Trends Unraveled: Decoding Economic Growth Amidst Layoffs in Today’s Workforce

A person uses a tablet to control a robotic arm in a warehouse. The screen displays various data charts and metrics. 

About a year ago, economists were certain there would be a recession in 2024. But now, the economy is doing better than expected. The Gross Domestic Product (GDP), which measures the economy’s output, grew by 1.3 percent in 2024.¹ As of May, the unemployment rate was low at 4 percent, and inflation, although still high, is slowing down, with a 3.4 percent inflation rate in June.

Despite these good signs, there is a surprising twist: many companies are laying off workers. According to Layoffs.fyi, about 96,551 people have lost their jobs in since the start of the year.² This seems confusing and makes us wonder: shouldn’t mass layoffs mean the economy is worsening?

The Layoff Puzzle: Restructuring, Not Recession

The layoff trends listed below show that workforce reductions aren’t just a sign of a declining economy. It could be a result of:

Pandemic Hiring and Market Corrections

During the pandemic, many tech companies hired lots of new workers to keep up with the rapid switch to online services and remote work. Companies like Meta, Amazon, Microsoft, and Google added many new employees to handle the increased demand for their services. But as the pandemic eased and regular economic activities resumed, these companies realized they had too many workers for the post-pandemic market needs. This caused a wave of layoffs to adjust the inflated workforce numbers.

Additionally, the economic downturn and supply chain disruptions made it even more necessary for these companies to reduce their staffing budgets to deal with lower revenues.

Technological Advancements and AI

Many companies are investing heavily in AI, causing job cuts in other parts of their businesses. This is especially true in the tech sector, where companies like Google, Microsoft, and Salesforce have announced thousands of job cuts.

The move towards using more AI is happening not just in Silicon Valley. In a recent poll of business leaders, 82 percent of respondents said they plan to increase their AI investment, which could lead to more job cuts.³

Shifts in Consumer Behavior

Consumer behavior has greatly influenced the current economic situation. The growth of e-commerce and digital services has changed how we shop, entertain ourselves, and even access healthcare. Online shopping sites, streaming services, and telehealth have become very popular, changing how traditional businesses operate.

These changes have helped the economy grow by creating new markets and ways to make money, but they have also caused brick-and-mortar stores and traditional service providers to decline. Many physical stores have closed, leading to job losses. In the entertainment industry, for example, people now prefer streaming movies at home instead of going to theaters, which has affected jobs in cinemas and related services.

The COVID-19 pandemic sped up these changes, forcing businesses to quickly adapt. Companies that shifted to digital operations successfully benefited, while those that couldn’t had to close and lay off workers. This difference in adaptability has worsened the imbalance in the workforce, showing how important it is to be able to change quickly in today’s fast-paced market.

Industry Restructuring

Industries are going through big changes because of globalization, new rules, and changing market demands. Traditional industries like manufacturing and retail are being transformed, while new fields like renewable energy and biotechnology are becoming very important for the economy.

Globalization has caused companies to move labor-intensive jobs to countries where it’s cheaper to produce goods. This has helped companies make more money and grow the economy, but it has also led to job losses in higher-cost regions.

Will There Be More Reductions in 2024?

The outlook for 2024 indicates that layoffs will keep happening in certain sectors due to various economic and structural reasons. There have already been over 96,000 job cuts in the tech industry. The media sector is also facing significant challenges, with layoffs likely to continue due to declining advertising revenues and shifts in consumer behavior towards digital media. Despite these specific sectors’ layoffs, the broader job market remains relatively strong. For example, the healthcare and professional services sectors are still showing strong demand for skilled workers, especially those with IT expertise.

According to the World Economic Forum, fast-growing jobs include AI and machine learning specialists, sustainability specialists, business intelligence analysts, and information security analysts.⁴ Jobs in renewable energy engineering, solar energy installation, and agricultural equipment operation are expected to expand by around 30 percent, creating an additional 3 million jobs. The growth of digitally enabled roles, such as e-commerce specialists, digital transformation specialists, and digital marketing and strategy specialists, is also forecasted to increase by approximately 4 million.

Economic forecasts suggest a slowdown in overall growth, which may lead to more layoffs. J.P. Morgan predicts a modest 0.7 percent real GDP growth for the U.S. in 2024, down from 2.8 percent in 2023.⁵ This slowdown is due to reduced consumer spending, less business investment, and the lingering effects of higher interest rates. Additionally, fiscal policy is expected to shift from being a growth contributor in 2023 to a slight headwind in 2024. These economic conditions suggest that while the overall economy might not see widespread layoffs, specific industries more sensitive to these factors will likely continue to face job cuts.

Navigating Change While Prioritizing People

Layoff trends show the need for smart workforce planning. While companies benefit from layoffs during an economic slowdown, the financial and emotional impact of layoffs on individuals could be detrimental. Keep in mind that employees are a company’s most valuable asset. Instead of cutting jobs when the economy changes, you can plan by looking at future needs and identifying skill gaps.

For example, automation and AI can increase productivity, but it cannot totally replace humans. To balance this, organize ongoing training programs that help employees learn new skills for changing jobs. This reduces the impact of job loss and creates a culture of adaptability and continuous learning. So, while you embrace new technology, consider investing in retraining workers.

Treat layoffs as a last resort and focus on a humane approach. Offer generous severance packages, outplacement services, and upskilling opportunities to help affected employees’ transition. Alternative strategies like hiring freezes, furloughs, and job sharing can also reduce the negative impact on workers and contribute. This positions your organization to maintain a positive brand image and a loyal workforce.

FIND THE RIGHT PEOPLE TO DRIVE YOUR BUSINESS FORWARD WITH GALT FOUNDATION

We live in an era of technological advancement. Businesses still need technical professionals to drive growth and stay relevant. Despite the news about layoffs, many companies face tech talent shortages. Galt can help solve this problem.

With over 25 years in the staffing business, our success rate is excellent. We have helped many companies fill their job openings and can do the same for you. The best part is that we prioritize diversity. In today’s world, where diversity is a hot topic, we help build a strong and diverse workforce through disability hiring.

Don’t wait until you have an urgent need to hire. Contact us today to discuss your staffing needs!

References

  1. Helhoski, Anna. “How Is the Economy Doing?” Nerd Wallet, 7 June 2024, www.nerdwallet.com/article/finance/state-of-the-economy.
  2. “Tech-companies w/ layoffs” Layoffs.fyi, 2024, layoffs.fyi/.
  3. Crist, Carolyn. “AI adoption will drive both hiring and layoffs in 2024, half of tech leaders say* HR Dive, 1 May 2024, www.hrdive.com/news/tech-business-leaders-anticipate-hiring-layoffs-ai/714826/.
  4. “The Future of Jobs Report 2023” WEF, 30 April 2023, www.weforum.org/publications/the-future-of-jobs-report-2023/digest/.
  5. “2024 economic outlook: 10 considerations for the US economy” J.P Morgan, 22 December 2023, www.jpmorgan.com/insights/outlook/economic-outlook/economic-trends.

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Let’s start a conversation! Are you a person with disabilities searching for a job or an organization with temporary or long-term employment needs? We look forward to helping you realize your potential.