The 'low-hire, low-fire' economy may be shifting as layoffs rise, despite a lack of new hiring opportunities.
The job market has been stagnant for months, with low hiring and layoff rates. However, recent data suggests this trend might be changing, and not for the better. According to a report by Challenger, Gray & Christmas, job cuts announced last month were the highest in January since 2009, indicating a growing trend of job reductions across the country.
The report, based on company announcements, revealed that U.S. employers announced 108,435 job cuts, a significant 118% increase from January 2025 and a 205% increase from December. This surge in layoffs is concerning, especially as January's hiring levels were the lowest since 2009.
Experts note that while unemployment rates remain relatively stable, the job market's overall health is questionable. The latest jobs report from the Bureau of Labor Statistics, delayed due to a government shutdown, showed a five-year low in job openings in December. This, combined with the rising layoff numbers, suggests a potential issue with job growth.
The situation is further complicated by the fear of job loss among workers. Even though layoff numbers are near pre-Covid levels, hiring remains sluggish, making it challenging for workers to find new opportunities. This anxiety is evident in the declining worker confidence in job-finding abilities, which reached a record low of 44.9% in September.
High-profile mass layoff announcements have also raised concerns. Amazon's recent layoffs, affecting 16,000 workers, and UPS's planned operational cuts of up to 30,000, are notable examples. However, experts argue that the increase in layoffs has been more subdued, and the unemployment rate remains in the healthy 4% range.
Despite these layoffs, the probability of job loss hasn't significantly increased, according to Laura Ullrich, Director of Economic Research at the Indeed Hiring Lab. Many layoffs are concentrated in companies that over-hired or made large AI investments. Amazon and UPS, together, account for over 40% of January's cut announcements.
The tech and logistics sectors, which experienced significant hiring during the pandemic, are now facing layoffs. This correction, as Ullrich suggests, is a natural part of the business cycle. However, the overall macroenvironment remains 'low-hire, low-fire'.
It's important to note that company announcements may not always reflect the full picture. Forward-looking statements in January, as Zhao explains, can be misleading. Some companies, like UPS, are discussing planned job cuts over the year, which differ from typical layoffs.
The low hiring rates and fear of layoffs have led to job-hugging among workers, causing uncertainty and confusion. Despite the stable unemployment rate, worker confidence in finding new jobs is at a record low, indicating a challenging job market for those seeking new opportunities.
