The number of announced layoffs in March increased 60% month over month, according to a report from Challenger, Gray & Christmas Inc. Federal layoffs made up almost 80% of these cuts.
Andy Challenger, senior vice president of Challenger, Gray & Christmas, Inc., joins Wealth to discuss how the Department of Government Efficiency (DOGE) is impacting the labor market.
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Well, the number of announced layoffs in March jumping 60% from a month prior, as DOJ enacted plans to eliminate positions across the federal government. Federal layoffs accounted for nearly 80% of total cuts during the month. That's according to a report from Challenger, Jane, Gray, and Christmas. Joining me now to discuss is Andy Challenger. He's senior vice president at Challenger, Gray, and Christmas. Andy, it's good to see you, uh, even though the numbers are not great here, to say the least. Um, how unusual is it to see this kind of an uptake, especially from what is essentially one employer?
Yeah, it's a huge uptake, but it's also just a huge overall number. In fact, outside of two months during the peak of COVID, this is the highest single month of job cut announcements that we've tracked since we started doing this 35 years ago. This is a really big number. Uh, the vast majority, about a quarter million of the job cuts that we've tracked this year are coming from the federal government. It's a really concentrated, uh, sector, uh, to be seeing this many cuts from, and it's totally anomalous. It's, it's something that we've been really surprised by.
And, and what I also thought was interesting is there are a lot of, um, sort of lawsuits in that are ongoing right now to try to get some of these people back to work or to block their firings. This, this doesn't even account for, in other words, like this is those people who, who have more definitively lost their positions, correct?
Yeah, we're not counting those individuals that, uh, are probationary that are, there's still a lot of court, uh, issues that have to be resolved before we know if those people are going to be let go. These are job cuts that have already happened or been officially announced and seem to be going forward in the next few weeks and months here.
Andy, what do we know about whether these folks are being absorbed back into the workforce?
Uh, we don't have too many signals on that yet. I think there's an expectation that we're going to see some jobs added to the economy, uh, in Friday's job report, but there's not an expectation that we're going to see a big surge, certainly not one big enough to absorb this many people coming out of the federal government. Uh, this is a real inflection point in the labor market overall with slow cooling for two years, hoping for that nice soft landing, and these cuts are actually coming at a time when there's a lot of economic news coming out that, that looks like headwinds for, for companies over the, uh, you know, next, next couple months and years.
So what signs are you going to be looking at then going forward? What, you know, and, and was this sort of it in terms of most of the government cuts, or I guess it depends on the outcome of some of those legal proceedings?
It's possible it could spike further cuts from, from the government. I don't expect it to stay at this pace in any way. These are such large, uh, cuts to be announced over just a, a one-month period. Uh, the expectation is that this will, uh, hopefully start to cool down and we'll be able to see the labor market and economy balance out, but, uh, obviously not, not good signs coming from the labor market piece of the equation.
Um, the underlying cuts that we saw in other industries, ex-government, it looks like what technology and financial were the other areas that saw the highest number of cuts, around 15,000. Is that sort of more in line with trend, though?
And that is a, it's, it wasn't very high in the private sector this month. However, over the last few months, we've been seeing an increase in layoffs coming out of the private sector as well. In our business, we're working with companies that are letting people go. It's been a very busy time, this first quarter. Uh, we are expecting continued layoffs from the private sector as the labor market continues to cool. So that coupled with, uh, the federal government cuts could mean some, some serious damage in the next few months.
We'll keep an eye on it. Thank you, Andy. Appreciate it.
Thanks.
