There are more and more layoffs, but some companies can’t hire fast enough.
Some of the largest U.S. companies are cutting jobs, but others are still scrambling to find people to hire. This is because consumer priorities have changed a lot since the COVID pandemic started three years ago.
Tech giants like Meta, Amazon, and Microsoft, as well as companies like Disney and Zoom, have all announced layoffs in the past few weeks. A report from the outplacement firm Challenger, Gray & Christmas, which came out earlier this month, says that U.S. employers cut nearly 103,000 jobs in January. This is the most since September 2020.
On the other hand, employers added 517,000 jobs last month, which is almost three times as many as analysts thought they would. This shows that the job market is still tight, especially in service industries like restaurants and hotels that were hit hard by the pandemic.
Even less can be said about the future of the U.S. economy because of this change. Even with higher interest rates and persistent inflation, consumer spending has stayed strong, which has surprised some economists.
David Kelly, the global chief strategist at J.P. Morgan Asset Management, said that all of this is part of the “legacy of weirdness” that the COVID pandemic left behind.
The next nonfarm payroll report will come out on March 3 from the Bureau of Labor Statistics.
Some analysts and economists say that job losses in other sectors could get worse if some sectors don’t do well, household budgets get tight, savings get used up, and interest rates are high. This is especially true if wages don’t keep up with inflation.
According to the most recent data from the Bureau of Labor Statistics, wages in the leisure and hospitality industry went up from $19.42 per hour in January 2017 to $20.78 per hour in January 2018.
Kelly said, “There’s a difference between saying the job market is tight and saying it’s strong.”
In the past few years, it’s been hard for many employers to find and keep good employees. Problems include workers’ need for child care and competition from other jobs with better hours and pay.
With interest rates going up and inflation staying high, consumers might cut back on spending, which could lead to job losses or less hiring in sectors that are otherwise doing well.
Aneta Markowska, chief economist at Jefferies, said, “When you lose a job, you don’t just lose one job.” There’s a multiplier effect.
So, even if some tech companies are having trouble, that could mean less money spent on business travel, or if the number of people losing their jobs goes up a lot, it could cause households to cut back sharply on spending on services and other goods.
The big change
Some of the recent layoffs came from companies that hired more people during the pandemic, when people and businesses spent more on remote work and online shopping.
Amazon said last month that the company would be cutting 18,000 jobs. According to company filings, the Seattle-based company employed 1.54 million people at the end of 2018, which was almost double the number at the end of 2019, right before the pandemic.
Microsoft said that it will cut 10,000 jobs, which is about 5% of its staff. At the end of June last year, the software giant had 221,000 employees, up from 144,000 before the pandemic.
“Tech used to be a grow-at-all-costs sector,” said Michael Gapen, head of U.S. economic research at Bank of America Global Research. “It’s starting to grow up a little bit.”
There are still people being hired by other companies. For example, Boeing wants to hire 10,000 people this year, most of whom will work in manufacturing and engineering. It will also cut about 2,000 corporate jobs, most of which are in the human resources and finance departments. The goal of the growth is to help the aerospace giant speed up production of new planes in preparation for a rise in orders from airlines like United and Air India.
When people stopped travelling early in the pandemic, airlines and aerospace companies were hard hit. They are now trying to catch up. Airlines are still looking for pilots, but there aren’t enough of them, which limits their capacity. At the same time, demand for experiences like travelling and eating out has gone up.
Chipotle wants to hire 15,000 people to get ready for a busier spring season and to help with its growth.
Both big and small businesses are finding that they need to raise wages to attract and keep workers. Restaurants and the aerospace industry, both of which lost favour with consumers and other businesses, are bringing back workers after letting people go. Walmart said it would raise the minimum wage for store workers to $14 an hour to attract and keep workers.
Because of a high turnover rate, the Miner’s Hotel in Butte, Montana, raised housekeepers’ hourly pay by $1.50 to $12.50 in the last six weeks. This was done by general manager Cassidy Smith.
Airports and businesses that sell things at airports have also been in a rush to hire people as travel has picked up. The Phoenix Sky Harbor International Airport has been holding job fairs every month and giving some employees scholarships for child care to help them get hired.
Schedules by seat at Austin-Bergstrom International Airport have grown by 48% this quarter compared to the same time last year. The airport has started a number of new programmes, such as $1,000 bonuses for referrals and incentives for referred staff to sign contracts and stay with the company.
The airport also increased the hourly pay for people who work in airport facilities, from $16.47 in 2022 to $20.68 in 2023.
“The cost of living is high in Austin,” said Kevin Russell, who works at the airport as the deputy chief of talent.
He said that people are staying with their jobs longer.
He said that it has been hard to keep electricians, plumbers, and heating and air conditioning technicians because they can work at other places that aren’t open 24/7 and pay more.
Even though it’s easier to find new employees, many companies still have to train their new hires. It can take a long time for some industries to get back on their feet.