Layoffs spread, but some employers can’t hire fast enough

Job cuts are increasing at some of America’s biggest companies, but others are still scrambling to hire workers, the result of wild swings in consumer priorities since the Covid pandemic began three years ago.

Tech Giants Meta, Amazon And Microsoftas well as companies ranging from disney For Zoom, have announced job cuts in recent weeks. In total, U.S.-based employers cut nearly 103,000 jobs in January, the most since September 2020, according to a report released earlier this month by outplacement firm Challenger, Gray & Christmas.

Meanwhile, employers added 517,000 jobs last month, nearly three times the number analysts expected. This points to a still tight labor market, especially in service sectors that were hit hard at the start of the pandemic, such as restaurants and hotels.

The dynamics make it even more difficult to predict the trajectory of the US economy. Consumer spending remained robust and surprised some economists, despite headwinds such as higher interest rates and persistent inflation.

It’s all part of the “legacy of weirdness” of the Covid pandemic, said David Kelly, chief global strategist at JP Morgan Asset Management.

The Bureau of Labor Statistics is expected to release its next nonfarm payrolls on March 3.

Some analysts and economists warn that weakness in some sectors, strains on household budgets, lower savings and high interest rates could further aggravate weak employment in other sectors, especially if wages are not keeping pace with inflation.

Wages for workers in the recreation and hospitality industry rose to $20.78 an hour in January from $19.42 a year earlier, according to the most recent data from the Bureau of Labor Statistics. .

“There’s a difference between saying the job market is tight and the job market is strong,” Kelly said.

Many employers have struggled to attract and retain staff in recent years, including the childcare needs of workers and competing workplaces that may have better hours and wages.

With interest rates rising and inflation continuing high, consumers could cut back on spending and cause job losses or reduce hiring needs in otherwise booming industries.

“When you lose a job, you don’t just lose a job, there’s a multiplier effect,” said Aneta Markowska, chief economist at Jefferies.

This means that while some tech companies may run into trouble, it could translate into lower spending on business travel, or if job loss spikes significantly, it could prompt households to drastically cut back on spending. in services and other goods.

Some of the recent layoffs have come from companies that have bolstered their workforces during the pandemic, when remote working and e-commerce were more central to consumer and business spending.

Amazon last month announced 18,000 job cuts across the company. The Seattle-based company employed 1.54 million people at the end of last year, nearly double the number at the end of 2019, just before the pandemic, according to company filings.

Microsoft said it was cutting 10,000 jobs, or about 5% of its workforce. The software giant had 221,000 employees at the end of June last year, up from 144,000 before the pandemic.

Technology “was once a growth sector at any cost, and it’s maturing a bit,” said Michael Gapen, head of U.S. economics research at Bank of America Global Research.

Other companies are still adding employees. Boeing, for example, plans to hire 10,000 people this year, many of them in manufacturing and engineering. It will also cut around 2,000 corporate jobs, mostly in human resources and finance departments, through layoffs and attrition. The growth aims to help the aerospace giant ramp up production of new planes for a rebound in orders with strong sales to airlines like United and Air India.

Airlines and aerospace companies were devastated at the start of the pandemic when travel dried up and is now catching up. Airlines are still scrambling for pilots, a shortage that has limited capacity, while demand for experiences such as travel and dining has increased.

Chipotle plans to hire 15,000 workers as it prepares for a busier spring season and to support its expansion.

Businesses large and small are also finding that they need to raise wages to attract and retain workers. Industries that have fallen out of favor with consumers and other businesses, such as restaurants and aerospace, are rebuilding the workforce after laying off workers. walmart said he would raise the minimum wage for store employees to $14 an hour to attract and retain workers.

The Miner’s Hotel in Butte, Montana, raised the hourly wage for housekeepers from $1.50 to $12.50 for the position over the past six weeks due to high turnover, Cassidy Smith , its managing director.

Airports and concessionaires also rushed to hire workers in the travel rebound. Phoenix Sky Harbor International Airport hosts monthly job fairs and offers some employees childcare scholarships to help with hiring.

Austin-Bergstrom International Airport, where seat times increased 48% this quarter compared to the same period in 2019, launched a number of initiatives, such as $1,000 referral bonuses and signing and retention incentives for referred personnel.

The airport also increased the hourly wage for airport facility representatives from $16.47 in 2022 to $20.68 in 2023.

“Austin has a high cost of living,” said Kevin Russell, the airport’s deputy chief talent officer.

He said employee retention had improved.

Electricians, plumbers and heating and air conditioning technicians in particular, however, have been difficult to retain because they can work in other locations that are not 24/7 and at higher pay. high, he said.

New workers at many companies need to be trained, something that takes time for some industries to recover, even though it has become easier to attract new employees.

“Hiring is no longer a constraint,” Boeing CEO Dave Calhoun said on an earnings call in January. “People are able to hire the people they need. It all comes down to training and ultimately preparing them to do the sophisticated work that we demand.”

—CNBC Amelie Lucas contributed to this article.