Follow the Job Data, Not the Headlines

If you spend a minute browsing the headlines on Bloomberg or WSJ lately, you’re bound to collide with two unkillable themes: Elon Musk and tech layoffs. Every media environment has its sacred cows; for the economic commentariat, the layoff has become the most reliable unit of attention grab.

Why? Well, the media does love bad news (see: Elon Musk) and layoffs offer an easily legible signal of doom to the common reader. In the Age of Tech, layoffs have become an arch signal of macroeconomic health for mainstreet consumers–in the way stocks moving up or down are viewed as a lockstep diagnostic of the economy beyond the ticker. But what, in fact, do layoffs tell us about the job market or the economy writ large? Do job cuts, even en masse, always spell a darkening sky?

Since the start of the year, tech companies have laid off nearly 40,000 workers globally including just under 30,000 in the U.S., according to Layoffs.fyi, a startup that’s been tracking cuts in the industry since the pandemic. The year is young and tens of thousands of job cuts is never a measure we’d take lightly–behind every job lost is a real person subject to the sorrow and fear that uncertainty brings. The good news is that tech workers walking the plank won’t be out of work long–demand for their skills continues to grow in areas beyond tech like consumer products and manufacturing, as toothbrushes get tricked out with bluetooth and tractors with GPS.

But for the ~128,000,000 Americans who do not work in tech, these layoffs amount to little more than noise. Tech insiders from CEOs to pundits claim rationales like a broad industry reset for AI or the dusty formulation that “firms are bracing for macroeconomic uncertainty.” The truth comes in three parts: the economy is strong, the job market remarkably so, and layoffs are most often a sign of the unpleasant but necessary discipline of good business governance (when they’re not a sacrificial lamb to Wall Street for a 2-day bump in stock price). Mark Zuckerberg said this week that “AI stuff was not a major driver” of recent cuts. As he sees it, companies “overbuilt” during the e-commerce surge of the pandemic and now find themselves needing to lean down. Or, as Wayfair CEO Niraj Shah put it when announcing a 13% headcount reduction last month: “In many ways, having too many great people is worse than having too few.”

To put recent layoffs into context, let’s dig into the LinkUp job listing data behind three tech companies who’ve recently announced cuts: Instacart (7% cut announced 2/13), Wayfair (13% cut announced 1/19), and Cisco (5% cut announced 2/14).

The remarkable thing to note of both Instacart and Wayfair is that, even in the wake of significant job cuts, these companies are still hiring. Instacart’s active listings are up almost 60% in the last 100 days, with a dip following their layoffs announcement, but not a plunge. Their new postings prioritize financial operations and software roles (Fig. 1) and have pulled away from management positions–indeed, their restructuring effort focused on middle management. Turning to Wayfair, you can’t miss the weeklong divot in their active listings after the layoff announcement on 1/19 (Figs. 3 & 4), but it’s absorbed by a brisk rebound to pre-layoff numbers within a month. Powered by LinkUp Compass, these data visualizations tell a story of companies undergoing maintenance, not distress.

Instacart

Fig. 1. Instacart occupation breakdown of active listings in last 100 days

Fig. 2. Instacart active listings & new & removed Jobs in last 100 days

Wayfair

Fig. 3. Wayfair occupation breakdown of active listings in last 100 days

Fig. 4. Wayfair active listings & new & removed Jobs in last 100 days

This is especially true when you view them opposite the shadow cast by Cisco’s recent layoffs, which impacted 4,250 employees or 5% of their global workforce. In the last 100 days, Cisco’s active listings have plummeted more than 50%, with postings shrinking across all major occupations–especially management and sales. This longer term decline points to more systemic concerns and demonstrates that job data can be predictive of impending job cuts: by early December, hiring significantly contracts ahead of the cuts to come by mid-February.

CISCO

Fig. 5. CISCO occupation breakdown of active listings in last 100 days

Fig. 6. CISCO active listings & New & Removed Jobs in last 100 days

We have to view layoffs as one in a matrix of signals of distress in order to gauge their relative heat. Layoffs can mean many things–from performative cost-cutting ahead of earnings reports to restructuring for emerging tech to–at the extreme–a looming recession. In any case, it’s essential to ground speculation in good, clean, hard data.

LinkUp’s dataset of job listings offers unmatched contextual intel around layoffs and can help you distinguish between corporate pruning and more existential threats. With an advanced view of hiring strategy, our data can also be used to anticipate possible layoffs ahead of announcements. Stay ahead of the company curve with LinkUp, and remember: follow the data, not the headlines.

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