A help sign shows a business window in Brooklyn, New York.
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Cracks are forming in the U.S. job market as some companies are looking to curb hiring while others are looking for desperate employees.
Microsoft, Twitter, Wayfair, Snap and Meta, Facebook’s father, recently announced that they plan to be more conservative when it comes to adding new employees. Peloton and Netflix announced layoffs as demand for their products slowed and online carmaker Carvana reduced its workforce as it faced inflation and rising stock prices. .
“We will treat hiring as a privilege and deliberate on when and where to add the number of people,” Uber chief Dara Khosrowshahi wrote to staff earlier this month, pledging to cut costs.
U.S. employers reported more than 24,000 job cuts in April, 14 percent more than the previous month and 6 percent more than the same month last year, according to the replacement company Challenger, Gray & Christmas.
But airlines, restaurants and others still need to take their places. Job cuts fell by 52% in the first four months of the year compared to the same period in 2021. Slightly less than 80,000 job cuts were announced from January to April, the highest figure down in the nearly three decades the company has been tracking the data.
What is emerging is a story of two labor markets, though not equal in size or salary. The hospitality and other services sectors cannot hire enough workers to staff what is expected to be a summer rebound after two years of Covid hurdles. Technology and other big business owners warn that they need to cut costs and warn employees.
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Job vacancies in the United States soared to seasonally adjusted 11.55 million at the end of March, according to the latest available report from the Department of Labor, a record for the year 2000. of employees who left their jobs also reached a record, at more than 4.5 million. Recruitments stood at 6.7 million.
Wages are rising, but not enough to keep pace with inflation. And people are changing where they spend their money, especially as family budgets are tightened by rising consumer prices in four decades.
Economists, employers, job seekers, investors and consumers are looking for signs of the direction of the economy and are finding emerging divisions in the labor market. The divergence could lead to a slowdown in wage growth, or hiring itself, and could ultimately reduce consumer spending, which has been robust despite deteriorating consumer confidence.
Businesses, from airlines to restaurants, large and small, are still unable to hire fast enough, forcing them to cut back on growth plans. Demand rebounded faster than expected after these companies laid off workers during the pandemic-induced fall in sales.
JetBlue Airways, Delta Air Lines, Southwest Airlines and Alaska Airlines have reduced their growth plans, at least in part, due to staff shortages. JetBlue said pilot wear is running higher than normal and will likely continue.
“If your wear and tear rates are, for example, 2 to 3 times what you’ve seen historically, you’ll need to hire more pilots just to stay still,” JetBlue CEO Robin Hayes told a news conference. ‘investors on May 17.
Denver International Airport concessions, such as restaurants and shops, have advanced in hiring, but they still do not have between 500 and 600 workers to reach about 5,000, according to Pam Dechant, senior vice president of airport concessions.
He said many cooks earn about $ 22 an hour, more than the $ 15 before the pandemic. Airport employers offer hiring, retention and, in at least one case, what she called a “bonus if you show up to work every day this week.”
Consumers “spent a lot on goods and little on services during the pandemic and now we see in our card data that they are back to services, they literally want to,” said David Tinsley, an economist and director of Bank of America. High school.
“It simply came to our notice then [had] it has been exaggerated in terms of recruitment, ”he said of current trends.
Go back
The companies leading the job growth are the ones most affected by the onset of the pandemic.
Jessica Jordan, managing partner of Rothman Food Group, is struggling to hire the workers she needs for two of her Southern California businesses, Katella Deli & Bakery and Manhattan Beach Creamery. She estimates they both have only 75% staff.
But half of applicants never respond to their emails for an interview, and even new hires who have already submitted their documentation often disappear before day one, without explanation, he said.
“I’m working really hard to grab their hand at every step of the process, just to make sure they get there the first day,” Jordan said.
Larger restaurant chains also have high hiring orders. Sandwich Subway, for example, said Thursday it wants to add more than 50,000 new workers this summer. Taco Bell and Inspire Brands, owners of Arby’s, said they also want to add staff.
Hotels and food services had the highest dropout rate of all industries in March, with 6.1% of workers leaving their jobs, according to the Bureau of Labor Statistics. The overall dropout rate was only 3% that month.
Some of these workers are moving completely away from the hospitality industry. Julia, a 19-year-old living in New York City, left her restaurant job in February. He said he left because of the hostility of both customers and their bosses and too many extra shifts added to his agenda at the last minute. She now works in daycare.
“You have to work really hard to be fired in this economy,” said David Kelly, chief global strategist at JP Morgan Asset Management. “You have to be really incompetent and nasty.”
Slowdown in Silicon Valley
And if the emerging industries are hiring to catch up, the opposite is equally true.
Following a boom in recruitment, several major technology companies have announced recruitment freezes and layoffs, as concerns over an economic downturn, the Covid-19 pandemic and the war in Ukraine slow down growth plans.
Emerging companies with large funding are also not immune, even if they are not subject to the same level of market value degradation as public technology stocks. At least 107 technology companies have laid off employees since the beginning of the year, according to Layoffs.fyi, which tracks job cuts across the industry.
In some cases, companies like Facebook and Twitter are canceling job offers after new hires have already accepted, leaving workers like Evan Watson in a precarious position.
Last month, Watson received a job offer to join Facebook’s emerging talent and diversity division, which he called one of his “dream companies.” He gave a notice to the real estate promotion company where he worked and set a start date for the social media giant for May 9th.
Just three days earlier, Watson had received a call about his new contract. Facebook had recently announced that it would pause hiring, and Watson speculated anxiously that he might receive bad news.
“When I got the call, my heart sank,” Watson said in an interview. Meta was freezing recruitment and Watson’s incorporation was off.
“He was like silent. He really had no words to say,” Watson said. “Then I said, ‘And now what?’ I don’t work for my other company. “
The news left Watson disappointed, but said Facebook offered to pay him severance pay while he was looking for a new job. Within a week, he got a job at Microsoft as a talent scout. Watson said it “feels good” to land at Microsoft, where the company “is much more stable, in terms of stock prices.”
For months, retail giant Amazon posted generous sign-up bonuses and free college tuition to attract workers. The company has hired 600,000 employees since the beginning of 2021, but is now overcrowded in its compliance network.
Many of the company’s recent hires are no longer needed, and e-commerce sales growth is cooling. In addition, employees who were on sick leave amid rising Covid cases returned to work earlier than expected, Amazon Chief Financial Officer Brian Olsavsky said in a call with analysts last month.
“Now that demand has become more predictable, there are places on our network where we’re slowing down or stopping hiring to better align with our operational needs,” Amazon spokeswoman Kelly Nantel told CNBC.
Amazon did not answer questions about whether the company expects layoffs in the near future.
Shield of recession
Reductions and hiring shifts are isolated for now, but they have some executives on the edge.
“Any kind of news flow … when your high-profile companies around the job loss, have the potential to break the sentiment a little bit,” said Tinsley of Bank of America, warning that the labor market is still strong. “Things aren’t as bad maybe as the picture some might paint.”
However, he said that the growth rate of employment in the services sector will begin to decline.
JPM’s Kelly said that even if the market lost 3 million openings, it would still be a job-seeking market.
“There is a strong over-demand for workers. It really protects the economy from the recession,” he said.
But job cuts could affect other sectors.
A sharp rise in hiring freezes, job cuts, wage stagnation or even a drop in company spending on things like employee benefits and a return to business travel could hurt same service sectors that have thrived as Covid cases fell.
“The question is, will consumer spending keep its head out of the water?” Tinsley said.
– Jordan Novet of CNBC contributed to this story.