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Job cuts persist as US market struggle with hiring

by Joseph Brown

May 22, 2023

Job cuts – In the American market, some businesses are having trouble filling positions while others are letting people go. ...

Job cuts – In the American market, some businesses are having trouble filling positions while others are letting people go. Many businesses have announced significant job cuts in recent months, including:

Amazon
Disney
Meta
Microsoft
Zoom

Consequently, approximately 103,000 jobs were lost by US-based firms in January. A report from the outplacement company Challenger, Gray & Christmas claims that since September 2020, there have been the most job cuts. On the other side, companies also added 517,000 positions in January, which was nearly three times as many as economists had predicted. The rise emphasizes how competitive the job market is, particularly in industries that were severely impacted by the pandemic, like the service sector.

The Covid legacy

The present dynamic makes it more difficult for specialists to forecast the US economy's future course. The strong consumer spending shocked experts, particularly in light of the ongoing inflation and rising interest rates. The latest consumer spending is a part of the "legacy of weirdness" left by the Covid pandemic, said David Kelly, a leading global strategist. The next nonfarm payroll will be released on March 3, according to the Bureau of Labor Statistics.

Wages

If wages don't keep pace with inflation, a number of researchers and economists caution, various factors might further reduce employment in other areas, including:

Strains on household budgets
High-interest rates
A savings drawdown

The Bureau of Labor Statistics recently released statistics showing that earnings for those employed in the leisure and hospitality industries rose in January. The pay increased to $20.78 from $19.42 the previous year. "There's a difference between saying the labor market is tight and the labor market is strong," said Kelly. Employers continue to have trouble finding and keeping employees. They face difficulties due to things like employee childcare necessities and potential competition with better schedules and salaries.

Consumer impact

Consumer spending could decline if interest rates rise and inflation remains high, which might result in additional job cuts or less 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." As a result, although there may be issues with tech businesses, there may be less money spent on business trips. If job cuts persist, consumers may be forced to reassess their expenditure on services and other products. Read also: Tesla union supporters fired days after organizing efforts

A reset

Companies that ramped up recruiting during the pandemic, when remote work and e-commerce had a greater impact on customers and corporate expenditure, have since made a number of job cuts. After employing 1.54 million employees in late 2022, almost twice as many as in 2019, Amazon announced 18,000 job layoffs in January. Microsoft used a similar strategy by eliminating 10,000 jobs, or 5% of its workforce. At the end of June of the previous year, the corporation had 221,000 employees, a huge increase from the 144,000 before the pandemic. The tech sector is evolving from being a "grow-at-all-costs" business, according to Michael Gapen, head of US economic research at Bank of America Global Research.

Airlines

While this is happening, other businesses are hiring more people. In 2023, Boeing aims to add 10,000 new employees, mostly in engineering and production. Almost 2,000 corporate roles, mostly in human resources and finance, were also eliminated by the corporation. Boeing's expansion aims to increase the company's ramp-up production of new planes for a pickup in orders from customers like United and Air India. Airlines and aerospace businesses suffered early on in the epidemic when traffic dried up, but they are now attempting to rebound. There is a pilot shortage that is now limiting airline capacity. As pandemic constraints were eased, demand for dining and travel increased.

A shared struggle

Both small and large enterprises would have to boost pay in order to recruit and retain employees. After job cuts, industries that lost favor with customers and other firms are attempting to hire more people. In an effort to recruit more employees, Walmart is boosting its minimum pay to $14 per hour. The Miner's Hotel in Butte, Montana, raised the hourly salary for housekeepers by $1.50 as a result of the high turnover rate. Airports and concessionaires are also employing staff as a result of the uptick in tourism. The Phoenix Sky Harbor International Airport sponsored job fairs every month and provided childcare grants to employees. In the same time of 2019, Austin-Bergstrom International Airport expanded by 48%. It also launched initiatives like:

$1,000 referral bonuses
Signing incentives
Retention incentives for referred staff

Likewise, the hourly pay for airport facilities representatives at Austin-Bergstrom International Airport increased, from $16.47 in 2022 to $20.68 this year. According to Kevin Russell, the airport's deputy talent chief, "Austin has a high cost of living." Russell also noted an improvement in staff retention. Certain roles, however, have been challenging to keep since employees may find higher-paying jobs elsewhere that aren't open 24/7, like:

Electricians
Heating-and-air conditioning technicians
Plumbers

Despite how simple it is to recruit new personnel, industries must face the time-consuming process of training new hires in order to ramp back up.

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Job cuts persist as US market struggle with hiring

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The Covid legacy

Wages

Consumer impact

A reset

Airlines

A shared struggle