While many businesses are either actually sidelining workers or at least are considering doing so, some industries are laying off staff more aggressively than others. All told, approximately 5.9 million Americans left the workforce in November 2022, either by being laid off or quitting their job voluntarily.
Shifting from “quiet quitting” to “loud layoffs”, technology, professional services, and leisure and hospitality industries, among others, were at the top of the industries that cut staff the most in late 2022, according to the U.S. Bureau of Labor Statistics.
Industries with the Worst Job Security
Some industries have a track record of leading the layoff pack in lean economic times, even ahead of potential recessions.
According to the marketplace staffing firm Outsource Accelerator, these industries offer the worst job security when economies start to wobble.
The arts, entertainment, and recreation industry offer the least job security, with the highest layoff rate at 2.98%, according to data from the Bureau of Labor Statistics.
The construction industry has the second-highest layoff rate at 1.80% on average. and professional and business services were found to have the third worst job security at a 1.56% layoff rate.
“This industry, which includes those working in accounting, engineering, veterinary, advertising and computer services to name a few, was found to have the highest number of layoffs per month on average at 353,000 people, however, ranks third when adjusted for the total number of workers in the industry which stands at approximately 22.6 million,” the firm stated in a recent report.
The information industry, which covers those working in image and sound recording, digital and print publishing, and telecommunications jobs, was ranked as having the fourth-highest layoff rate (1.12%).
The major services industry, which encompasses professions such as equipment and machinery repair, dry cleaning or laundry services, providing personal and pet care, grantmaking, and promoting religious activities, ranked fifth (1.06%).
Industries That Are Cutting Staff the Most Right Now
While the industries listed by Outsource Accelerator tend to cut jobs in any economic downturn, other industries are actually laying off workers at greater rates right now.
According to job advertising data from Salarship, the following industries are the most affected (December 2022 compared to November 2022):
Information Technology (-15.9% month-over-month as of December 2022): “Big tech companies such as Google or Meta are already either freezing hires or laying off people,” said Salarship chief executive officer Nathan Brunner. “These tech companies rely solely on advertising, and advertising revenue is expected to drop during the recession.”
Finance and Insurance (-12.5%): The finance industry could be an outlier right now, as there’s no specific reason that industry firms are shedding staff right now.
Manufacturing (-10.5%): “As the cost of energy increases, manufacturers are forced to slow down their production and lay off workers,” Brunner said.
During a recession, companies tend to cut jobs in non-essential occupations, such as research and development and marketing, to prioritize resources toward core functions, Brunner noted.
“Consumers also reduce their discretionary spending during a recession,” he added. “This can lead to downturns across consumer-centric industries such as retail, restaurants, travel/tourism, leisure/hospitality, and real estate.”
Sharpening the Layoff Axe
Another common takeaway on job cuts is that cyclical industries experience most layoffs during economic downturns.
“However, structural changes in the post-Covid economy are causing companies to upgrade their business models, technologies, and staff to become more productive and adaptable,” said Milken Institute chief economist William Lee. “A high number of job openings and quits (turnover) reflect much of this upscaling.”
Layoff announcements from the tech sector, for example, reflect excess hiring during covid and the pandemic's recovery phase and are a small percentage of the labor force.
“These skilled workers tend to be re-employed quickly,” Lee said. “Right now there is little evidence of traditional cyclical layoffs, apart from the housing industry (such as mortgage brokers and residential construction workers.)"
Lee characterizes the current downturn as a “white-collar recession” because the demand for (flexible) blue-collar workers is strong (e.g., Amazon warehouse workers and drivers).
“Meanwhile, demand for lower-skilled white-collar workers is being reduced by the adoption of new tech (e.g., modern software and point-of-sale terminals replaced many low-level data processing and accounting clerks),” Lee said.
Companies Want Energetic and Flexible Workers
For U.S. career professionals looking for jobs in a recession, Lee said displaying flexibility and a “can do” mindset go a long way with employers these days.
“Adaptability and positive work attitude are highly sought-after attributes for hiring managers,” he said. “Even traditional blue-collar jobs require the ability to work with robotic consoles and restaurants adopting 'ghost kitchens' require chefs with broader skills than those in traditional stand-alone stores.”
“Resting on credentials and track record will not be enough to be hired,” Lee added. “Job candidates must show a robust desire to adapt to changing work environments and hours.”
