The Layoff Lull

Plenty of evidence indicates that employers today are leerier of overhiring than they were a year ago. But new data suggests that organizations might be even more fearful when it comes to cutting staff.

So far this year, an average of 1.6 million workers have been laid off per month, according to government data released last week. Compare that with the 1.9 million per month laid off in 2019, which many experts thought was a very good year for both job seekers and employees. “People are pretty comfortable with their head counts,” says Jonathan Wildman, a senior client partner with Korn Ferry Advisory.

That could change just as fast as the economy has. But so far, numbers are considerably lower than they were a year ago in manufacturing, education, and even technology. There are notable exceptions (entertainment firms laid off 50% more people this summer than they did a year ago), but big layoff rounds have been few and far between.

Experts say managers are finding that targeted layoffs of a few highly compensated employees might be enough to satisfy executive demands to rein in costs. “These types of layoffs are offering more bang for your buck,” says Maria Amato, who leads Korn Ferry’s Employer Value Proposition and Total Rewards Optimization solution areas. (On the flip side, some experts say that layoffs are why the country is in a white-collar recession.)

Many organizations have also concluded that, unless business is really bad, big rounds of layoffs often cause more harm than good. Letting lots of people go at once can attract negative publicity. Layoffs also can be costly, not only in terms of severance packages and legal fees, but also of lowered productivity: Distracted employees work less, and others depart voluntarily as the work of their laid-off colleagues lands on their desks. “At some point, cuts erode culture,” Wildman says.

Organizations also may have made the decision to carry a few too many employees in the short term, as a hedge against business picking up. By some measures, filling a job takes longer than ever, a consequence of multiple interview rounds and the need to evaluate thousands of candidates. Even then, 93% of hiring managers say they’ve struggled to find the skilled professionals they need, according to one 2023 survey.

Despite the better news for workers, the new data contradicts how some of them actually feel. A third of employees fear losing their job without having a new one lined up, up from 24% in spring 2023—and 28% in fall 2023—according to a Harris Poll from the late summer. The data also flies in the face of the actual unemployment rate, which has risen from 3.5% last summer to 4.2% now. Experts say the unemployment rate’s ascent has more to do with more people entering the workforce than any changes in corporate layoff practices.

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