- [Narrator] It might seem like Fed Chairman Jerome Powell's

view of the labor market doesn't jive

with the layoff after layoff after layoff

that is plagued to the tech industry.

However, he's right, at least according

to the Labor Department's recent jobs reports.

Employers added over 260,000 new positions in November,

the 23rd month in a row the economy has added them,

and unemployment is under 4%, near the lowest on record.

- So this is a great labor market in that sense.

- There's this huge disconnect.

You're hearing about companies

like Amazon, Twitter, DoorDash layoff workers,

and it feels like we're in the middle of a recession.

- [Narrator] Here's why those big headlines

aren't in sync with the overall job market.

(light somber music)

First, some of the recent layoffs

aren't yet reflected in the data.

For example, about 1.4 million people were laid off

or discharged from their jobs in November,

but that number may not include the entire month.

- Some of this data does come with a lag.

For example, some companies may have announced these layoffs

too late in the month for them to be captured in the data.

- [Narrator] For example, DoorDash's cuts on November 30th

weren't reflected in the report,

neither were Amazon's on the 16th or Carvana's on the 18th.

Also, the Labor Department counts the layoffs themselves,

not the announcements.

- Companies may be saying

that they're going to tighten their belts and lay people off

but they simply haven't made those cuts quite yet.

So that can lead to that lag.

- [Narrator] The delay might be part of the reason

the unemployment rate has stayed...

- Near an all-time 50-year low: 3.7%

- [Narrator] But there is more to it.

- The jobs market

is in a really really weird place right now,

and there's this historic gap

between the number of workers looking for employment

and the number of jobs out there.

- [Narrator] That gap

is partly driven by a shrinking workforce.

- The labor-force participation rate,

the number of people out there looking for jobs

and wanting to have a job, is historically low

and actually ticked down in November.

- [Narrator] One reason why fewer people are looking

is that millions left the workforce

during the Covid 19 pandemic starting in 2020.

Roughly 2.6 million retired early

and more people retired in 2020

than had in the previous eight years.

Others left for reasons like lack of childcare.

Now there's about 1.7 job openings

for every person looking for work.

- So what we're seeing is intense competition

for workers right now because you have this gap

between the number of jobs out there

and the number of people looking for jobs

and that helps add to this low unemployment rate.

- [Narrator] While Covid is affecting unemployment,

tech layoffs aren't big enough to register

but data quirks are just one factor.

Another is that the job cuts are proportionally smaller

than the headlines might have you believe.

Looking at the numbers, Amazon and Meta announced layoffs

of about 10,000 and 11,000 each.

Snap said they'd cut 1,200 jobs.

Shopify cited 1,000.

And Netflix estimated 300.

In the entire sector, about 50,000 job cuts

were announced in November.

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To put that into perspective, there are

more than 150 million people working in the US.

The entire tech industry is just 3% of the whole.

- You'd think it'd be companies in the S&P 500,

the mega cap companies driving job growth in the US,

but in fact, it's the small businesses

driving more of the job growth.

Companies within the S&P 500

make up just 19% of employment in the US.

- [Narrator] To be sure, tech layoffs did count

for a large proportion of November's job cuts.

And this year there were more than any year since 2002.

- So these tech companies are market leaders.

They are some of the biggest companies in the US,

if not the entire world, and they also loom large

over the public consciousness.

I mean, think about the phones that we use,

the computers that we use, where we online shop.

You know, they are leaders in so many different ways.

However, they just don't make up

as big of a part of the labor market as we think.

- [Narrator] Other sectors that lost jobs

include retail and transportation and warehousing.

But it's still unclear

whether layoffs will continue in those sectors.

Economists expect that additional interest rate hikes

from the Fed may trigger more widespread layoffs.

- So the tech industry is facing one of its biggest tests

and one of its biggest downturns of the past decade.

As the slowdown continues,

we very well could see more tech layoffs ahead.

(register beeps)

- [Narrator] And as inflation remains high,

additional layoffs will depend

on how the job market reacts to Fed policy.

(light somber music)