by Kristen Euretig, CFP® Founder & Chief Planner
Over the last few months, we’ve had increased feedback from our clients that they fear layoffs or have been laid off. Since many of our clients have experienced this, I wanted to take a moment to break it down and quell some fear around what’s happening in the job market.
The bad news
According to Layoffs.fyi, there were 257,000 layoffs in 2023 in tech alone. Compare that to 15,000 layoffs in all of 2021, and you can imagine the impact on the labor force! That’s not counting everyone whose livelihood was impacted by the Writers’ and Actors’ strikes that took place during the second half of 2023. Now, we’re seeing clients affected by layoffs in other industries like finance and retail as well.
The good news
Most of our clients so far are landing on their feet. One client notified me a week before our meeting that she had been laid off and had a job offer by the time we met. Another client who was just laid off had plans to talk to various contacts in the industry while still receiving a severance for the next 6 weeks. So what we’re seeing anecdotally is that the job market is still strong and that clients have been in transition between roles for short periods of time while receiving a severance package to bridge the gap.
What this all means
This all lines up with what the macroeconomic data trends tell us. Unemployment is returning to a pre-pandemic normal. We saw unemployment historic lows in 2022 that made the job market an exciting place to be for workers. Many got raises and competitive offers through their job search.
What we’re seeing isn’t out of the ordinary by historic standards. The most recent unemployment reading was 3.7%. Compare that to 3.9% 5 years ago in 2018 and 7.37% 10 years ago in 2013, and we’re still in really good shape in terms of the number of people employed. What we’re seeing is a return to normal in the labor market, as companies cramp down after a white hot labor market raised wages and costs in 2021 and 2022.