A sign asking for help is displayed in the window of the Brooklyn office in New York.
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Cracks are forming in the US labor market as some companies seek to limit hiring while others desperately need workers.
Microsoft, Twitter, Wayfair, Snap and Facebook parent Meta recently announced that they plan to be more conservative about adding new employees. Peloton and Netflix announced layoffs as demand for their products waned and online car dealer Carvana cut staff as inflation and falling stock prices hit.
“We will treat hiring as a privilege and consider when and where to add staff,” Uber boss Dara Khosrowshahi wrote to employees earlier this month, promising to cut costs.
US employers reported more than 24,000 job cuts in April, up 14% from the previous month and up 6% from the same month last year, according to data from Challenger, Gray & Christmas.
But airlines, restaurants and other companies still need to fill vacancies. Job losses in the first four months of the year were down 52% compared to the same period in 2021. Just under 80,000 job cuts were announced from January to April, the lowest in nearly three decades the firm has tracked. data.
A story emerges of two labor markets, though not equal in size or pay. Hospitality and other service industries are unable to hire enough workers to staff what is expected to be a roaring summer recovery after two years of Covid-fueled headwinds. Tech and other large employers are warning they need to cut costs and are warning employees.
US The seasonally adjusted number of job openings rose sharply to 11.55 million at the end of March, according to the latest available report from the Department of Labor, a record for data dating back to 2000. The number of employees who left their jobs also reached a record, more than 4.5 million. Hiring amounted to 6.7 million people.
Wages are rising, but not enough to keep up with inflation. And people are changing where they spend their money, especially as household budgets shrink due to the highest consumer price increases in four decades.
Economists, employers, job seekers, investors, and consumers look for signals about the direction of the economy and detect emerging labor market discord. The divergence could mean a slowdown in wage growth or self-employment and could eventually cut consumer spending, which has been resilient despite worsening consumer confidence.
Companies large and small, from airlines to restaurants, are still unable to hire fast enough, forcing them to scale back on growth plans. Demand recovered faster than expected after these companies laid off employees during the pandemic-driven sales slump.
JetBlue Airways, Delta Air Lines, Southwest Airlines, and Alaska Airlines have cut growth plans, at least in part, due to staff shortages. JetBlue said that the loss of pilots is above the norm and is likely to continue.
“If your turnover rates are, say, 2-3 times what you have seen in the past, then you need to hire more pilots just to stand still,” JetBlue CEO Robin Hayes said at an investor conference on May 17 .
According to Pam Decant, senior vice president of airport concessions, Denver International Airport concessions, such as restaurants and shops, have made progress with hiring but are still understaffed by about 500-600 workers to get roughly 5,000 people.
She said many chefs are making about $22 an hour, up from $15 before the pandemic. Airport employers are offering hire, retention and, in at least one case, what she called “a bonus if you show up for work every day this week.”
Consumers “spending a lot on goods and little on services during the pandemic, and now we see in our card data that they are returning to services, they are literally flying,” said David Tinsley, an economist and director of Bank of America. institute.
“This is something like a shake-up from those people who, perhaps, [had] overdid it in terms of hiring,” he said of current trends.
Companies driving job growth were hardest hit early in the pandemic.
Jessica Jordan, managing partner at Rothman Food Group, is struggling to hire workers for her two Southern California operations, Katella Deli & Bakery and Manhattan Beach Creamery. According to her estimates, both enterprises are only 75% staffed.
But half of the candidates never respond to her interview emails, and even new hires who have already submitted their paperwork often disappear before their first day without explanation, she said.
“I work so hard to hold their hand through every step of the process, just to make sure they show up on day one,” Jordan said.
Larger restaurant chains also have high hiring orders. Sandwich chain Subway, for example, said Thursday that it plans to add more than 50,000 new employees this summer. Taco Bell and Inspire Brands, which owns Arby’s, said they are also looking for new hires.
The hotels and food service industry had the highest layoff rate by industry in March, with 6.1% of workers leaving their jobs, according to the Bureau of Labor Statistics. The overall quit rate for that month was only 3%.
Some of these workers leave the hospitality industry entirely. Julia, a 19-year-old New Yorker, quit her job at a restaurant in February. She said she left because of hostility from both clients and her superiors, as well as too many extra shifts added to her schedule at the last minute. Now she works in a kindergarten.
“You have to work really hard to get fired in this economy,” said David Kelly, chief global strategist at JP Morgan Asset Management. “You must be really incompetent and obnoxious.”
And if booming industries are hiring to catch up, the opposite is also true.
Following a hiring boom, several major tech companies have announced hiring freezes and layoffs as fears of an economic downturn, the Covid-19 pandemic and war in Ukraine curb growth plans.
Richly funded startups are also not immune, even if they aren’t subject to the same level of market value declines as public tech stocks. At least 107 tech companies have laid off employees since the start of the year. Layoffs.fyiwhich tracks job cuts in the sector.
In some cases, companies such as Facebook and Twitter cancels job offers after new hires have already accepted them, leaving workers like Evan Watson in a precarious position.
Last month, Watson received a job offer at Facebook’s new talent and diversity department, which he called one of his “dream companies.” He notified the real estate firm where he worked and set a start date for the social media giant for May 9.
Just three days prior, Watson received a call about his new contract. Facebook recently announced that it was suspending hiring, and Watson worriedly suggested he might get some bad news.
“When I got the call, my heart sank,” Watson said in an interview. The Meta was freezing hiring, and Watson onboarding has been disabled.
“I just kept quiet. I really didn’t have the words to say,” Watson said. “Then I thought, ‘Now what? I don’t work for my other company.”
The news disappointed Watson, but he said Facebook had offered to pay him severance pay while he looked for a new job. Within a week, he got a job at Microsoft as a talent scout. Watson said he “feels good” about moving to Microsoft, where the company is “much more stable in terms of stock price.”
For months, retail giant Amazon has been offering generous signup bonuses and free college tuition to attract employees. The company has hired 600,000 employees since the start of 2021, but now there are too many employees in its fulfillment network.
Many of the company’s recent employees are no longer needed as e-commerce sales growth slows. In addition, employees who went on sick leave amid a spike in Covid cases have returned to work earlier than expected, Amazon CFO Brian Olsawsky said during an analyst call last month.
“Now that demand has become more predictable, there are sites in our network where we are slowing down or pausing hiring to better meet our operational needs,” Amazon spokeswoman Kelly Nantel told CNBC.
Amazon did not respond to questions about whether the company foresees layoffs in the near future.
Layoffs and hiring changes have so far been isolated, but some executives are on edge.
“Any flood of news … with his high-end companies talking about job losses could dampen sentiment a bit,” Bank of America’s Tinsley said, warning that the job market is still strong. “Maybe it’s not as bad as some might make it out to be.”
However, he said service job growth is likely to slow down.
JPM’s Kelly said that even if the market loses 3 million jobs, it will still be a job seeker market.
“There is a strong excess demand for workers. It really protects the economy from a recession,” he said.
But job cuts could affect other sectors as well.
A sharp increase in hiring freezes, job cuts, wage stagnation, or even cuts in companies’ spending on things like employee benefits and a return to business travel could hurt the very service sectors that flourished when Covid cases dropped.
“The question is, will consumer spending stay afloat?” Tinsley said.