 But layoffs "may be more than offset by job gains," says Stacey Standish, press officer for the US Bureau of Labor Statistics. In fact, January 2023's 3.4% unemployment rate was the lowest since 1969, according to data from the Bureau of Labor Statistics.2 It rose just 0.2 percentage points in February.3

"Big names are laying off workers, but in the broader economy that's just not happening," says Wayne Cascio, PhD, who studies layoffs as a distinguished university professor emeritus at the University of Colorado Denver. And yet, even with low unemployment, "that aggregate number can mask what's happening locally in particular sectors," says Ofer Sharone, PhD, a professor at the University of Massachusetts Amherst, where he researches career transitions. The result: a lot of confusion.

Here's what to know about the job market in 2023.

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Why are there layoffs now?

"You are seeing some occupations or functions being hit disproportionally," says David Fano, founder and CEO of Teal, a platform that offers resume editing and tools for job seekers.

The reason for these hits: During the height of the COVID-19 pandemic there was a shift in demand for labor by industry, says Dorothea Roumpi, PhD, assistant professor of human resource management in the School of Labor and Employment Relations at Pennsylvania State University.

For instance, interest in products for the home and groceries surged, as did technology for virtual work, so there was a greater need for workers in those areas—and recruiters to find them. "As we are gradually moving to a situation that resembles the pre-pandemic normal, it's only natural that there is again a shift in consumer needs," Dr. Roumpi says. Companies that are now experiencing drops in demand, particularly in tech and recruiting, are cutting costs through layoffs.

While some layoffs may be necessary for the business's survival, other companies are mimicking industry competitors, says Dr. Cascio. Executives may have an easier time announcing layoffs if others are doing it too. "There's a cloning response—if these people are doing it, they must see something," he says.

By the same token, companies may want to signal that they're putting themselves in a stronger financial position by announcing largescale layoffs, or the softer "rightsizing after pandemic hiring," says Maggie Mistal, a career consultant, radio host, and author. "Sometimes it makes the news because it's fear-based, like clickbait," she says.

Still, finding a job in technology or recruiting in a specific location may be challenging, Dr. Sharone says—and the promising broad jobs data can hurt job seekers' confidence more than it helps. Many blame themselves for not being able to find a role in what sounds like a great market, adds Dr. Sharone. To make matters worse, some hiring managers may be less willing to hire long-term job seekers because of the generally upbeat market, he says. "When the economy has low overall unemployment numbers, the stigma for unemployment is greater," Dr. Sharone says.

The unemployed aren't just competing with each other for roles. After company layoffs, more employed workers may be tempted to search for new opportunities because their own situation seems less stable. "Layoffs rattle confidence," Fano says. "They're going to create millions of people who are currently employed but open to opportunity."

What's going on in the rest of the job market?

The February jobs report showed that more than 300,000 new jobs were added that month, beating predictions, according to US Department of Labor Data.4 And a ZipRecruiter survey found that about half of those who were laid off in December 2022 or January 2023 had at least 1 job offer by the end of January. This was the case for Laino—he scored an offer just 10 days after his layoff.

Fano points out, though, that jobs data can hide how many people are making sacrifices to get back to work. For instance, some who were laid off from large tech companies in Seattle report settling for lower salaries at smaller companies to continue in their field.5 The ZipRecruiter survey backs this up, finding that about 21% of those who were laid off and landed new jobs took a pay cut.6 Laino's part of this group too. He took a pay cut and returned to a job title and industry from earlier in his career to return to work quickly. "The entire tech industry feels unstable, so I went back to something I'm familiar with," he adds.

Fano is also seeing job seekers from currently shrinking fields such as recruiting switch to more service-focused roles in hospitality to earn a paycheck. Hospitality is one of the industries that's booming now. Many workers left their jobs altogether during the pandemic, and many others are sticking with work-from-home roles. That, coupled with an easing pandemic sending more people on trips and to bars and restaurants, means there are many openings in dining and leisure, Dr. Roumpi says.

Prospects for unemployed workers

Even with layoffs, Mistal expects the coming months to offer plenty of openings. Many of her clients are excited about searching for new opportunities, given that there were about 2 job openings for every unemployed person in January 2023.7 She's also seeing more people switching industries to take advantage of the open positions. "I think this is the time when you can make a bigger leap faster than you could in the past," she says.

To make that big leap, it might take some willingness to be flexible about your ideal role. Reinventing yourself is never easy, but it can be even tougher if you're emotionally or financially drained from an unexpected job loss. Luckily, industry-specific knowledge can apply to all kinds of roles, and it's worth the research to figure out how exactly they can translate to fields experiencing growth, suggests Dr. Roumpi.

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1. Sarah Magazzo, "Mass Layoffs in 2022 & 2023: What's Next for Employees?" Mondo. 2. "News: Unemployment is at its Lowest Level in 54 years," US Department of Commerce, February 3, 2023. 3. "Employment Situation Summary," US Bureau of Labor Statistics, March 10, 2023. 4. "Employment Situation Summary," US Bureau of Labor Statistics, March 10, 2023. 5. Paul Roberts, "For laid-off tech workers, Seattle job market is no longer quite so friendly," The Seattle Times, March 5, 2023. 6. Julia Pollak, "Survey of Recently Laid-Off Workers," ZipRecruiter, March 2, 2023. 7. "Number of unemployed persons per job opening, seasonally adjusted," US Bureau of Labor Statistics.

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The views expressed are as of the date indicated and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author, as applicable, and not necessarily those of Fidelity Investments. The third-party contributors are not employed by Fidelity but are compensated for their services.

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