Economic analysts are raising an eyebrow at the recent jobless claims amid layoffs at tech companies.
JP Morgan analysts believe that large severance packages offered at Google, Amazon and Meta might be keeping unemployment claims at a lower level, Axios reported Friday. The analysts argue large severance packages likely keep workers from being eligible for an unemployment claim, resulting in 50,000 fewer unemployment benefit requests, according to the outlet.
Tech companies have undergone significant downsizing, the Daily Caller previously reported. Amazon laid off 17,000 employees, higher than initial expectations. Meta laid off 11,000 employees, amounting to 13% of their worldwide workers, while Google has laid off 12,000 workers.
“While rules vary by state, severance generally would either delay or reduce one’s eligibility for unemployment insurance,” JP Morgan analysts said, according to Axios, “so people who were laid off and have been receiving severance may not have filed for unemployment insurance yet.”
Despite big tech layoffs, the unemployment rate in tech is just 1.5%
Many of workers laid off over the last few months have already found new jobs pic.twitter.com/fZCnfxcF1c
— Genevieve Roch-Decter, CFA (@GRDecter) February 7, 2023
Other economists agree that the large number of tech layoffs obfuscate the true extent of the country’s unemployment growth.
“Announcements of layoffs, particular in the tech sector, continue, but those job losses haven’t translated into a notable rise in claims,” Nancy Vanden Houten, an Oxford economist said. “That suggests that these workers are finding it relatively easy to find other jobs or are confident they will be able to do so.”
John Leer, chief economist at Morning Consult, claims that job-seekers seem very confident about their employment prospects. Most employees do not expect to lose their jobs or see a reduction in income, bolstering the perception of a strong economy.
Workers remain fairly optimistic about their future employment prospects,” Leer said. “The share of workers who anticipate losing their job or losing their income remains low.”
