Business

The division of the U.S. labor market increases the opportunities for some employees and informs others

A sign asking for help appears in the window of a New York business in Brooklyn.

Spencer Platt | Getty Images

Cracks are popping up in the U.S. job market, while some companies are looking to cut hiring, while others are desperate for workers.

Microsoft’s parents, Twitter, Wayfair, Snap and Facebook’s parent Meta recently announced plans to become more conservative to add new employees. Peloton and Netflix announced layoffs as demand for their products slowed, and Carvana online car salesmen slashed their employees because they are suffering from inflation and stock prices.

“We will treat hiring as a privilege and we will deliberately increase the number of employees when and where,” 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, up 14% from the previous month and 6% from the same month last year, according to Challenger, Gray & Christmas outplacement.

But airlines, restaurants and others still have jobs to fill. In the first four months of the year, employment cuts fell by 52% compared to the same period in 2021. Less than 80,000 job cuts were announced from January to April, the lowest figure the company has tracked in data for nearly three decades.

What is emerging is the story of two labor markets, even if they are not the same size or salary. The hospitality and other service sectors are unable to hire enough staff after a two-year hurdle that Covid is expected to experience a sharp summer rebound. Technology and other large employers have warned of the need to reduce costs and are informing employees.

Register job offers

U.S. job vacancies rose to seasonally adjusted $ 11.55 million at the end of March, according to the latest Department of Labor report available, a record figure for the year 2000. The number of employees who left the job was also at a record high until 2000. More than 4.5 million. Recruitment was $ 6.7 million.

Wages are rising, but they are not enough to keep pace with inflation. And people are changing where they spend their money, mainly because household budgets are being tightened by a four-decade rise in consumer prices.

Economists, employers, job seekers, investors and consumers are looking for signs of the direction of the economy, and are finding the divisions that are emerging in the labor market. This divergence could lead to a slowdown in wage growth, or recruitment itself, and ultimately lead to a reduction in consumer spending, which has been strong despite a decline in consumer confidence.

Companies from airlines to large and small restaurants still can’t get hired fast enough, which forces them to cut their growth plans. Demand returned faster than expected after the pandemic hit sales after these companies laid off workers.

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 the pilot’s wear is higher than normal and will likely continue.

“If your wear rates, for example, double and triple what you’ve historically seen, then you need to hire more pilots to stay still,” JetBlu CEO Robin Hayes said at a May 17 investor conference.

Concessions such as restaurants and shops at Denver International Airport have progressed in hiring, but there are still about 500 to 600 employees left to reach about 5,000, according to Pam Dechant, vice president of airport concessions.

He said many chefs earn about $ 22 an hour, more than $ 15 before the pandemic. Airport employers are offering recruitment, retention and, at least in one case, so-called “if you show up for work every day this week”.

Consumers “spent a lot on goods and not a lot on services as a result of the pandemic, and now we’re seeing them return to services in our card data, literally flying,” said David Tinsley, an economist and director of Bank of America. Institute.

“It simply came to our notice then [had] in terms of over-hiring, ”he said of current trends.

Go back

It is the companies that are leading the way in job growth that were hardest hit in the early days of the pandemic.

Jessica Jordan, managing partner of Rothman Food Group, is struggling to hire the staff she needs for two businesses in Southern California, Katella Deli & Bakery and Manhattan Beach Creamery. Both estimate that they are only about 75% of the workforce.

But half of applicants never respond to emails for the interview, and new hires who have already submitted papers also often disappear before the first day, without explanation, he said.

“I’m working so hard at every step of the process to hold them in their hands to make sure they come that first day,” Jordan said.

Large restaurant chains also have high hiring orders. The Subway sandwich chain, for example, said on Thursday it wants to add more than 50,000 new employees this summer. Taco Bell and Inspire Brands, the owner of Arby’s, said they are also looking to add staff.

Hotels and food services had the highest rate in all industries in March, with 6.1% of workers leaving work, according to the Bureau of Labor Statistics. The overall exit rate was 3% that month.

Some of these employees are moving away from the hospitality industry completely. Julia, a 19-year-old living in New York City, quit her job at the restaurant in February. He said he left because of the hostility of customers and his bosses and the fact that too many extra shifts were added to the schedule at the last minute. She now works in child care.

“You have to work very hard to be released in this economy,” said David Kelly, JP Morgan Asset Management’s chief global strategist. “You have to be really incompetent and evil.”

Slowing down in Silicon Valley

And if they’re hiring bouncing industries to catch up, it’s just the opposite.

Following a surge in recruitment, several technology companies have announced a freeze on hiring and layoffs, as concerns about the economic slowdown, the Covid-19 pandemic and the war in Ukraine reduce growth plans.

Start-ups with rich funding are also not immune, even if they do not suffer the same level of degradation in the market value of public technology shares. At least 107 technology companies have laid off workers since the start of the year, according to Layoffs.fyi, which continues to cut employment in the sector.

In some cases, companies like Facebook and Twitter are canceling job offers after they have already accepted new hires, leaving employees like Evan Watson in a precarious situation.

Last month, Watson received a job offer to join the emerging talent and diversity division on Facebook, which he called one of his “dream companies”. He reported to the real estate development company he worked for and set a start date for the social media giant for May 9th.

Three days earlier, Watson had received a call for a new contract. Facebook recently announced that it would suspend hiring, and Watson speculated that he would receive bad news.

“When I got the call, my heart sank,” Watson said in an interview. Meta’s hiring was freezing, and Watson’s intrusion was off.

“I was silent. I had no words to say,” Watson said. “Then I said, ‘Now what?’ I don’t work for my other company. “

The news left Watson disappointed, but said he was offered Facebook to pay for his dismissal 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 share prices.”

For months, the Amazon retail giant provided generous sign-up bonuses and free college tuition to attract employees. The company has hired 600,000 employees since its inception in 2021, but now finds its workforce overcrowded.

Many of the company’s recent hires are not necessary as the growth in e-commerce sales has cooled. In addition, an increase in Covid cases resulted in workers returning to work earlier than expected due to illness, Amazon CEO Brian Olsavsky said in a call to analysts last month.

“Now demand has become more predictable, there are sites in our network that are slowing down or pausing hiring to better align with our operational needs,” Amazon spokeswoman Kelly Nantel told CNBC.

Amazon has not answered questions about whether the company plans to release them in the near future.

The shield of recession

Restrictions and hiring shifts are isolated at the moment, but some executives are on the edge.

“Any news flows … when reputable companies have a chance to break their feelings a little bit about job losses,” said Tinsley of Bank of America, warning that the job market is still strong. “Things may not be as bad as some pictures might paint.”

However, he said that the pace of growth in employment in the services sector will begin to slow.

JPM’s Kelly said that even if the market lost 3 million openings, it would still be a job-seeker market.

“There is a huge demand for overstaffing. It really protects the economy from recession,” he said.

But job cuts could affect other sectors.

Freezing hiring, job cuts, wage cuts or even a drop in business spending, such as employee benefits and business trips, could hurt service sectors that have progressed as Covid’s case has declined.

“The question is, will consumer spending keep itself above water?” Tinsley said.

– CNBC Jordan Novet he helped in this story.

The division of the U.S. labor market increases the opportunities for some employees and informs others

Source link The division of the U.S. labor market increases the opportunities for some employees and informs others

Back to top button