January Jobs Report Preview: Measured Start to 2023

This Friday, the Bureau of Labor Statistics (BLS) will release the January jobs report. In the first report for 2023, the labor market is expected to get off to a measured start, holding itself in check as it paces for a soft landing. The labor market finished up the 2022 lap stronger than expected, with robust job gains but cooling wage gains and inflation. And despite another round of tech layoffs in January, the job market appears to be holding up, cooling only gradually. 

Here are three trends we'll be watching for in the January jobs report:

Employee Concerns about Layoffs are Surging

With another round of layoffs announced in January from major tech firms like Microsoft and Alphabet, employees are growing increasingly concerned about the risk of layoffs. Mentions of layoffs in Glassdoor reviews are up 11 percent month-over-month in January 2023. This is also a 149 percent increase year-over-year and the highest level since July 2020. In tech specifically, discussions of layoffs are up 21 percent month-over-month and 452 percent year-over-year, putting them at a higher level than at the peak of the pandemic.

Unsurprisingly, discussions of layoffs are overwhelmingly negative, with 82 percent of mentions occurring in the cons section of reviews. Interestingly, this is slightly better than pre-pandemic (86 percent in January 2020) but also worse than in April 2020 (63 percent) when employees were more forgiving of companies that were forced to lay off workers by the onset of the pandemic.

Similarly, discussions of layoffs on Fishbowl by Glassdoor, a social network for professionals, continue to rise, up 50 percent month-over-month in January 2023. This is the highest level since June 2020, when we were still coming off the wave of layoffs at the start of COVID. Notably, discussions of inflation and recession have cooled since mid-2022 as gas prices have fallen.

Benchmark Revisions Expected to Boost Payroll Estimate

In this month’s jobs report, the Bureau of Labor Statistics will release its benchmark revisions for March 2021 payroll employment. The preliminary benchmark released last August estimated an upward revision of 462,000, meaning jobs growth was likely more robust between March 2020 and March 2021 than originally thought.

The revisions will also vary by industry, with payroll employment in retail trade expected to be revised down significantly (-323,300 jobs) and professional & business services (+270,000), leisure & hospitality (+140,000) and transportation & warehousing (+151,600) are expected to be revised up substantially.

If payrolls in March are revised upward by the estimated 462,000, that would likely pull forward the date that we returned to pre-pandemic payroll employment levels to early 2022 instead of August 2022. While this would signal a healthier recovery early on, unfortunately, the benchmark revisions won’t tell us much about the trajectory of the labor market in the second half of 2022, when recession concerns came to the fore.

Conclusion

The labor market is expected to get off to a modest start in the new year, gearing down from the strong 2022 job market. Despite headlines about layoffs, jobs data has been surprisingly robust so far, and simultaneously, inflation has cooled. As long as the labor market remains resilient with low unemployment and positive job gains, a soft landing cannot be ruled out.

Methodology

To analyze employee discussion topics, we looked at two datasets: employee reviews on Glassdoor and comments & posts on Fishbowl by Glassdoor. For employee reviews, we looked only at reviews from U.S. full-time and part-time employees. For Fishbowl comments/posts, we looked at only U.S.-based users. 

We counted the prevalence of keywords including “layoff”, “recession” and “inflation”, and their related terms. For example, for “layoff”, we also counted “laid off” or “fired”. January 2023 data is current through January 22.