US companies experienced a significant increase in job cuts last year, with 721,677 planned layoffs, according to a report published by professional outplacement firm Challenger, Gray & Christmas. This marked a 98% jump from the 363,832 layoffs reported in 2022. The tech sector was particularly affected, with high-profile companies like Meta and Amazon slashing jobs. In total, 168,032 employees were laid off in 2023, a staggering 73% increase from the previous year. Experts are now predicting that this trend could worsen in 2024 due to the labor market softening in the face of high-interest rates and persistent inflation.
Andy Challenger, senior vice president of Challenger, Gray & Christmas, commented on the situation, stating that labor costs are high and employers remain cautious and focused on cost-cutting. As a result, the hiring process is likely to slow down, and job cuts may continue in the first quarter of this year. Challenger also highlighted the impact of AI, mergers and acquisitions, and realignment of resources and talent on the tech sector.
The report revealed that retail companies were responsible for a significant portion of job cuts last year, eliminating 78,840 positions, which represents a 274% increase compared to the previous year. Mr. Challenger advised retailers to remain vigilant in 2024, despite many companies showing caution and flexibility in their hiring practices.
Healthcare and product manufacturers, including hospitals, also saw a substantial number of job cuts, with 58,560 positions eliminated in 2023, a 91% increase from the previous year.
The reasons cited for the job cuts included deteriorating market and economic conditions, store closures, bankruptcy, and the impact of artificial intelligence.
Furthermore, a separate survey conducted by Challenger, Gray & Christmas revealed that 34% of employers did not provide bonuses in 2023, compared to 27% in 2022. This is the highest rate since 2019 when 36% of companies decided against awarding bonuses to their workers.
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