Challenger, Gray & Christmas, a global outplacement and career transformation firm headquartered in Chicago, has drawn attention to a worrying trend in the United States job market. In 2023, job cuts by US employers are projected to increase 98% from the previous year, raising concerns about the health of the labor market.

Also read: 22% Indian companies to cut jobs in 2023 against global average of 32%: Report

According to the report, a significant 721,677 job cuts were planned by companies in 2023, significantly higher than the 363,832 layoffs reported in 2022. This surge has been attributed to a variety of factors, and experts predict that the situation in the labor market could worsen in 2024. Challenges like high interest rates and persistent inflation have to be faced.

Challenger, Gray & Christmas senior vice president Andy Challenger highlighted that “labor costs are high”, prompting employers to remain cautious and focus on cost-cutting measures. He said this caution is expected to slow the hiring process for many job seekers, with job cuts likely to continue into the first quarter of 2024. Fox News,

One sector that bore the brunt of these job losses in 2023 was the technology industry, which saw a 73% increase in layoffs compared to the previous year.

A total of 168,032 workers were affected, a number just shy of the sector’s annual record in 2001. The impact on the tech sector has been attributed to factors such as the rise of artificial intelligence, mergers and acquisitions, and realignment of resources and talent.

Retail companies also faced a large number of job cuts, with 78,840 positions eliminated in 2023, a significant increase of 274% from the previous year. Despite careful recruitment practices, the retail sector is urged to remain vigilant in the face of current challenges.

Healthcare and product manufacturing, including hospitals, also experienced significant job cuts, with 58,560 positions eliminated in 2023, representing a 91% increase from the previous year. Reasons for these job cuts include deteriorating market and economic conditions, high inflation, sharp increases in interest rates, store closures, bankruptcies, and the impact of artificial intelligence on certain industries.

Economists had expected a slowdown in the labor market, but the labor market remained tight throughout last year, defying forecasts. Although signs of normalcy are gradually visible, the situation is still far from being resolved. The latest report from the Labor Department, which indicated an increase of 216,000 jobs in December, suggests a labor market that is slowly slowing down.