(Mostly) Help Wanted: Divergent labor market improves prospects for some workers and puts others on notice

A Help Wanted sign is displayed in the window of a Brooklyn, New York business.

Spencer Platt | Getty Images

Cracks form in the American job market as some companies seek to curb hiring while others are desperate for employees.

Microsoft, Twitter, Wayfair, Instantaneous and Facebook-parent Meta recently announced its intention to be more cautious about adding new employees. Platoon and netflix announcement layoffs as demand for their products slowed and the online car seller carvana To cut its workforce as it faces inflation and falling stock prices.

“We will treat hiring as a privilege and decide when and where we add staff,” Uber boss Dara Khosrowshahi wrote to staff earlier this month, pledging to cut costs.

US-based 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 the outplacement firm Challenger, Gray & Christmas.

But airlines, restaurants and others still need to fill the positions. Job cuts for the first four months of the year were down 52% from the same period in 2021. Just under 80,000 job cuts were announced from January to April, the highest tally low for nearly three decades that the company has tracked the data.

What emerges is a story of two labor markets, but not equal in size or pay. Hospitality and other service sectors cannot hire enough workers to staff what is expected to be a lively summer rebound after two years of Covid hurdles. Tech and other big employers warn they need to cut costs and warn employees.

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WE Jobs climbed to a seasonally adjusted 11.55 million at the end of March, according to the latest available report from the Labor Department, a record for data dating back to 2000. The number of employees who left their jobs also hit a record high, at more than 4 .5 million. Hirings amounted to 6.7 million.

Salaries are rising but not enough to keep up inflation. And people are changing where they spend their money, especially as household budgets tighten thanks to the biggest consumer price increases in four decades.

Economists, employers, job seekers, investors and consumers look for signals about the direction of the economy and discover emerging divisions in the labor market. The divergence could mean a slowdown in wage growth, or hiring itself, and could eventually reduce consumer spending, which has been robust despite deteriorating consumer confidence.

Businesses from airlines to restaurants large and small still cannot hire fast enough, forcing them to reduce growth plans. Demand picked up faster than expected after these companies shed workers during the pandemic-induced slump in sales.

Jet Blue Airways, Delta Airlines, South West Airlines and Alaska Airlines have scaled down growth plans, at least in part, because of staff shortages. JetBlue said pilot attrition was higher than normal and likely to continue.

“If your attrition rates are, say, 2x to 3x of what you’ve seen historically, then you need to hire more pilots just to stand still,” JetBlue CEO Robin Hayes said at a conference. investors on May 17.

Denver International Airport concessions, such as restaurants and stores, have made progress in hiring, but are still short of about 500 to 600 workers to about 5,000, according to Pam Dechant, vice president. main airport concessions.

She said many cooks were making around $22 an hour, down from $15 before the pandemic. Airport employers are offering hiring, retention and, in at least one case, what she called a “bonus if you show up for work every day this week.”

Consumers “spent a lot on goods and not a lot on services during the pandemic and now we see in our card data that they are coming back to services, literally by stealing,” said David Tinsley, an economist and director at the Bank of America. Institute.

“It’s a bit of a jolt from these people who maybe [had] overdone in terms of hiring,” he said of current trends.

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The companies leading the way in job growth are those that were hardest hit at the start of the pandemic.

Jessica Jordan, managing partner of the 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 the two are only staffed at around 75% staff.

But half of applicants never respond to her emails for an interview, and even new hires who have already submitted their documents often disappear before their first day, without explanation, she said.

“I work so hard to hold their hand every step of the way, just to make sure they get there on day one,” Jordan said.

Large restaurant chains also have large hiring orders. Sandwich chain Subway, for example, said Thursday it plans to hire more than 50,000 new workers this summer. Taco Bell and Inspire Brands, which owns Arby’s, said they are also looking to add staff.

Hotels and food services had the highest quit rate of any industry in March, with 6.1% of workers quitting their jobs, according to the Bureau of Labor Statistics. The overall dropout rate was only 3% that month.

Some of these workers walk away from the hospitality industry altogether. Julia, a 19-year-old living in New York, quit her restaurant job in February. She said she left because of hostility from customers and her bosses and too many extra shifts added to her schedule at the last minute. She now works in child care.

“You have to work very hard to get fired in this economy,” said David Kelly, chief global strategist at JP Morgan Asset Management. “You have to be really incompetent and obnoxious.”

Slowdown in Silicon Valley

And while rebounding industries are hiring to catch up, the reverse is just as true.

After a hiring boom, several major tech companies have announced hiring freezes and layoffs, as worries about an economic downturn, the Covid-19 pandemic and war in Ukraine dampen growth plans.

Richly-funded startups aren’t immune either, even if they aren’t subject to the same level of market value degradation as public tech stocks. At least 107 tech companies have laid off employees since the start of the year, according to Layoffs.fyiwhich tracks job cuts in the sector.

In some cases, companies such as Facebook and Twitter cancels job offers after new hires have already been 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 the property development company where he worked time off and set a start date at the social media giant for May 9.

Just three days earlier, Watson had received a call about his new contract. Facebook had recently announced it would suspend hiring, and Watson anxiously speculated that he might receive bad news.

“When I got the call, my heart sank,” Watson said in an interview. Meta was freezing hiring, and Watson integration was disabled.

“I was like silent. I didn’t really have words to say,” Watson said. “Then I was like, ‘Now what?’ I don’t work at my other company.”

The news disappointed Watson, but he said Facebook had offered to pay him severance while he looked for a new job. Within a week, he landed a job at Microsoft as a talent scout. Watson said it “felt good” to land at Microsoft, where the company “is much more stable, stock price-wise.”

For months, the distribution giant Amazon hanged generous login bonus and free tuition to attract workers. The company has hired 600,000 employees since the start of 2021, but it now finds itself overstaffed in its distribution network.

Many of the company’s recent hires are no longer needed, with slowing e-commerce sales growth. Additionally, employees who went on sick leave amid a spike in Covid cases have returned to work ahead of schedule, Amazon chief financial officer Brian Olsavsky said in a call with officials. analysts last month.

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

Amazon did not respond to questions about whether the company plans any layoffs in the near future.

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