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The job market is still very strong right now. Don't be fooled by stories like this trying to convince you otherwise. The unemployment rate is back down to near

The job market is still very strong right now. Don't be fooled by stories like this trying to convince you otherwise. The unemployment rate is back down to near-historic lows, under 4 percent.[0] Job openings are down slightly from the peak, but are still well higher than the two decades leading up to 2020.[1] [0] https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE [1] https://fred.stlouisfed.org/series/JTSJOL https://fred.stlouisfed.org/series/JTSJOL

blastro 3y ago
I like this narrative, but don't these charts include all non-farm jobs? From what I've read, seems like tech is being hit harder than other areas. I might be wrong about that and, at any rate, I prefer your approach over over-indexing on anecdotal data, but seems a bit rougher than necessary to depict the full picture.
- ak217 3y ago
  Tech is being hit harder to the extent it depends more on capital financing for employee compensation. Going from 0 to 5.5% fed funds rate has enormous implications for the cost of capital and growth models. Corporate debt financing yield went from 2% to 6% (https://fred.stlouisfed.org/series/BAMLC0A0CMEY https://fred.stlouisfed.org/series/BAMLC0A0CMEY). (Before the pandemic it was 3% for a decade, except for a small blip when the fed tried to raise the rates and the market sneezed.) The hurdle rate went up accordingly. A lot of business models that worked over the past decade are on borrowed time right now. Every company and employee's situation is different and talent is still rewarded, but many pre-revenue companies are facing a very different financial reality and can sustain a much smaller workforce.
Waterluvian 3y ago
Do these datasets discriminate between job levels/types/incomes, or would two new ditch digger jobs count as a net gain over a lost senior sysadmin job?
- oldpersonintx 3y ago
  the Fed does not care if your job pays well, they only care if it exists a job at Chipotle is on par with a job at OpenAI
  - CHSbeachbum420 3y ago
    Yep, and for some reason there is an abundance of economic shills on here and Reddit. This economy is not healthy and there's a zero percent chance we get out unscathed. Good luck, stay diverse and don't lock yourself into some crazy mortgage or other debt
threatofrain 3y ago
But is this enough information for tech workers to discount the story of 50% more tech layoffs YoY?
oldpersonintx 3y ago
[flagged]
onlyrealcuzzo 3y ago
It seems like the amount of layoffs in engineering (so far) have been highly disproportionate. I.E. - you have companies that are 70% product-engineering by employees doing a 10% cut - and only 10% of the cut is coming from product-engineering. If it was proportionate - you'd see 70% of laid off employees being product-engineering - instead of 90% coming from recruiting, sales, and marketing - which only makes up like 20% of the company in the first place... The rest of the economy seems to be doing fine. If recruiters and marketers and salespeople are going from "tech companies" to other companies and keeping similar wages - that doesn't at all seem doom-worthy.
hammock 3y ago
The numbers are cooked. Also, the last payrolls was Full-time workers: -22K Part-time workers: +151K Indicative of the overall trend, which is net of jobs added since the pandemic is part-time workers. The quality of jobs gained is deteriorating
- deleted 3y ago
  [deleted]
Xenoamorphous 3y ago
* in the US
hn_throwaway_99 3y ago
Just like they say "all real estate is local", so is it true that "all employment is industry-specific." It's almost irrelevant what the broader economy unemployment rate is. For example, where I live there was actually pretty strong tech employment growth in 2008 despite it being a bloodbath for the broader economy. Now, I happen to agree with you that there is still a strong need for tech workers (previous comment on this topic https://news.ycombinator.com/item?id=37881705 https://news.ycombinator.com/item?id=37881705), but most of those jobs are at significantly lower salary for a lot of people. The fact is there is a glut of recently laid off tech people looking for jobs, and saying "ignore your own eyes and experience" is not helpful.
mitthrowaway2 3y ago
This is about tech layoffs, not the labor market as a whole. Tech is an interest-rate-sensitive industry.
- deleted 3y ago
  [deleted]
- crakenzak 3y ago
  > Tech is an interest-rate-sensitive industry. why? funding?
  - mitthrowaway2 3y ago
    There are several reasons, some of which are mathematically equivalent to each other, but basically tech is an industry in which large expenditures are being paid in the present in the hopes of producing revenue growth farther down the road in the future. Even in a profitable company like Google, which has existing revenue streams, some of the headcount is there to keep the systems running, but much of it is still investment in future growth. In an unprofitable company like (Uber? I haven't checked), they're losing money in the present in the hopes of earning more in the future. Contrast with, say, Kellogg's, where most of the headcount is there to sustain existing revenues and production, and only a little is being invested into new product lines, cost-saving optimization, and future growth. As interest rates rise, it makes today's revenue more preferable and future revenues less important. That has a strong impact on the valuation of companies like Uber and Google, and a weaker impact on the valuation of companies like Kellogg's. A company that is still pre-profit but has a bit of revenue might need to cut its expenses to become profitable, even at the expense of future growth. A company that is pre-profit with no revenue might want to keep its employees to launch products ASAP, but with investment drying up it could go bankrupt first. And at a company like Google, the shareholders may be interested in pivoting towards the Kellogg's model to keep the share price high. So they lay off a bunch of cost-adding developers, and focus more on stretching today's advertising revenue as far as possible. The only future development being pursued will be the ones where payoff is so big that it's worth it even at a high discount rate, so perhaps AI.
ofslidingfeet 3y ago
Fed chair Powell explains, pretty much every time he speaks, that this is due to lack of participation in the labor pool which is a bad thing.
1vuio0pswjnm7 3y ago
The job market for "real jobs" is strong. Contrast with the market for "jobs" paid from investment rounds where the "work" is playing with computers and the objective is "growth" instead of profits. If the output of such activity was the production of actual, sustainable businesses (cf. short-term investment opportunities for small sets of sophisticated investors), then these employees would still be needed.

blastro 3y ago

I like this narrative, but don't these charts include all non-farm jobs? From what I've read, seems like tech is being hit harder than other areas. I might be wrong about that and, at any rate, I prefer your approach over over-indexing on anecdotal data, but seems a bit rougher than necessary to depict the full picture.

ak217 3y ago
Tech is being hit harder to the extent it depends more on capital financing for employee compensation. Going from 0 to 5.5% fed funds rate has enormous implications for the cost of capital and growth models. Corporate debt financing yield went from 2% to 6% (https://fred.stlouisfed.org/series/BAMLC0A0CMEY https://fred.stlouisfed.org/series/BAMLC0A0CMEY). (Before the pandemic it was 3% for a decade, except for a small blip when the fed tried to raise the rates and the market sneezed.) The hurdle rate went up accordingly. A lot of business models that worked over the past decade are on borrowed time right now. Every company and employee's situation is different and talent is still rewarded, but many pre-revenue companies are facing a very different financial reality and can sustain a much smaller workforce.

Waterluvian 3y ago

Do these datasets discriminate between job levels/types/incomes, or would two new ditch digger jobs count as a net gain over a lost senior sysadmin job?

oldpersonintx 3y ago
the Fed does not care if your job pays well, they only care if it exists a job at Chipotle is on par with a job at OpenAI
- CHSbeachbum420 3y ago
  Yep, and for some reason there is an abundance of economic shills on here and Reddit. This economy is not healthy and there's a zero percent chance we get out unscathed. Good luck, stay diverse and don't lock yourself into some crazy mortgage or other debt

threatofrain 3y ago

But is this enough information for tech workers to discount the story of 50% more tech layoffs YoY?

oldpersonintx 3y ago

[flagged]

onlyrealcuzzo 3y ago

It seems like the amount of layoffs in engineering (so far) have been highly disproportionate. I.E. - you have companies that are 70% product-engineering by employees doing a 10% cut - and only 10% of the cut is coming from product-engineering. If it was proportionate - you'd see 70% of laid off employees being product-engineering - instead of 90% coming from recruiting, sales, and marketing - which only makes up like 20% of the company in the first place... The rest of the economy seems to be doing fine. If recruiters and marketers and salespeople are going from "tech companies" to other companies and keeping similar wages - that doesn't at all seem doom-worthy.

hammock 3y ago

The numbers are cooked. Also, the last payrolls was Full-time workers: -22K Part-time workers: +151K Indicative of the overall trend, which is net of jobs added since the pandemic is part-time workers. The quality of jobs gained is deteriorating

deleted 3y ago
[deleted]

Xenoamorphous 3y ago

* in the US

hn_throwaway_99 3y ago

Just like they say "all real estate is local", so is it true that "all employment is industry-specific." It's almost irrelevant what the broader economy unemployment rate is. For example, where I live there was actually pretty strong tech employment growth in 2008 despite it being a bloodbath for the broader economy. Now, I happen to agree with you that there is still a strong need for tech workers (previous comment on this topic https://news.ycombinator.com/item?id=37881705 https://news.ycombinator.com/item?id=37881705), but most of those jobs are at significantly lower salary for a lot of people. The fact is there is a glut of recently laid off tech people looking for jobs, and saying "ignore your own eyes and experience" is not helpful.

mitthrowaway2 3y ago

This is about tech layoffs, not the labor market as a whole. Tech is an interest-rate-sensitive industry.

deleted 3y ago
[deleted]
crakenzak 3y ago
> Tech is an interest-rate-sensitive industry. why? funding?
- mitthrowaway2 3y ago
  There are several reasons, some of which are mathematically equivalent to each other, but basically tech is an industry in which large expenditures are being paid in the present in the hopes of producing revenue growth farther down the road in the future. Even in a profitable company like Google, which has existing revenue streams, some of the headcount is there to keep the systems running, but much of it is still investment in future growth. In an unprofitable company like (Uber? I haven't checked), they're losing money in the present in the hopes of earning more in the future. Contrast with, say, Kellogg's, where most of the headcount is there to sustain existing revenues and production, and only a little is being invested into new product lines, cost-saving optimization, and future growth. As interest rates rise, it makes today's revenue more preferable and future revenues less important. That has a strong impact on the valuation of companies like Uber and Google, and a weaker impact on the valuation of companies like Kellogg's. A company that is still pre-profit but has a bit of revenue might need to cut its expenses to become profitable, even at the expense of future growth. A company that is pre-profit with no revenue might want to keep its employees to launch products ASAP, but with investment drying up it could go bankrupt first. And at a company like Google, the shareholders may be interested in pivoting towards the Kellogg's model to keep the share price high. So they lay off a bunch of cost-adding developers, and focus more on stretching today's advertising revenue as far as possible. The only future development being pursued will be the ones where payoff is so big that it's worth it even at a high discount rate, so perhaps AI.

ofslidingfeet 3y ago

Fed chair Powell explains, pretty much every time he speaks, that this is due to lack of participation in the labor pool which is a bad thing.

1vuio0pswjnm7 3y ago

The job market for "real jobs" is strong. Contrast with the market for "jobs" paid from investment rounds where the "work" is playing with computers and the objective is "growth" instead of profits. If the output of such activity was the production of actual, sustainable businesses (cf. short-term investment opportunities for small sets of sophisticated investors), then these employees would still be needed.