Job cuts – Some companies are having problems filling positions in the US market, while others are letting individuals go.
Significant job cuts have been announced by many companies recently, including:
As a result, US-based businesses lost over 103,000 jobs in January.
According to a survey from the outplacement firm Challenger, Gray & Christmas, the biggest job cuts have occurred since September 2020.
On the other hand, businesses also created 517,000 new jobs in January, more than nearly three times what experts had anticipated.
The increase highlights how competitive the employment market is, especially in sectors like the service industry that were severely damaged by the pandemic.
The Covid legacy
It is more challenging for experts to predict the future trajectory of the US economy given the current environment.
Experts were taken aback by the robust consumer spending, especially in view of the continuous inflation and rising interest rates.
According to David Kelly, a renowned international strategist, the most recent consumer spending is a part of the “legacy of weirdness” left by the Covid epidemic.
The Bureau of Labor Statistics will present the subsequent nonfarm payroll on March 3.
Researchers and economists warn that a variety of reasons might further cut jobs in other sectors if wages don’t keep up with inflation, such as:
- Strains on household budgets
- High-interest rates
- A savings drawdown
According to data recently provided by the Department of Labor Statistics, wages for people working in the hotel and leisure sectors increased in January.
From $19.42 the prior year to $20.78 this year, the compensation increased.
“There’s a difference between saying the labor market is tight and the labor market is strong,” said Kelly.
Companies still struggle to retain and recruit employees.
They encounter challenges because of factors like the need for staff childcare and potential competition from better schedules and pay.
If interest rates increase and inflation continues high, consumer spending may drop, which might lead to more job losses or reduced employment in other industries.
“When you lose a job, you don’t just lose a job,” said Aneta Marowska, a Jefferies chief economist. “There’s a multiplier effect.”
Because of this, there could be less money spent on business travels even if there might be problems with tech firms.
Consumers could be compelled to reevaluate their spending on services and other items if job cuts continue.
Businesses that increased hiring during the pandemic, when e-commerce and remote work had a stronger influence on customers and corporate spending, have since undertaken a lot of job cuts.
In late 2022, when it had almost twice as many employees as it did in 2019, or 1.54 million, Amazon announced the loss of 18,000 jobs.
Similar tactics were adopted by Microsoft, which cut 10,000 employees, or 5% of its staff.
The firm had 221,000 employees at the end of June the year prior, a significant rise from the 144,000 before the pandemic.
According to Michael Gapen, head of US economic research at Bank of America Global Research, the tech industry is changing from a “grow-at-all-costs” industry.
As this is going on, other companies are expanding their workforces.
Boeing plans to hire 10,000 additional workers in 2023, mostly in engineering and production.
The business also cut around 2,000 corporate positions, largely in human resources and finance.
The goal of Boeing’s expansion is to boost the company’s capacity to produce new aircraft in anticipation of an increase in orders from clients like United and Air India.
Early on in the outbreak, when traffic dried up, airlines and aerospace companies suffered; however, they are currently making efforts to recover.
The number of pilots available is now restricting airline capacity.
When pandemic restrictions loosened, there was a rise in demand for eating and travel.
A shared struggle
To attract and keep staff, businesses of all sizes would need to raise compensation.
Industries that suffered consumer and other company disapproval after employment losses are now striving to hire more workers.
Walmart is raising its minimum wage to $14 per hour in an effort to attract more workers.
Due to the high turnover rate, The Miner’s Hotel in Butte, Montana increased the hourly wage for housekeepers by $1.50.
The increase in tourism is also leading to personnel hiring at airports and concessionaires.
Every month, the Phoenix Sky Harbor International Airport sponsors job fairs and offers childcare scholarships to staff.
Austin-Bergstrom International Airport grew by 48% in the same period of 2019.
It also launched initiatives like:
- $1,000 referral bonuses
- Signing incentives
- Retention incentives for referred staff
Similarly, Austin-Bergstrom International Airport’s airport facilities representatives now earn $20.68 per hour, up from $16.47 in 2022.
Austin has a high cost of living, according to Kevin Russell, the airport’s deputy talent chief.
Russell also saw a rise in employee retention.
Nonetheless, it has been difficult to maintain some positions since workers may be able to obtain higher-paying positions elsewhere that aren’t available 24/7, such as:
- Heating-and-air conditioning technicians
Considering how simple it is to acquire new employees, businesses must spend time training new recruits before they can ramp back up.
Image source: Mondo