The latest February employment report in the United States was significantly lower than expected. Non-farm employment unexpectedly fell by 92,000 jobs, while the market had previously expected an increase of 55,000 jobs. The decline in the technology industry was particularly prominent, and economists described it as experiencing a "technology bloodbath." Multiple data and expert opinions show that the rate of loss of technology jobs in this round has exceeded the 2008 financial crisis and the 2020 epidemic recession, and is second only to the bursting of the Internet bubble.
Economist Joseph Politano issued an article after the employment data was released, pointing out that although U.S. technology employment has no longer expanded at a rapid rate in the past period, it has at least remained roughly stagnant. Now this trend has been completely reversed in the past year, and technology jobs have begun to continue to be lost at the fastest rate in the past 20 years. In his view, the current adjustment is "obviously worse than the recession in 2020 and slightly worse than 2008." The closest historical reference is the bursting of the Internet bubble, but it has not yet reached the extreme level of that year.
Judging from historical experience, the U.S. technology industry usually adds a net increase of 100,000 to 300,000 jobs every year. Even if it experiences a correction, it often rebounds quickly. However, this time, technology employment has been in a state of net loss for three consecutive years, which is similar to the pace of hiring that resumed roughly four years after the Internet bubble burst. However, the current decline is accelerating as it enters its third year, making analysts particularly worried. Politano lamented that the only comparable point of reference today is "the worst recession in tech employment in history," a fact that speaks volumes in itself.
However, the decline in employment is not unique to the technology industry. Indeed Hiring Lab economist Corey Starr pointed out that the manufacturing industry has been cooling for several years, and manufacturing jobs continued to decline in this employment report, and government employment also shrank. The health care field, which has previously supported the overall labor market, saw rare job losses in February. Part of the reason was related to the month-long strike at Kaiser Permanente Group. All industries showed a "generally weak" pattern overall.
ZipRecruiter economist Nicole Bachold said job losses in the information industry and related professional services fields in February continued a recent weak trend. In her view, the decline in technology-related industries is not a sudden "collapse", but a continuation of the previous downturn; despite constant reports of layoffs at large technology companies, looking at broader data, the overall layoff rate in the United States is still at a low and relatively stable level.
This round of technological winter has particularly hit those who are new to the workplace. Among the new college graduates, a large number of students majoring in science, engineering and computer science, as well as other job seekers looking for their first job, have borne the brunt of the cooling technology recruitment. Starr pointed out that in the past four or five years, when many young people chose majors such as computer science, they were told that this was a "sure path" to enter the labor market and earn high salaries. But now they are faced with the reality that technology companies continue to shrink recruitment and the job supply continues to decrease.
The latest employment data has yet to fully reflect the impact of recent layoffs at some large technology companies. Payment company Block just announced last week that it would lay off nearly half of its employees. In an internal statement, CEO Jack Dorsey listed artificial intelligence as one of the reasons for the layoffs, saying that the smart tools the company is building and using, combined with a smaller, flatter team structure, are opening up new ways of working. However, many laid-off employees are skeptical about the term "AI replacement". They said that they have used AI tools extensively during their employment and do not agree that these tools are enough to completely replace existing positions.
Politano believes that artificial intelligence is driving at least part of this contraction in technology employment. He said that it is difficult to accurately quantify the impact of AI, but sub-sectors such as computer system design are currently one of the most serious areas of unemployment. At the same time, although emerging AI companies are expanding their recruitment, they are far from matching the number of jobs provided by traditional technology giants in the past. This gap between the disappearance of jobs and the creation of new jobs has intensified the contraction of overall employment.
Looking ahead, Politano judged that the bad news in the technology industry is "far from bottoming out." He predicts that in the short term, the market will still be in a stage where bad news is coming one after another, and there is no strong evidence of getting rid of the "post-bubble cycle" since 2022. Until then, it is difficult to reverse the technology employment situation. Under the combined influence of multiple cyclical factors and technological changes, the U.S. technology industry is experiencing a long and painful job clearing, and it is still unknown when it will bottom out and rebound.