According to the Department of Labour, the number of Americans submitting unemployment claims decreased last week, even though Amazon, Disney, and numerous other businesses continued to lay off thousands of employees.
During the week ending April 22, 230,000 Americans applied for unemployment insurance for the first time, a decrease of 16,000 from the week before.
Unemployment insurance claims measure layoffs, which spiked during the pandemic as firms closed. Supply lines were congested but have subsequently levelled down as the economy stabilized and many employers struggled to fill positions.
The number of claims filed by Americans the previous week was revised from the reported 245,000 to 246,000, an increase of 1,000.
However, the four-week moving average of claims for unemployment insurance, which provides a more comprehensive and accurate picture of the unemployment situation, was 236,000, down 4,000 from the revised average from the previous week.
2023 Disney, Amazon, and Meta all made cuts
This week, Meta, Disney, and Amazon have continued with their rounds of massive layoffs; some employees learned that their jobs had been eliminated on Wednesday. No effort is spared, and employees are under pressure. Affected departments vary from advertising to on-air presenters.
The layoffs had been reported by all three corporations in the previous few weeks, but it had been unclear until now which departments would be impacted.
Meta
The first Big Tech business to announce a second wave of massive layoffs totalling 10,000 employees is Meta. Additionally, 11,000 workers had their jobs cut in the autumn of last year.
On Wednesday, stories about the layoffs of Meta’s engineering and IT teams, including machine learning engineers and UX researchers, began to surface. Of the 10,000 positions announced, it is thought that 4,000 were terminated on Wednesday. Additional posts related to company operations will be lost the following month.
Disney
As part of CEO Bob Iger’s $5.5 billion reorganization strategy to bring back the struggling corporation, The Mouse House has started eliminating on-air talent and administrative positions at ESPN. Although the number of layoffs is unknown, Disney previously disclosed that the total number would be close to 7,000. It has already made employment cuts in its worldwide offices and metaverse business.
Employees at Disney are preparing for news next week as the film and TV divisions are expected to be the next to go. Disney will release its Q1 earnings report in May, including ESPN’s first-ever financial disclosure.
Amazon
Amazon said Tuesday that it was making layoffs to its advertising group to complete the trio. The number of impacted roles has yet to be determined with certainty. The action follows the announcement of 100 job losses in Amazon’s video gaming division and the impending elimination of further positions in retail, hiring, and human resources.
What was the response of the market?
Before the layoffs, some have charged Meta CEO Mark Zuckerberg of caving to Wall Street and Meta’s stock price, while others have praised the decision as a successful cost-cutting measure. Since the beginning of the year, Meta’s stock has increased by 72%; however, on Wednesday, the Wall Street darling experienced a decline in its share price of 1.2%.
The two other ones were pretty decent. Disney’s pre-market share price fell by 0.4%. With a 0.3% share price boost on Wednesday in response to the announcement, Amazon emerged as the largest beneficiary.
It’s an intriguing turn of events considering that most major corporations saw their stock prices increase after announcing layoffs. Investors may be seeing the forest for the trees and setting their prices accordingly as more information about the locations of those cutbacks becomes available.
Why are there so many layoffs?
The waves of job losses in the tech sector, where tens of thousands of employees have been lost, have received much attention. But a significant factor in why that industry has been so severely affected is that it hired quickly before the pandemic.
According to a study of Bureau of Labour Statistics conducted by CompTIA, an information-technology trade association, tech companies added 1.3 million workers five years before the global health crisis.
The pandemic increased the demand for more tech workers to fulfil orders from customers who were increasingly making purchases online and had extra money to spend on gaming consoles, computers, and other electronics thanks to government stimulus checks and improved unemployment insurance.
However, that extra cash has started to run out, and consumers are cutting back on their purchases. To curb increasing inflation, the Federal Reserve also started hiking interest rates. This sent tech stocks tumbling, and businesses started laying off employees they no longer needed or could no longer afford to remain on the payroll.
