31 Aug California Leads Nation in New Jobs, Countering Layoff Concerns
With AI transforming the job landscape and companies announcing layoffs, many workers feel at risk. An estimated 6 in 10 employers plan cuts, and 1.4 million were laid off in November 2022 alone, according to the U.S. Bureau of Labor and Statistics.
However, latest reports from the office of the Governor Gavin Newsom provide a sense of relief. California continues to lead the nation’s economy. It added 96,700 new jobs in January – a gain that accounted for 18.7 percent of the nation’s 517,000 overall job gains for the month.
Eight of California’s major industry sectors gained jobs in January and the state outpaced the nation in year-over-year job growth with 559,500 jobs added – an increase of 3.5 percent.
Nationwide, the labor market remained resilient amid Fed rate hikes over the past year. July saw the first annual layoff decrease in over a year. But other data signals softening. Private payrolls and job openings slipped in July. Workers appear to be staying put due to caution. A cooler employment landscape may lie ahead.
This is because tech has seen significant layoffs due to market challenges like falling valuations and dipping stock prices. However, experts think most of these laid-off workers in tech either have highly compensated roles or are entry-level recruits.
LinkedIn’s Workforce Confidence Index sees anxiety levels among workers in the following job functions:
- Product Management – 46%
- Quality Assurance – 40%
- Marketing – 39%
- Finance – 37%
- IT – 37%
Global mobility professionals say the reductions and concerns were not entirely in the tech sector. Several other industries were affected by layoffs, including finance (Citigroup, Morgan Stanley) and FinTech, media (CNN, Netflix), trade, transportation, automotive, healthcare/product manufacturing, utilities, leisure and hospitality, real estate, and construction.
Global mobility professionals will have to take note in terms of how to handle the average 74 percent of employers which have reportedly instituted hiring freezes, citing rising inflation and labor costs, higher interest rates, reduced revenues, and fears of an impending recession.
On the other hand, professionals with the least stress about getting laid off are those categorized as problem-solvers in fields, such as:
- Accounting (26%)
- Military and protective services (25%)
- Community and social services (25%)
- Administration (23%)
- Legal (22%)
Despite the cuts, the overall economy is still creating jobs with the labor market boasting roughly 10.5 million job openings and 6.1 million hires. However, while the overall job market remains resilient, companies are still actively planning for a downturn.
Despite a gloomy economic outlook, most businesses still plan to retain or grow staff in 2023.
JP Morgan Chase found 65% of midsize leaders expect a recession. With inflation high, only 8% are optimistic about the global economy versus 34% in 2022.
Similarly, inflation tops small business concerns in the NFIB Index. Rising rates and input costs also challenge operations.
However, 65% remain bullish on their own company’s performance. 88% of midsize leaders expect to maintain or add headcount. 86% foresee revenue growth, and 76% will increase or maintain capital spending.
Though broader economic challenges persist, businesses seem cautiously optimistic about their situation. While hiring freezes hit some sectors, many plan to expand teams in 2023. Employees may find new opportunities amid a turbulent backdrop.
Traditional layoffs often backfire long-term by damaging employer reputation, creating knowledge gaps, and lowering engagement and retention. Avoiding cuts by weathering the storm can still better position companies once the recession passes.
In a survey of more than 400 senior AI professionals in large companies around the world in June 2023 by Dataiku and Databricks, about 64% of organizations will reportedly “Likely” or “Very Likely” use generative AI technology over the next year. Plus, 45% of respondents said they are already experimenting with it.
This urgency means now is the time to start building a generative AI strategy. One that will both turn applications of generative AI use cases into reality as well as safeguard against risk. And just like any other investment, your generative AI strategy should be future proof for further developments that are sure to come.
However, there is a complex landscape of new and existing technology providers as well as consulting and systems integration (SI) offerings. This means choosing the right strategy is not easy. As with traditional artificial intelligence (AI) and machine learning, executives will need to weigh the tradeoffs between:
- Short-term time-to-value
- Long-term return on investment (ROI), including technical debt
- Up-front versus ongoing costs
- Available resources, including existing skills within the organization
- Current technology assets and medium-term roadmap
As for small businesses, they are confident that their businesses will continue to grow — with some even planning on hiring additional employees.
Instead of layoffs, small businesses can consider:
- Applying for working capital funds through government programs
- Trimming non-essential expenses without impacting culture
- Increasing marketing and sales outreach
- Renegotiating supplier and vendor contracts
- Enacting a hiring freeze and reassigning staff
- Transitioning to a remote-first policy to cut overhead