Help (mostly) wanted: A diverging job market boosts some workers’ prospects and puts others on notice

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  • The hospitality and service sectors cannot hire enough staff to staff what is expected to be a hot summer.
  • Microsoft, Meta and other companies have indicated they plan to be more cautious about hiring.
  • The divergence could mean a slowdown in wage growth, or a cut in hiring and spending, which has remained strong despite declining consumer confidence.

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The US labor market is cracking as some companies seek to curb hiring while others are desperate for workers.

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Microsoft, Twitter, Wayfair, Snap and Facebook-parent Meta recently announced that they plan to be more conservative about adding new employees. Peloton and Netflix announced layoffs as demand for their products slowed, and online car seller Carvana has cut its workforce as it faces inflation and a cratering stock price.

Uber boss Dara Khosrowshahi pledged to reduce costs to employees earlier this month, writing, “We will treat hiring as a privilege and will discuss how and where we add headcount.” “

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According to outplacement firm Challenger, Gray & Christmas, US-based employers reported more than 24,000 job cuts in April, up 14% from the prior month and up 6% from the same month last year.

But airlines, restaurants and others still need to fill positions. Job cuts for the first four months of the year were 52% lower than for the same period in 2021. 80,000 job cuts were announced from January to April, the lowest tally in nearly three decades the data is tracking.

What is emerging is the story of two job markets – albeit not identical in size or salary. Hospitality and other service sectors can’t hire enough staff to staff what is expected to rebound to a bustling summer after two years of Covid constraints. Tech and other big employers are warning they need to keep costs down and are putting employees on notice.

record job openings

According to the latest available Labor Department report, US job openings rose to a seasonally adjusted 11.55 million at the end of March, a record for data that goes back to 2000. The number of employees leaving their jobs also hit a record, more than 4.5 million. The rent was 6.7 million.

Wages are rising but not enough to keep pace with inflation. And people are changing where they spend their money, especially as household budgets tighten due to the highest consumer price hike in four decades.

Economists, employers, job seekers, investors and consumers are looking for signs of the economy’s direction, and emerging divisions in the labor market. Divergence could mean a slowdown in wage growth, or hiring itself, and ultimately lower consumer spending, which has remained strong despite declining consumer confidence.

Companies from airlines to restaurants large and small still can't take things fast enough, forcing them to cut back on growth plans. Demand fell faster than expected after those companies laid off workers during the pandemic-induced sales decline.

JetBlue Airways, Delta Air Lines, Southwest Airlines and Alaska Airlines have shelved growth plans, at least partly due to staff shortages. JetBlue said the pilot's crash was running higher than normal and is likely to continue.

"If your accident rate is 2x to 3x what you've seen historically, then you need to hire more pilots to stay stable," JetBlue CEO Robin Hayes said at an investor conference on May 17. "

Denver International Airport concessions such as restaurants and shops have made progress with hiring, but are still short of about 500 to 600 employees, according to Pam Dechant, senior vice president of concessions for the airport.

She said many cooks are earning around $22 an hour, which is up from $15 before the pandemic. The airport employer is offering hiring, retention and, in at least one case, what it called a "if you show up to work every day for a bonus this week".

David Tinsley, an economist and director at Bank of America, said: "Consumers spent a lot on goods and not much on services over the pandemic, and now we're seeing in our card data that they're flying back into services, literally. are flying." Institute.

"It's a slight blow from those who might [had] In terms of hiring,” he said of the current trends.

snap back

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

Rothman Food Group's managing partner Jessica Jordan is struggling to hire essential workers for her two businesses in Southern California, Catella Deli & Bakery and Manhattan Beach Creamery. He estimates that both only have about 75% of the workforce.

But half of applicants never respond to her email to interview, and even new employees who have already submitted their paperwork often disappear before their first day without any explanation. go, she said.

"I'm working very hard to hold their hand at every step of the process, just to make sure they come through on day one," Jordan said.

Large restaurant chains also tend to have longer hiring orders. For example, sandwich chain Subway said Thursday that it wants to add more than 50,000 new workers this summer. Taco Bell and Inspire Brands, which own Arby's, said they are also looking to add employees.

According to the Bureau of Labor Statistics, hotels and food services had the highest industry quit rates in March, with 6.1% of workers leaving their jobs. The overall dropout rate that month was just 3%.

Some of those workers are moving away from the hospitality industry altogether. Julia, 19, who lives in New York City, quit her restaurant job in February. She said she left because of hostility from both customers and her bosses, and that too many extra shifts were added to her schedule at the last minute. She now works in child care.

"You have to work really hard to get fired in this economy," said David Kelly, chief global strategist at JPMorgan Asset Management. "You have to be really incompetent and obnoxious."

recession in silicon valley

And if the industry in rebound is hiring to catch up, the opposite is equally true.

Following a spurt in recruitment, several big tech companies have announced hiring freezes and layoffs, as concerns about the economic slowdown, the Covid-19 pandemic and the war in Ukraine curtail growth plans.

Largely funded start-ups are not immune, even if they are not subject to the same market price declines as public tech stocks. At least 107 tech companies have laid off employees since the beginning of the year layoff.fyiWhich tracks job cuts across sectors.

In some cases, Facebook and . companies like Twitter is canceling Job offers after new employees have already been accepted, leaving workers like Evan Watson in a precarious position.

Last month, Watson received a job offer to join the emerging talent and diversity division at Facebook, which he calls one of his "dream companies." He served notice at the real estate development firm where he worked and debuted at the social media giant for May 9.

Just three days before that, Watson got a call about his new contract. Facebook recently announced that it would be halting hiring, and Watson eagerly anticipated that he might have received bad news.

"When I got the call, my heart broke," Watson said in an interview. Meta was freezing hiring, and Watson's boarding was off,

Watson said, "I was absolutely silent. I didn't have words to say." "Then I was like, 'Now what?' I don't work in my other company."

The news disappointed Watson, but he said Facebook offered to lay him off in search of a new job. Within a week, he got a job as a talent scout at Microsoft. Watson said he "feels good" about landing at Microsoft, where the company is "much more stable in terms of share value."

For months, retail giant Amazon risked generous sign-on bonuses and free college tuition to lure workers in. The company has hired 600,000 employees since early 2021, but now finds itself overstaffed in its fulfillment network.

With e-commerce sales growth cooling down, many of the company's recent work is no longer needed. Also, workers on sick leave amid a surge in Covid cases returned to work earlier than expected, Amazon CFO Brian Olsavsky said on a call with analysts last month.

Amazon spokeswoman Kelly Nantel told CNBC: "Now that demand has become more predictable, there are sites in our network where we are slowing or stopping hiring to better align our operational needs. "

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

bearish gradient

Cuts and hiring shifts are isolated for now, but they have some executives on edge.

"Any kind of news ... when high-profile companies surrounding job losses, have the potential to quell sentiments a bit," warns Bank of America's Tinsley, adding that the job market is still strong. "Things are not as bad as the pictures might paint some."

However, the pace of employment growth in the services sector is likely to slow down, he added.

JPM's Kelly said that even if the market has lost 30 lakh openings, it will still be a job-seekers' market.

"There's strong excess demand for workers. It really saved the economy from recession," he said.

But there could be job cuts in other sectors.

A pullback in company spending on things like hiring freezes, job cuts, pay pauses or even employee benefits and a return to business travel could hurt the very service sectors that have been hit by the Covid pandemic. Cases have declined.

"The question is, 'Will consumer spending keep its head above water?'" Tinsley said.

— CNBC jordan novette contributed to this story.

Credit: www.cnbc.com /

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