Job cuts and hiring creates headache for US market
Job cuts – Some companies are having problems filling jobs in the US market, while others are letting individuals go.
Various corporations have lately announced massive job cuts, including:
As a result, there were nearly 103,000 jobs cut in US-based companies in January.
According to a survey by the outplacement firm Challenger, Gray & Christmas, it is the largest job cut since September 2020.
The number of new jobs created by firms in January, however, was 517,000, which is more than nearly three times what economists had projected.
The increase in employment demonstrates how extremely competitive the labor market is, especially in industries like the service sector that were severely harmed by the epidemic.
The Covid legacy
It is more challenging for experts to forecast the future direction of the US economy given the current circumstances.
Experts were taken aback by the robust consumer spending, particularly in view of the continuous inflation and rising interest rates.
According to renowned global strategist David Kelly, 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 caution that a variety of variables might result in greater job cuts in other industries if wages don’t keep up with inflation, including:
- Strains on household budgets
- High-interest rates
- A savings drawdown
According to data recently published by the Bureau of Labor Statistics, wages for people working in the hotel and leisure sectors increased in January.
The compensation increased from the previous year, when it was $19.42, to $20.78.
“There’s a difference between saying the labor market is tight and the labor market is strong,” said Kelly.
Companies still struggle to find and retain the right people.
They encounter challenges because of factors like the need for staff childcare and potential competition from improved working conditions and pay.
If interest rates increase and inflation remains high, consumer spending may drop, which might lead to further job cuts or lower employment overall.
“When you lose a job, you don’t just lose a job,” said Aneta Marowska, a Jefferies chief economist. “There’s a multiplier effect.”
There may be less money spent on business visits as a result, even if there are concerns with tech companies.
Consumers may be compelled to reconsider their spending on services and other items if job cuts continue.
Read also: Tesla recalls model after concerns rose regarding FSD feature
Businesses that increased their hiring during the pandemic, when e-commerce and remote work had a greater influence on consumer and corporate spending, have since endured a sizable amount of job cuts.
At the end of 2022, when it had 1.54 million employees—roughly twice as many as it did in 2019—Amazon recorded an 18,000 job cut.
Microsoft shed 10,000 employees, or 5% of its staff, using identical tactics.
The corporation had 221,000 employees by the end of June the year before, a significant rise from the 144,000 before the infection.
According to Michael Gapen, head of US economic research at Bank of America Global Research, the tech sector is evolving from a “grow-at-all-costs” industry.
Meanwhile, other companies are hiring more people.
Boeing plans to hire 10,000 new employees in 2023, mostly in engineering and production.
Also, the business cut roughly 2,000 corporate jobs, mostly in finance and HR.
Boeing is growing to improve the company’s capacity to build new aircraft in anticipation of an increase in orders from clients like United and Air India.
Early on in the outbreak, when business dried up, airlines and aerospace companies suffered; however, they are currently making efforts to recover.
The amount of pilots available currently determines how many passengers each airline may carry.
As pandemic restrictions were lifted, there was an upsurge in demand for food and travel.
A shared struggle
To attract and keep employees, businesses of all sizes would need to raise pay.
Industries who saw customer reaction and other company backlash after job cuts are now trying to hire more people.
Walmart is raising its minimum wage to $14 an hour in an effort to attract more employees.
Due to the high turnover rate, The Miner’s Hotel in Butte, Montana increased the hourly compensation for housekeepers by $1.50.
Concessionaires and airports are also hiring additional workers as tourism increases.
Every month, the Phoenix Sky Harbor International Airport hosts employment fairs and offers childcare support to staff.
Austin-Bergstrom International Airport grew by 48% during the same time in 2019.
Moreover, it results in improved incentives like:
- $1,000 referral bonuses
- Signing incentives
- Retention incentives for referred staff
In a similar vein, 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, claims Kevin Russell, the airport’s deputy talent chief.
Russell also saw a spike in employee retention.
However, it has proven difficult to maintain some positions open as staff may be able to find higher-paying positions elsewhere that aren’t available 24/7, such as:
- Heating-and-air conditioning technicians
Despite how simple it is to acquire new employees, businesses must spend time training new staff before they can scale up.