Still not many layoffs, but concentrated in the San Francisco Bay Area. Workers found new jobs quickly, and employment in California still rose.
By Wolf Richter for WOLF STREET.
Amid all these breathless layoff announcements by tech and social media companies, I’m going to keep an eye on actual layoffs in California as disclosed in the WARN (Worker Adjustment and Retraining Notification) reports. The big tech and social media companies are global companies, and the layoff announcements are global, and they’re just announcements, and only part of them take place in the US, and those are scattered all around the US.
How many layoffs in California since July 1?
In total, 54,679 layoffs in all of California were disclosed in the WARN reports in the seven and a half months since July 1, when this layoff tango took on momentum. This includes a large variety of companies, from hospitals to Google, each for its own reasons.
But over the period from July 1 through December, employment has grown by 229,000, according to the Bureau of Labor Statistics state data (latest available), which shows that the laid-off workers are generally absorbed by other employers fairly quickly, and employment growth continued.
Many employers that had been outbid for talent by the tech and social-media overhiring and overpaying frenzy finally have a chance to staff up on their terms.
The 15 counties with the most layoffs.
The table below shows the 15 counties with the most layoffs since July 1. However, here are some important points to complicate the picture:
Los Angeles is the largest county in California, with a population of nearly 10 million people. Over a quarter of California’s population lives in L.A. County. Many other counties are small. This is an important consideration because L.A. County had the largest number of layoffs since July 1 (9,379), but it was small given the size of the huge county.
But San Francisco, which has less than 1/10th of the population (834,000), had 6,971 layoffs – even that is a relatively small number, given the size of the labor market in San Francisco, but it was by far the largest layoff-to-population ratio in the state.
Marin, a small county by population, on the other side of the Golden Gate Bridge, shows 578 layoffs by just one company, Autodesk, which is closing its headquarters office in Marin County and moving its headquarters to San Francisco. Most of its workers are on a hybrid working-from-home basis. But it also reported 61 layoffs at its office in San Francisco. It announced in early February that it will lay off 250 workers of its global workforce. So it seems Autodesk submitted the WARN filing because it permanently closed a facility while most of the workers assigned to the Marin office will be re-assigned to the San Francisco office and keep their jobs.
San Benito, a rural county south of Silicon Valley with a population of just 64,000, is at risk of losing its only hospital, Hazel Hawkins Memorial Hospital, which may file for Chapter 9 bankruptcy and reported 741 layoffs with an effective date of February 18. Rural hospitals across the US are in trouble.
The three major counties with a significant number of layoffs in proportion to their population are San Francisco, Santa Clara (Southern part of Silicon Valley), and San Mateo (northern part of Silicon Valley):
|County of:||Layoffs||% of CA layoffs||Pop. in 1,000||Layoffs % of pop.|
In the US, even in good times, 1.8 million layoffs and discharges per month.
Companies lay off workers for a variety of reasons, including company-specific issues. And companies fire workers for all kinds of reasons. This is part of the regular churn. No one writes about this because it happens all the time. These workers are relatively quickly absorbed by other employers, and unemployment remains low.
In the US overall, every month during the Good Times before the pandemic, between 1.6 million and 1.8 million workers were laid off or were discharged. And they found jobs relatively quickly.
But during the bad times, suddenly there are 2.5 million layoffs and discharges a month, month after month, just when employers have stopped hiring, and the number of unemployed people looking for a job surges, while companies batten down the hatches.
But that’s precisely what we’re not seeing yet. Total layoffs and discharges in the US have ticked up from the record lows a year ago, to 1.48 million in December, but remain well below the lows of the Good Times before the pandemic, according to data from the Bureau of Labor Statistics:
Laid off not yet.
The WARN report also shows that some layoffs have an “effective date” in March or April, and so these layoffs haven’t even happened yet, such as by Amazon, Microsoft, Google, Intel, Wayfair, and lots of others, including Gallo Sales Company (winemaker Gallo shut down its inhouse wine distributor and outsourced this business to another company).
Other layoffs in the WARN report have effective dates later in 2023, and some even in 2024.
The California WARN Act requires employers with 75 employees or more to give advance notice to employees affected by plant closings and mass layoffs. With enough severance pay, employers can lay off employees with immediate effect, but they still have to report those layoffs to WARN.
WARN reports don’t reflect the layoffs at small companies of less than 75 employees.
The 61 Companies with 200+ layoffs in California since July 1.
Of the 54,679 layoffs reported by several hundred companies since July 1 in the WARN reports, 55%, or 30,863 layoffs, were reported by just 61 companies, each reporting 200 or more in layoffs during that time.
Among these 61 companies are a number of hospitals, other healthcare providers, and insurers.
The 10 companies with the biggest layoffs accounted for 24% of all of California’s layoffs. But wait…
Temporary layoffs. The #4 on this list, Dreyer’s Grand Ice Cream, reported “temporary” layoffs of 1,213 employees in November when it shut down portions of its facilities in order to migrate production over to new equipment. These laid-off employees returned to work in December.
Jabil (#3) also indicated that a portion of the layoffs were temporary. There are several other smaller “temporary” layoffs in the WARN report and in the list below (indicated). The WARN report does not indicate when workers return to work.
|1||Meta Platforms, Inc.||2,726|
|4||Dreyer’s Grand Ice Cream (temporary)||1,213|
|10||Madera Community Hospital||772|
|11||San Benito Health Care District dba Hazel Hawkins Memorial Hosptial||741|
|18||ABM Industry Groups, LLC dba Meta||434|
|19||Blue Shield of California||429|
|23||DHL Supply Chain||394|
|26||Infineon Technologies Americas Corp.||375|
|27||Crest Beverage, L.L.C.||372|
|28||Brown & Toland Physician Services Org.||364|
|29||Elk Grove Auto Group||355|
|30||Gallo Sales Co.||355|
|31||Nutrition Corp, dba Fresh & Lean||353|
|33||Thermo Fisher Scientific||335|
|35||Loews Hotels & Co||321|
|38||Teva Parental Medicines, Inc.||305|
|40||Shift Technologies Inc.||296|
|41||TAP Manufacturing LLC and TAP Worldwide LLC dba 4 Wheel Parts||293|
|47||United Furniture Industries, Inc.||261|
|48||Argo AI, LLC||257|
|56||Healthcare Staffing Professionals||224|
|57||Aseptic Solutions USA Ventures LLC||211|
|58||Athas Capital Group, Inc.||211|
|59||Terre du Soleil dba Auberge du Soleil||206|
|60||American Advisors Group||204|
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Laid off workers found real jobs that are going to last 30+ years?
“My million dollar mansion is in trouble. If I do not find another million dollar job within the next 30 days, I am done for, someone, please help me.”
Of course all these folks will find those 30+ year lifer jobs, that they need to pay off that mortgage.
Wolf, how can common people buy multiple 3 month treasuries and guarantee 5% returns?
An article with fixed income opportunities with details of how to avail it will be worth more than a decent donation to ws.
One of your most useful articles was “How to freeze your credit for free”
My bank is only offering 3 month cds at a meager 2.75%.
Why asking for 3 months is because I see inflation heading higher, so interest rates may need to run higher. So I would like to rotate after 3 years.
Check with your brokerage about CDs. ETrade lets you buy cd’s from banks all over the place. Many >4%.
Check out treasurydirect.com. 3 month T-Bill is at 4.82% right now. You can also buy them thru a brokerage like Fidelity. If you are not comfortable buying the T-Bills online, you can go into your local Fidelity office and setup an account and buy them there.
I might discuss it someday. But a few lines are enough (this is much simpler than freezing your credit):
Right now, you can get close to 5% with a 3-month T-bill. Yield today = 4.84%. The 1-year yield today = 5.0%.
Open an account at Treasurydirect.gov (requires a linked bank account) and put in an order for an upcoming auction. In your account, there is a schedule of upcoming auctions, and what will be sold at those auctions. Just check one of them and put in an amount. Hold to maturity. Sleep well. Earn interest.
Once you have that account set up, you can buy I-bonds. You need to read up on them on the site. They are somewhat complicated. We’ve discussed them here in the comments a lot too. For us, it has been one of the basic things we do every year, for years: we buy the max allowed ($10k per year per entity) of I-bonds in all our accounts. It’s just routine. They’re a variable-rate, inflation protected (CPI-W adjusted), tax-deferred retirement instrument. It’s one of the basic bottom layers of our nest egg.
This will get you started. I might follow up with an article if there is enough interest. I don’t do financial advice. I won’t tell people what to buy. But the how-to and where-to-look-for aspects are within my scope.
As mentioned here, if you have a brokerage account, a “brokered CD” is also a good option.
You may be able to buy T-bills through your broker in addition to CDs. I’ve been buying >5% T-bills with ~6 month maturities through mine (Merrill).
I have a few brokered CDs in my ladder, but T-bills seem to provide slightly better yield for the same duration right now.
The situation with the labor market in Europe is similar. It is clear that the two central banks will have to continue with the restrictive measures. Otherwise, we will not see inflation of 3-4 percent anytime soon, let alone 2 percent.
“Information” sector hired / promoted too many executives in pandemic. These organizations are too top-heavy to be productive and they are now laying off few workers at bottom level for 1% to 2% cost reduction.
It’s a sham with only one purpose: Reduce employee salaries artificially below inflation levels. It’s not meant to cut real costs from executive stock compensations and stock buybacks.
In my opinion, if the banks maintain the high interest rates, we should see a drop in the labor market and inflation to around 3-4 percent within a year, especially in Europe. Because these rate hikes and the start of QT by the ECB from March 2023 usually act with a delay. In addition, in Europe and Canada there are no 30-year fixed mortgages like in the US. People and companies will have to refinance at higher interest rates, which will further cool down the real estate and labor market, and hence inflation. But it is too early to talk about inflation of 2 percent. It’s just that the banks walked into the trap by announcing a 2 percent target. If they now turn around and raise it to 3 percent, for example, that would further erode confidence in them.
What high interest rates?
You’re joking, right?
Credit conditions are still extraordinarily loose, especially taking into account actual borrower credit quality.
However, we must not forget that in March of last year, the interest rate of the Fed was 0.25, as far as I remember, and it was minus 0.5 at the ECB. Still, not even a year has passed since then, and the interest rates are at a level that no one would have thought back then. When changing monetary policy, it usually takes 12 to 18 months to see the effect. And finally, no one has said that interest rates will not continue to rise if necessary.
“What high interest rates?”
High relative to where they were a year ago.
“You’re joking, right?”
He’s not joking, everything he said sounds right to me.
AF won’t be happy until mortgages are limited to ten years with 50% down at 25% interest rates.
Oh yes ! And he would like debtors prisons reinstated.
“What high interest rates?”
Personally, I am enjoying my 5% 1 year Treasuries.
It reminds me of the good old days. It finally smells like freedom!
All we need is an 8% 10year and we will see mass retirements.
I agree with you. Anyone with eyes sees that prices are still stubbornly high from housing (here in Sacramento, CA) as well as in states like ID, MT or WY that I’m looking at for over year and half. Small drops in real estate prices when they are there. My rentals are in a lower income area. Everything is pending. Prices are 315 and up to low 400’s. Houses built in 50’s and maybe 1500 sq ft the largest. Investors are still buying. I get calls regularly. They dropped off a short time awhile back, but back.
Services still going strong. I talked to a contractor few days ago. Busy, busy. Spoke to a retired electrician. He’s got jobs up the wazoo. Help wanted jobs everywhere!
Went to Costco yesterday, buy my eggs there and my Euro sparkling water (on sale) there. I’ve notice that seasonal stuff they bring every year i.e. fertilizer, lawn care, etc has gone up quite a bit from last couple years.
They’re going to have to do what Peter Schiff talks about (a gold bug) and raise the rates beyond 10%, but they have a problem. The country is drowning in debt as he states. Gonna be interesting times we’re gonna live thru.
Yep been waiting four years for a contractor to do a framing job that I cannot handle, four looks, four no-shows. They make they’re money pounding nails into tract homes. I have good food storage so I keep a supply a year ahead. Costco is good, I watch for sales. For veggies the garden lasts from harvest until April but I still buy veggies and yes the prices have gone up.
Yep everything has gone up and most likely will not go down. Last year’s inflation is baked into prices this year.
Are you saying low income areas are up to 400k? 300k to 400k in my area is upper middle class.
I have a rental in a low income 1000 sq/3bd home and it is $140k. Pre-covd it was about 70k.
Last October, I got some bids to replace a driveway. The guy was booked out into spring 2023.
We are south of Sac. House prices aren’t moving here. In fact, some of the new builds have gone up. Investor bought anther house on our street. Sigh.
We are in the market for house #2 and this point, I’m happy sitting on the sidelines. It is still too crazy, not sure it will turn though. I wish the Bay Area people would stop moving here. They have absolutely creamed the housing market for the locals.
ECB and Fed both got super worried about scarring in the labor market and goosed the labor economy. The labor market is way too tight. People are going to strike for better wages the longer inflation runs hot. Time is not on the side of the central bankers anymore, and they are worried as such.
Gonna need a lot more layoffs than that to get a good recession brewing.
Good report Wolf!
You don’t need to be technically brilliant to work for social media companies.
I suspect the technically brilliant were not laid off.
However, we have had a few critical function people laid off. They had a critical job that now a higher paid engineer has to cover. Idiots.
I expect cots to be arriving soon but since our cubicles are so small, may they’ll set them up in the break room.
@Seen it all before, Bob,
“However, we have had a few critical function people laid off. ”
Same thing at my company. There was an older engineer like myself (late 50s/early 60s) who was laid off last October. I think management just saw him as an expensive programmer. They didn’t realize that he was also a talented/experienced electronic hardware engineer. In January on of our manufacturing lines had to be shut down because a test fixture broke. The test fixture included software, and custom circuit boards. They had to hire him back as a consultant to repair the fixtures to get the line going again. His price was $200/hour. He had them by the balls, the company paid him that price.
If I was called back to fix something due to a poor decision to lay me off, my rates would be higher.
With the entire line down, how much was he really worth?
Great analysis as always, Wolf.
As a (too many) decades technology “worker” I’d like to add some additional dimension to the discussion. When significant layoffs occur across an industry and/or region it always makes for public hullabaloo regardless of the details. More than most other sectors however tech is differentiated into industry-specific functions (engineers, programmers, tech leads, etc.) as well as non-tech roles such as accounting, HR, facilities, and of course the gilded halls of the ‘C’ class.
When techs announce significant “right sizing” (remember that euphemism, kids?), the general assumption is that actual tech workers are being laid off. Sometimes this is indeed the case, though more often than not it’s the non-tech roles being whittled down. I give you Twitter as an exemplar. Musk took out something like 2/3 of the workforce in a matter of days yet operations continued without interruption. What does that tell you about the company? How do you feel as a shareholder who actively subsidized an equity whose majority workforce swaggered into the office at best a couple of days a week, and only then to score a 3-star meal followed by a meditation session and massage (with or without happy ending) — all on your dime? And when they were fired no one noticed…or cared?
I have yet to hear of any sizable layoffs of those who actually deliver the product or service. The few who have seem to be largely the H-1B class.
To put it another way, if a tech industrial starts making noticeable cuts to its actual tech contributors as opposed to bloated overhead then the ship is likely going down.
Spot on. I think that Musk opened the door and made it “acceptable” for other SV firms to perform similar analyses of their respective workforces. I
In addition, I think many of them are using “return to the office” as a means of separating the wheat from the chaff and allowing staff to self-select out of a job.
Agree with both of you.
One additional point about (way) excessive geographic concentration in tech (historically speaking) – by overwhelmingly hiring only from N. California to fill out the non-coding hordes in their workforces, the tech giants virtually ensured that they were going to end up with mono-cultural woke-forces that would aggressively insist that *their* values direct all corporate decision making (not owners, managers, or actual make-the-boat-go technical staff).
Twitter has demonstrated as much, in spades. But all the giants did this to themselves, as well.
And, there never really was a need to…ever.
Geographic dispersion of hiring/employment could have occurred 20 years ago, leading to a much more diversified, well balanced workforce.
Add the politicized fever-dreaming to the needlessly inflated cost-of-living, and it really is amazing that the tech “geniuses” were so blind.
The cheap credit era had lots of folks living in a self-referential cultural bubble. They thought they were leading-edge, but they perhaps now realize they were walking a plank, and when the seas shifted, it was being sawed off behind them.
I think you are overestimating what was possible 20 years ago. I am not even sure I fully understand your rationale here.
Also, aside from language & cultural barriers and time differences, nothing says those “dispersed” jobs would stay in the country. I refer you to customer service and the manufacturing sectors.
Twitter has had plenty of disruptions.
Lol.. nah, nobody missing them purple haired censoring commies. Bye!
That’s a great performance. You make a very convincing far right commentator. But you forgot to leave a clue that you’re joking because most people would eat that shit up without questioning it.
We need Musk to do the same 2/3 axing at every level of our government. I would expect the same result.
Operations continued without interruption in the same way your computer can go a long time without issue. You won’t see any problems with that decision immediately, and I hope you aren’t judging something with long-term consequences based on short-term performance — although I understand someone who is scrambling to make up for an incredibly idiotic acquisition they were legally obligated to complete.
Is tech culture spoiled? Are there too many workers? Sure, in some cases. But Elon’s management style has also proven incredibly short-sighted and more concerned with him and his image than anything else. He’s a troll who often gets away with it, except when he doesn’t and spends tens of billions of dollars I don’t think he was ever serious about losing on a bad deal for everyone involved except zealots with petty wishes.
Fuck Elon Musk.
Seriously! Dude’s an epic turd.
No government agencies eh !! I believe the Kool Aid Corporation must be hiring, everybody’s drinking it. A very “California Centric” article, this should come with a warning. In all seriousness don’t the corporations leaving Cali have more of an impact than this tech layoff? Long term over Shirt term?
AA: Couple things, 1) the WARN report is CA specific, that is, CA requires companies to disclose this, but no other state does (that I’m aware of). The article isn’t “CA Centric”, the report is. 2) if you RTGDFA you’ll notice many of the companies Wolf talks about are moving from one place to another inside CA, not moving out. Is it possible Co.s are moving out? Sure, but that’s not the focus of the article. The point seems to me to be that “in the shirt term” we are not really seeing anything meaningful getting untucked….in the ling term, cod workers might start to suffer…. :)
“Shirt term?” Love it! Entered into the Wolf Street Lexicon.
“… very “California Centric” article..”
LOL, misconception here. It’s not “California Centric.” It’s “ABOUT” California, based on raw WARN data released by the California EDD. It’s about layoffs, particularly tech and social media layoffs, in California because many of these companies are headquartered in California, and the hullaballoo has been about these layoffs.
Read about the elevator operator who sued Tesla for $137 million because his feelings were hurt? Tesla was sued in San Francisco. Tesla moved to Texas.
Which is ironic because it’s against the law for Tesla to sell cars to Texans.
It’s alright, Tesla doesn’t care about Texans. Just their business climate.
Is the free money handed out by gov’t starting to abate?
Labor force participation rate has started to climb since Oct 2022.
What is the driver behind the recent positive trend in non-farm labor productivity?
Is this sustainable while annual GDP growth rates have been declining since Jan 2022?
It’ll be an interesting ride.
Will/can consumer debt continue to rise?
Will/can consumer mortgage debt balances continue to increase?
Will average hourly wages YoY continue to drop?
Will/can the positive slope in continuing jobless claims persist?
Will/can consumer spending continue to rise?
Will interest rates follow a positive slope?
Will BRICS+/petrodollar shifts eventually begin undercutting the dollar?
What happens when the SPR runs dry?
Not everyone is poor, sir. If you have two couples making 100 grand plus apiece, then they can afford that expensive house. For many people, they will adjust. Maybe a little less eating out and make the coffee at home, but professional folks (or plumbers, I know one guy who said he makes over 10 grand a month) will survive. Yes, they will pay more, but they will carry on and pass on increases to you and me.
It’s the people in the middle of the bell curve and below that are going to get clobbered! J Powell doesn’t not have the gonads to do what needs to be done: raise those rates high. The Congress and President will jack up military spending to 1 trillion soon and borrow that via Fed. They need to spend and borrow less! Also, high earners are going to have to pay more taxes. That’s the only way to break the service inflation.
Interest rates way up, less spending/borrowing and increased taxes on high earners is the only way you are going to slow down the inflation. None of this will happen.
200K+ income per year is only around top 10% of the population. Household with an income of 200K cannot necessarily afford an expensive house. It’s not really that much money now to be “rich”.
Agreed we hit the AMT (Aternative minimum tax level 250k) but never felt rich. We lived ok but really a lot of that gets taxed away ie; property tax, health Ocare tax, sales tax, FICA, federal income tax, endless insurance etc.
I agree. 200K/year is not rich. It is comfortable.
However, it really depends on how old you are now.
200K/year will buy a starter home for a young couple. 200K/year will fund the retirement of a 50+ employed person nicely if they bought a house 20 years ago.
Funny, I said the same thing as I made 30K/year out of college and looked at my 50+ year old mentors making 80K/year with a 1K/month mortgage.
Things don’t change.
That’s true JK. But most everyone (except top percentiles) still makes tradeoffs at the margin. That has impacts. I’m comfortable at the moment – but am having to make these margin decisions just the same. At some point, especially for retirees, what gives becomes significant.
We have yet to feel the pain of the moment. What we have is the anticipation of it.
@ Philip – If i had to guess. I would answer yes to all of those except the average hourly wage has been going up YOY since 2010. It was $17 in 2010 and it is 29 now. Maybe you mean real hourly wage when normalized vs inflation? It was dipping into 2015 but has been up through 2021. 2022 maybe caused it to reverse.
Ru82. I was looking at average hourly earnings histograms from Mar 2022 to Jan 2023. Agree that one can find any answer one prefers by selecting different start/end points. For me, the slope running across adjacent histograms was telling and/or surprising depending on what other data one is looking at.
l have heard some pretty interesting theories, one being it looks like a recession has been kicked down the road about 6 months and that will not be a good thing. The longer inflation runs hot, the harder the landing is the thinking.
I will be a broken record. Treasury curve inverted and leading economic indicators down 10 months in a row. Almost by definition employment peaks at end of economic expansion.
I think you’re right.
My guess…especially with an election around the corner: the federal gov’t will continue to approve non-quorum budgets (without, again, any real appropriations process – i.e., baseline budgeting) with continuing/sizable deficits.
The FR is fighting an uphill battle all the way.
Did you forget that the Fed starts to default on its debts in a few months unless the House extends the debt limit.
To be honest, I’ld like to see that happen rather than constant life under the financial sword of Damocles. The whole thing has been a sham since Sen Reid and his bubbas decided to subvert representative government.
LOL. It seems like this debt default always happens when congress is split. When will they just finally get rid of the debt limit to stop wasting valuable time arguing over a debt limit everyone knows they will increase.
It is a useful political tool except when it isn’t. That is all there is to it. It is disgusting but expected.
Rural hospital closures and downsizing have been happening for years. Rural areas have less income and rely more on Medicare and Medicaid. Federal aid for rural hospitals has been reduced. There are staffing shortages and lower patient volumes.
I’m from San Benito County. Illegal Immigration is the issue behind Hazel Hawkins issues.
Who wants to be a modern serf? The ag workers are recent imports because the work is totally miserable and underpaid. This has been going for over a century, and yet the folks who have to pay the bills for their health care don’t seem to care until their local hospital closes. Meh. In three generations they will have disappeared into the great American melting pot and will no longer have much beyond some bad spanglish and tamales on Christmas.
And then we will have to import our ag workers from some other overpopulated and poor place. Because factory food requires factory conditions….and I was just reading an article on how miserable working conditions are in a Foxconn Apple assembly plant. You want a cure for illegal immigration, make it legal and have the employers pay the full freight of the costs imposed on the community by their presence.
Someday this war’s gonna end….
CitizenAM – this (or enforced card-check, similar effect but with the ‘domestic’ population). Well-said in any event, true price discovery is where you…discover it.
may we all find a better day.
…please insert after ‘true price discovery’: (financial or societal). Apologies.
may we all find a better day.
It seems to me that the US Ag business needs underpaid foreign fruit vegetable pickers to pick their crops and keep prices somewhat low.
If these people don’t show up during harvesting time:
1) The owners have to pay higher prices for labor and the prices of the crop goes up causing more inflation.
2) Most of the crop rots and the owner is able to charge more for a crop that is in demand but short supply causing more inflation.
Low cost imported ag workers have been required since forever. If we change that, prices and inflation will go up.
Maybe we need labor prices to go up and wage inflation to go up to help the US workers? I am not a communist.
These immigrants have been doing our yard work, picking crops, various repairs, home and road maintenance, etc., forever. I have experienced the benefits: anti-inflationary.
Most of farm workers come to California on the H-2A visa and are perfectly legal.
@Phleep – true
I guess that is why one gets a good education? I have some co-workers who live in Mexico. They have no want to do ag work in the U.S.. But they do have an engineering degree and do engineering work in Mexico.
I used to do ag work on farms in high school. But know I have an engineering degree and live in the middle class.
Lost Angeles… Love it! :]
Hence forth part of the WOLF STREET Lexicon, LOL.
It was late.
I’ve only started reading Wolf Street recently, but I do enjoy all your articles, including the lexicon.
“Another lost angel” — a Doors lyric, since what? 1970?
Perhaps you could debunk the narrative that all the “new Jobs ” created are mostly part time and that “people are working 2 or 3 jobs to make ends meet because of inflation”?
Employment market is strong because economy is mostly artificial. It’s been that way since 2009 with persistent above trend federal deficits and monetary stimulus.
The “greatest economy ever” prior to the pandemic was mediocre and also fake. But apparently, it’s credible that the US partially shut down the economy for months and then from this mediocre economy, an even more fantastic economy emerged on the other side by raining down “free” money on the population.
It’s utterly ridiculous.
I wonder if a lot of new tech jobs were created because of COVID and companies hired for the demand and now it is gone. A company like Zoom would be growing still if COVID ended up being a very bad virus with a high mortality rate as WFH would still be in force. But it is not but they may have hired as if growth would still be there?
I remember during dotcom bubble, everyone thought all growth would be on the internet. Lots of of extra people were hired because of that false growth projections and people had to be laid off when it did not occur.
I think that is partly what we are seeing? `I could be wrong.
From what I hear, some of the work-from-home folks worked a couple of full-time jobs from home while skiing. Working from home makes side gigs or second main gigs very possible. And it’s not to “make ends meet” but to make lots of money the smart way, because you can.
Maybe companies are catching on to it, led by Musk’s gut feeling when he gutted Twitter (forgive me).
I don’t see the issue unless companies want to control what workers do both on and off the clock. If you are meeting your goals while at the organization and are not engaging in unethical behavior, like working for a competitor or other conflicts of interest, then what is the basis? Eliminating FUD towards what workers are doing when they aren’t working?
One of the main takeaways from the last couple of years for me is how leadership or managers are not very good at setting expectations, instead relying on ambiguously-defined goals or practices and the goodwill of people under them wanting to do a good job and not harm others to extract more productivity and effort out of them.
Poor planning and defining boundaries for your role. I may not be phrasing this clearly. If you are a line worker on a factory line, it’s pretty damn evident what you need to be doing, how you need to develop, and what the expectations are, and once you’re off the clock, that’s it.
LK – excellent insight. My experience (an impecunious geezer’s perspective, admittedly) is that many in management struggle with this, seeking only quarter-to-quarter equilibriums while neglecting, or worse, ignoring concurrent SWOT analyses…
may we all find a better day.
“Lost Angeles is the largest county in California”
They lost their tech job paying $250k and landed a job as a bartender for $50k and a nighttime stocking job at Whole Foods for $25k. In the Biden economy they gained one job, all is wonderful- when it’s really not. You have to include wages in the discussion, or the analysis is incomplete. Wages have been declining vs inflation for a few years. Middle class dying. Any fool can see this, even a boomer.
Wishful thinking, maybe?
They lost a tech job paying $250K and stock options, and got a tech job paying $150k-$200k without stock options at an industrial company, such as an automaker trying to staff up their new EV divisions. This is now happening all the time. Ford made the news again by laying off ICE workers (including engineers) while hiring tech workers for its EV division. Oil and gas companies are hiring tech workers, manufacturers need tech workers. Nothing runs without software. They all had trouble hiring them because Big Tech and social media companies were handing out packages no one else could compete with. Now these industrial companies can finally staff up.
BTW, labor shortages continue in the restaurant business.
Who wants a restaurant job ,usually low pay,rude customers and bad management. Plus we’re eliminating cash notideal
Nobody but those with no other choice. Try poker dealing at a casino. It’s even worse.
But will they stay?
The IT industry labor force is like no other I have ever seen. When at MITRE I supported a certain three letter agency at Fort Meade. The standard practice was to come to the Fort, obtain a couple key certificates, and then start the journey of job lillypad jumping. It was not unusual to know people who “matriculated” (as Hank Stram would say) through a new job every 10 mos across a variety of industries for years on end – all in the name of higher, hugely higher, incomes. A few thought it was about power and influence, but, as one friend put it who went on to become CIO at a very large Federal Agency, everyone has a boss.
This has been going on since I first entered the business/operations side of IT during the mid-90s as an officer in the military. Even back then it has very hard holding on to IT workforce – especially the few who really understand how it all works.
How many full stack software developers are needed to make an EV? Answer: zero.
Great points. Tight labor market produced by high wage tech layoffs. Whodathunkit? And inflation stubbornly high as 2 wage earners spend all the income to maintain standard of living they’re accustomed to. If you get a W2 congrats, you’re the working poor.
Transitory Middle Class.
I read that 70 percent of the workers at technology companies in the bay area were not born in the U.S.
If a downturn does happen in tech, will most just move back to their home country? If so, the unemployment rates would not rise much. LOL
And the modern restaurant business is another misery workplace for everyone below the chef or owner. Variable work schedules, low pay or ridiculously low tip based pay- front of the house staffed by young pretty thangs, and the back of the house speaks spanish. Tell me again how a rude extractive industry works- and those jobs that used to be staffed by teenagers back in the golden age are now staffed by those recent immigrants who don’t want to work in the fields.
I am surprised every restaurant owner isn’t advocating for more cheap subsidized housing, or building their own, just like the big farmers do with their labor to ensure their fields get priority….
I never know how much of this layoff stuff is true. From what I understand, most tech layoffs simply result in re-hiring within the company in a different division. Or part time people being let go etc.
I think the actual number of layoffs is much much smaller than reported in the news for purposes of stock market valuations. People I know in tech except for some of the biggest companies don’t really feel any significant change to the job market right now. Some flashy layoffs at Meta and Twitter and recently at Salesforce but even then not much. More of a hiring freeze really in actual numbers. At least vs GFC.
I think people who don’t have faith in the fed and went all in on housing and stock market may be on to something. I have no faith in the fed either. I just feel they are stringing people along. Housing might come back down to 2020 levels but no lower. This fed doesn’t have the appetite to do what is necessary. We are normalizing transitory selective 6% inflation (to hide a real 10% inflation) and they will just babble about getting back to 2% to string people along hoping nobody forces their hand to raise rates higher (which is exactly what is happening now).
Housing and stock will probably be at a standstill so I can afford to wait before entering market but definitely need to switch out of brick and mortar savings account into other options to minimize losses. And 25 bps is a joke. Even 50. They need to go 75+ to send a message but they won’t. They will sit at 25-50 and never land the plane. We are all on to them now…
My take. We are sitting at pre 2010 interest rates and mortgage rates.
These are normal rates for a normal economy and honestly, are still accommodative and are on the historical low end. The current rates are not really hawkish at all IMHO. They probably need to go higher if they feel inflation is still a big problem.
The problem is the economy never came back after 2008. It’s all smoke and mirrors based on QE, ZIRP & stimmies. Without them- Depression.
I wouldn’t be surprised if the layoff announcements were meant to coincide
with stock option vesting for senior management.
There’s something to that. Nearly always, a big layoff announcement causes the share price to jump.
Layoff announcements almost always boost stock prices.
Who benefits from that?
#2 Smithfield Distribution laid off 1876. I wonder if Californians process less pork, will they eat less processed pork?
Pork processing company Smithfield Foods is closing its San Jose, CA plant, which will result in 139 worker layoffs beginning March 13.
The San Jose plant produced bacon and corned beef, and seven months ago Smithfield closed its meatpacking plant in San Leandro, CA.
Smithfield was sold in 2013 to Chinese firm Shuanghui International for $4.7 billion. In 2015, Smithfield announced that it would downsize operations to boost overall growth.
I think a lot of people’s focus on the low unemployment numbers doesn’t tell the whole story of the momentum in lost economic spending power. Sure we lost relatively a few high tech jobs and gained a lot of service jobs. But how many service jobs paying minimum wage does it take to balance those high tech salaries and benefits.
1. There was zero in this article about the “unemployment numbers.” Zero. Nada. Go back to sleep. Or RTGDFA
2. Nearly ALL tech jobs are SERVICE jobs. Google, Meta, Microsoft are service providers. Amazon is a mix of retailer and services provider (cloud, streaming, ebooks, etc.). Get it? These are service workers making 250k a year plus stock options. If you don’t get this about the US economy, you don’t get anything.
3. Tech workers that got laid of found other tech jobs perhaps in other industries. They’re not shifting down to bartending. They have highly sought-after skills.
I wonder if losing tech jobs even effects the unemployment rate. Many tech employees are not from the U.S. I am reading articles on how some of these laid off tech workers need to find a job in 60 days or their VISA expires and they have to leave the U.S.
10 years ago, I worked at a fortune 100 company in an R&D department. There were 22 in our group. Only 5 were born and raised in the U.S. The rest were foreigners who enrolled in a U.S. college, graduated and were then hired by a U.S. company. Almost all of were on some type H1B visa program.
HH chinese hate Americans,we better wake up,shut down meat plants for growth. How dumb is this country,2 edged sword less jobs,less food .Double whammy
As soon as we get motivated workers who are at least vaguely competitively priced, I can agree. But a bunch of overpaid foot-dragging shirkers, with high absenteeism, I’m not warm toward. I was always told, if you want to have something, you should fit yourself to have that thing. I have done my best to live by that.
Unfortunately Americans will pimp the country out to the highest bidder. Germans and Japanese were allowed to immigrate to the US right after WWII, Russians are allowed to immigrate to the US even when the countries were in a cold war for almost half a decade. A president of the US licked Saudi Arabia’s boots right after 9/11, and now selling American assets to the Chinese. Most countries make it impossible for foreigners to buy land, not so here in the good old USA. Our politicians are so generous with tax payer money that they sponsor 50K green card lotteries. They will bring some random foreigners into the country for virtue signaling, when half the country is in dire condition. For the ones that don’t win the lottery; not to worry, we even sell green cards for a cool million. If nothing else, just apply to some smalltime university for “higher education”. American tax payers will provide scholarship, and a job as well. Maybe the next thing is to sell the white house to some foreign billionaire so some politicians and corporate scum can make money. Teach your kids to look out for themselves first.
Intel also has instituted a PAY CUT for the layoff survivors – adding insult to inflation injury. It’s an under the radar RIF.
I think the layoffs are real and very few of the people who lost their jobs are able to find another opening at the same company.
I’ve been working in the tech industry for 25 years now. It’s a horribly cyclical industry and goes through periodic boom/bust cycles for as long as I’ve been in it. They over-hire during the boom and slash away their workforce during the busts. This is aggravated by the fact that it’s painfully difficult to fire someone for being unproductive or incompetent. Much easier/cheaper to stick them on the next layoff list.
What Wolf’s numbers don’t include is the legion of contractors that many of the tech companies have laid off. They’re not employees of the California companies, and even if they’re ultimately unemployed, their “employer of record” usually isn’t covered by California’s WARN act, so it goes unreported. My SWAG is that for every CA employee laid off by a tech company, there’s also 1 or 2 contractors that suffered the same fate.
Contractors who are on H1B visas are not eligible for unemployment insurance, so their numbers are difficult to track. I’m not aware of anything that tracks how many of those end up leaving the country because of their visas being lost due to unemployment.
It’s starting to feel more and more that this highly anticipated slow motion recession Trainwreck, and the expanding narrative that the train is on fire at the top of the pass, is a story about how that journey towards the train station unfolds.
The narrative is a process of passing on second hand news to other people and then adding colorful layers of inferences from prior train wreck stories.
I think we can thank the Fed for a sensational job of jaw boning and adding distractive confusion into their schizophrenic description as it relates to their perception of what’s going on with the train.
I guess I’m just wondering st this point if the train even exists. I’ve stumbled across the recent no-landing scenario, but quickly ignored looking at that, but now, here I am reexamining why I’m in catastrophe mode.
I don’t understand the concept of a flash crash in excessively overvalued equities, a stalled out housing market, hovering in limbo, an impending earnings recession, Treasury yields headed higher, mortgage rates headed higher, increasing unemployment, global GDP decay and the entire other side of the coin, where there’s massive amounts of liquidity, strong economies, strong consumers and the possibility that even a little deficit hiccup isn’t going to destroy raging consumer animal spirits.
In terms of California layoffs, it’s looking like a where’s the beef story.
Yet, I wonder, is it over confidence that ends up derailing the train, a belief that everything is fine, and confidence that cash burn will take care of itself, a few bankruptcies don’t matter, house prices falling are unimportant, stocks down 30%, so what, been there, done that.
Maybe this is all about resilience and accepting that if the train gets to the station, on fire, structurally damaged, that’s not really a big deal.
Maybe it’s normal to invest or bet on the train as it speeds down the hill, and anticipate that after it’s rebuilt, that in time, it’ll eventually go on a journey, go up a hill and not catch fire?
Well, I can’t predict the near-term stock trajectory… but as they say, stocks climb the wall of worry. And you are definitely the poster child of the wall of worry!
If you think of the economy like a spinning toy top and lets also say there is a dot on the table that you need to keep it on (representing price stability)… If the top is spinning stably on this dot that you don’t want to deviate from, you can successful ramp up the speed of this top (circulation, supporting new industries etc) without crashing your top or having your top leave the dot on the table and fall off the side.
However, if it starts wobbling, sometimes you need to slow down the top or put something heavy at the bottom of the top to keep it from spinning away from the dot to fall off the side of the table, or from wobbling and crashing because its overbalanced on one side and light on the other.
Covid shutdowns and spending basically destabilized the top. The solution was to slow down the top because the other option, which was to put something heavy at the bottom of this toy top was not available. Our equities are already inflated to try to pretend we have something of value (we don’t manufacture what we used to do its all property valuation manipulation and interest managing money). Too much debt means we have a fake economy on top of a weakened real one after GFC and whatever else. So the only option was slowing down the top aka recession.
The government and fed decided to speed the top up instead of slow it down because they are smarter? than us. Now this spinning toy top is zooming around the table completely off the dot, wobbling all over the place (inflation and strong job market but also layoffs).
People basically have no idea what the top’s relation to this dot is (price stability), so they start adjusting prices to cover themselves (inflation) with no competition and decreased supply and some price gouging (monopoly, used car prices) and some places layoffs are happening and some places they cant hire enough, logistics and shipping and materials are whack.
The average person is praying that the top will just magically come back to this dot OR that we can all live with this top zooming around wobbling all over this table without it crashing or falling off the side of the table and hope we can keep making more money to make ends meet.
The smart? lying? fed and government insist all is fine. They say the top is totally going to come back to this dot because they are slowly prodding this top towards the dot, but the top shoots off crazily in different directions every time they touch it. Services vs goods inflation whatever. They insist they have the tools to prod the top back on to the dot rather than slow down the top to make it easier because um the top moving off the dot and wobbling was transitory due to covid, ukraine, world war 3?
Since we can’t control the government spending (speed of top) and the fed doesn’t want to slow the top down by increasing rates to force a recession to stabilize the top, or i suppose third option is to go to war to win goods that everyone else needs (like oil?) to put at the bottom of this top to stabilize it, the average person continues to deal with all kinds of conflicting stories/realities with our fingers crossed that it will all sort of work out for us.
The plane hard landing implies the top being slowed down to the point the fake/overinflated equities/economy at the bottom of the top is exposed whereas its just a blur when you’re spinning really fast. If people really see how fake it is, they might not invest to spin the top back up again. Which is what stock market/bank/ etc is afraid of exposing.
The plane soft landing implies you can prod the top to the dot on the table and gently coax it back to position.
No plane landing means we live with the insanity of the top shooting around and wobbling all over the place and nobody knowing what will happen and government lying to your face… endgame 1984?
Since nobody knows whether the top will crash or not unless it is slowed and the fed doesn’t seem to want to slow it, and the calculation being that if the top crashes the average person is screwed anyways, it makes sense to some to spend for today and invest in more ownership of the top. If the top falls off the table, societal stability is over. Look at turkey post earthquake and people looting markets (or even more recently riots in the US). The average person has no faith the top will stabilize but in case it does, they might as well gamble and win big in the market.
I would say the chances are extremely bad and we are almost certainly going to crash the financial system unless we slow this top down, but there’s always a chance somebody pulls out some new thing to drag this out somehow. We get hurt either way, with a mass crash/default vs hyperinflation.
I am personally hoping that eventually the instability becomes so politically unpopular that we get a Volcker type (vs weak Powell) who finally forces the top to slow (recession) before the top crashes. At which point, my calculation rewards me for not gambling in the market (and really gambling for a deflation since at this point, the value of the dollar is ??). Unfortunately, I also have no faith that will happen given that Volcker is the anomaly and not the pattern in history.
If the top does manage to get back to price stability and Powell pulls off the soft landing, than I lost out on a lot of stock money and housing too. I think as most of us do that this option is unlikely.
If the top never slows down and inflation stays at 5%+… we are all dead at some point so might as live the way we want and rack up debt. Seems the people who believe this are living it up buying new cars, houses, eating out at restaurants, etc. And it feels the fed is rewarding these individuals and hurting savers instead. This includes people who say the fed has no choice.
I think we bite the bullet and raise interest rates to prepare for the hard landing and build a real healthy economy but no political will for it at the moment. At least based on midterm results. So…
TLDR: We are ****** (insert swear word of choice).
Maybe this is the wrong thread to suggest what’s needed is a few super strong Fed hikes.
The lack of capitulation in almost every market, along with far looser financial conditions, suggests the Fed needs to stop being super cautious lightly tapping the brakes.
We can’t really say it’s an icy road, in terms of Fed policy, but we can see the icy roads of equities, stocks and employment.
The exuberant resilience of the post pandemic era clearly demonstrate that the economy is running too hot.
For God’s sake, a jar of Newman salsa is now $4.59 — it used to be $2.50. the Fed has to crash the economic cycle and foster demand destruction, or else, we end up with severe inflation and real serious problems. Taking the air out of stocks and houses won’t crush, but ensuring that excess speculation is stomped on hard, helps reset a better future economic cycle.
I say push terminal rate to 7.5
You must either be very wealthy or on government funded retirement.
Why would someone on fixed income want more inflation? Honest question – seems like they’d be the ones getting screwed by it the most.
Inflation is vicious economic serum, inflicted on the poor by the wealthy, in my opinion. I agree that the Fed’s tip toeing while the obvious inflation rate that is > 7 % is unseemly. It has become an inflation accelerent rather than the brake the Fed is trying to sell.
The stock market is a symptom of the excess liquidity that is suspending the asset price bubbles such as the stock, bond, housing and the military budget markets.
The world is awash in fiat currency, whether it is Communist Chinese yuan, the BOC yen, the Euro, the world is caught in a battle of race to the bottom, currency devaluation. The Fed could make dollars dear by increasing the scarcity driving the interest rate up, opening the flood gates up for foreign governments to buy American assets with paper money.
Ah, California, according to your most interesting article, the godzilla of states, is still cruising, unscathed by the Fed’s so-called “tightening”.
I have to admit that I feel good that, in general, it seems that a lot of the folks are able to find suitable employment that meets their expectations about salary and benefits, the great motivator.
Perhaps, the potential of the marginalized American work force will finely be utilized rather than be punished.
Opportunity is the nectar of human innovation.
Are you being sophist or sarcastic?
If inflation is outpacing salary and benefits significantly and housing is now out of reach, how is the American work force supposedly being rewarded or supposed to stay motivated.
Marginalized work force being utilized rather than punished you say? Being forced to make ends meet due to inflation is being punished.
California is not cruising. Los Angeles homeless population has skyrocketed. People are leaving the state.
And you ?
Obviously you are still in the shit. I was unexpectedly retired a decade ago and no longer have a dog in the fight.
Besides, I grew up, in the glow of the post WW2 experience of optimism, which was infectious.
I also grew up in a union family, nurtured by the income and benefits the came with the union membership. I remember a clash between union members greeting the scabs.
I agree, California is macrocosm of random, gale force winds of disfunctionality that I certainly am unable to prescribe a suitable remedy. That being said. I recommend common sense which always draws raspberries in California.
You remind me of the scene from the movie ” Butch Cassidy and the Sundance Kid”, where they were trapped on a cliff and the only alternative to being captured by the law was to jump into the river. Sundance readied himself to die in a hail of bullets rather than leap from the cliff into the river because he didn’t know how too swim.
Everyone is motivated to be the best they can be which makes the realization that they are being exploited such a bitter pill.
Californians feel sorry for themselves without a clue how bad it is everywhere else. People are leaving ? Then go.
Switching topics but still relevant in the sense that a moron machine is likely to evaluate your resume. Powered by AI.
Unknowing and uncaring. An algorithm, without the validation of a mathematical proof that it is predictable and consistent, is being installed.
The origins of AI go back a couple of centuries with the mathematical proof of the ” central limit theorem” that any sample randomly drawn from any distribution will fall within a normal distribution of similar samples with a mean and a variance.
And that the variance is a continuous function of the probability that any sample is the same as the mean, given that the method of measurement is also random.
Dang and Dang:
”Lies, damn Lies, and Statistics” was the title of the book my statistics prof at CAL wrote and used in the class he taught at CAL.
When I told him of my very clear education in the ”HARD sciences” and asked to just take the final, he agreed…
He knew then, as I did, that his course was ”pablum” for those folks who had been denied any ”REAL” education in real hard science, ( as opposed to the various and sundry ”social sciences”…)
Those pseudo sciences, psych, econ, social, etc.,, continue to parade.
Some how, and some when,,, WE,,, in this case ALL of WE peasants and others SO similar for the last couple THOUSAND years,,, will figure this out and take our places as those who actually MAKE and DO ”stuff”,,,
As opposed to all the clearly ”scum bag sters” who continue to suck as much as possible from those who actually DO stuff that all folks need…
I signed up for the ‘FREE’ options guide.
Don’t do it.
Within 3 days of receiving that ‘BOOK’ I have been receiving an inordinate amount of offers and phishing scams.
While I trust Wolf and his wonderful dissertations, I do NOT trust ANY other offers with Mr Richter’s name attached.
I don’t sell or give away options guides, crypto guides, etc. If it has my name on it, it’s an impersonator, and you’re victim of a fraud. There are lots of them out there.
If you’re tempted by such an offer, contact me first via email, or ask me in the comments. I always welcome that.
If I write another book (I already have a couple of them, unrelated to finance), I will promote it on this site, and you will see it’s mine.