Massive layoffs have rocked the workforce within the past few years, with X, Meta, Salesforce, Goldman Sachs, Amazon and other high-profile companies laying off thousands as businesses scramble to get ahead.
Although small and midsize businesses (SMBs) have also seen layoffs, the layoff rate for SMBs declined from 1.4 percent to 1.3 percent between August 2022 and August 2023, according to pay and hiring data from Gusto. Additionally, in 2023, there was an 81-percent increase in hiring freezes due to rising inflation and labor costs, higher interest rates, reduced revenues, and fears of an impending recession, Glassdoor’s 2024 Employee Confidence Index found.
Despite these stats, some industries have been resilient, and the unemployment rate is near a historic low, at around 4 percent. Read on to discover which industries and roles have been affected most by recent layoffs.
Where have layoffs occurred already?
Although it’s hard to determine the exact number of layoffs in each sector in recent months, data from the U.S. Bureau of Labor Statistics shows that 1.5 million people were laid off in March 2024 alone.
While layoffs in the arts and entertainment industries are declining, there has been an increase in layoffs within the private educational sector. Layoffs.fyi, a crowdsourced database that’s been tracking tech layoffs since the pandemic, reported that over 320 tech companies have laid off nearly 100,000 workers in 2024 alone. That number includes employees at major tech companies such as Intel and Google.
But the reductions aren’t entirely in the tech sector. Several other industries were affected by layoffs, including finance (Citigroup, PayPal) and fintech, media (Time, the Los Angeles Times), durable goods and information services.
Where are layoff concerns the strongest?
Although there has been some improvement, workers are still concerned about job cuts. Glassdoor’s 2024 Employee Confidence Index captured the anxiety levels among workers of various roles. Although actual layoffs are currently at a historical low, workers are more worried than they’ve been since 2019. Mention of layoffs in Glassdoor reviews increased 27% year-over-year as of January 2024. Overall confidence is low across the board, with less than half of employees reporting a confident business outlook for the next six months.
In 2023, 240,000 jobs were lost in the tech sector alone. According to Revelio Labs, there was also an uptick in layoffs at the beginning of 2024. Employees in the construction, transportation and information services industries remain at the greatest risk of future layoffs.
The tech industry is leading the way when it comes to layoffs, though firings are economy-wide. The workers who feel most at risk include those in product management, quality assurance, marketing, finance and IT roles.
What is the economic outlook for small businesses?
Despite the cuts, the overall economy is still creating jobs, with the labor market boasting roughly 8.5 million job openings and 5.1 million hires. However, while the overall job market remains resilient, companies are still planning for a downturn.
JPMorgan Chase’s 2024 Business Leaders Outlook survey found that 31 percent of midsize business leaders in the U.S. were optimistic about the national economy.
Rising inflation remains top of mind among leaders when it comes to hiring. In NFIB’s May 2024 Small Business Optimism Index, 25 percent of small business owners cited inflation as the single most important problem in operating their businesses. Other factors included dramatic interest-rate hikes and rising input costs (supplies, inventory, energy and labor).
Despite these challenges, 56 percent of the businesses surveyed are continuing to hire. Still, after accounting for seasonal adjustment, the report found that only 11 percent were planning to create new jobs within the next three months. This is the lowest this figure has been since May 2020.
Tip
Small businesses are somewhat confident about business growth, and some plan to hire employees. However, inflation and high interest rates are key challenges.
Tips for small businesses to avoid layoffs
Traditionally, employers resort to cutting business expenses and jobs to save money. However, layoffs have detrimental long-term costs, including tarnishing a company’s reputation, creating knowledge gaps, lowering employee engagement and customer retention, and diminishing trust among workers and customers.
“Our team of employees is the lifeblood of our business, and we’ll run a loss before laying anyone off,” said Carson Lang, co-founder and chief operating officer of Test Prep Insight. “Other small businesses might not have that luxury, but to the extent you can weather the storm and keep people employed, I believe you’ll be better off for it in the long run.” Lang added that when you keep your team intact, you won’t be scrambling to hire at the same time as other companies when conditions improve.
Like Lang and other midsize business leaders who expect to hire new staff or keep their current teams, small business owners can take these steps to avoid layoffs:
- Apply for funding for working capital. Leverage the many government programs available to individuals and businesses, such as crisis assistance funds, SBA small business loans, tax deferrals or government grants.
- Cut business expenses. Consider cutting expenses that don’t contribute directly to your return on investment (ROI). Review your discretionary spending, and trim peripheral perks — such as office snacks, social events or free laundry services — without affecting your positive company culture or employee productivity.
- Generate more leads. Focus on marketing campaigns to generate leads and support sales. Update your marketing strategies, and ramp up efforts to boost demand and reach new customers in different markets. Before you invest, perform a thorough analysis to ensure your marketing campaigns will generate an acceptable ROI.
- Renegotiate terms with suppliers. Renegotiate contracts with your contractors, suppliers, vendors and other associates to create cost savings for your business. If possible, consolidate as much of your purchasing as possible to a single supplier to obtain the best deal possible.
- Enact a hiring freeze. Think twice before recruiting new hires and replacement hires. You can reallocate staff to other areas in the organization that have a greater impact on customer value or revenue, thereby protecting your most loyal employees.
- Pivot to a remote-first policy. Implementing a remote work policy can save money on recurring costs such as rent and utilities. Additionally, remote workers may be more productive and happier, boosting overall company productivity.
Did You Know?
Layoff alternatives include offering temporary furloughs, converting employees into contract or temporary workers, shortening workdays, and implementing flexible working schedules.
How to lay off employees if necessary
No business owner wants to lay off workers. However, layoffs are sometimes necessary to ensure a business’s survival. The goals are to let workers go as painlessly as possible and to avoid public blowback. Consider the following best practices for laying off employees:
- Inform employees directly and privately. Giving layoff notices is always tough. Let your employees know it’s not their fault, and share as much information as you can. Meet each employee directly and privately, whether in person or via a video conferencing service. Make it short and polite, and give them a day or so to process the news and discuss it with their families.
- Make decisive personnel cuts. You don’t want a second round of layoffs, so don’t procrastinate over the decision or overpromise employees that their jobs will return. Try to make your first layoff round your only one. Otherwise, morale could take a big hit, and the remaining employees could look to jump ship.
- Explain what’s happening to your remaining team. Your remaining employees may be frustrated and concerned as they see their co-workers leave. Recognize their feelings, and communicate transparently about the company’s situation. Listen while they process “survivor guilt,” and help them shift their focus to their jobs by connecting work to purpose.
- Support laid-off employees as much as possible. If you’re in a position to help, offer outplacement services, severance packages, health coverage assistance and help with navigating unemployment benefits. Some employers offer retention bonuses for employees who continue to perform their job functions as they look for work.
Tip
When you communicate layoffs, prioritize individual communication, use compassionate language, and be transparent about the factors causing your business's current challenges.
Lighten the load of the layoff process
Layoffs are always bad news for everyone involved. Before you lay off staff, consider your options thoroughly to ensure you exhaust all alternatives. That way, you can make the process easier for everyone while minimizing damage to your leadership and business.
Natalie Hamingson contributed to this article.
