Early in the pandemic, waves of layoffs hit retail, leisure and hospitality workers — anyone whose job depended on in-person interactions.
But now that the pandemic has subsided, it’s those workers who are outnumbered and it’s the highest-paid employees who find themselves at the end of the layoff announcements.
Among the branded companies that recently announced job cuts or hiring freezes, according to a list compiled by Reuters: Amazon, Citigroup, Intel, HP, Microsoft, Johnson & Johnson, Phillips 66 and Walt Disney Co.
He has the makings of a “white collar” downturn. And while layoffs in the tech sector have been widely in the headlines, it’s far from the only sector facing job losses. Last Friday’s jobs report from the US Bureau of Labor Statistics showed markedly slower hiring or an outright decline in employment across a range of white-collar industries. Notably, hiring in professional and business services has now slowed for four of the past five months, and in November the sector recorded the second fewest jobs added in this phase of the pandemic, with just 6,000 jobs created at national scale.
Other sectors that saw a significant drop in hiring last month included employment services jobs; administrative support roles; and certain lending and other credit-related professions.
On the other hand, demand for workers whose jobs are threatened by the pandemic has come back strong. This is why restaurant jobs, as well as positions in hotels and retail stores, have seen significant wage increases, although in many cases they are not yet large enough to keep up with inflation. .
“What we’ve seen is massive hiring in the tech sector, big hiring over the last couple of years in the service-producing sectors,” said James Knightley, the company’s chief international economist. of ING financial services. “And now, with the growing risk or worry of recession, some of those businesses may have grown too big in the aggressive post-pandemic reopening, and they now face more uncertainty.”
So far this year, U.S. employers have announced plans to cut 320,173 jobs, an increase of nearly 6% from the 302,918 cuts announced in the first eleven months of 2021, according to Challenger, Gray & Christmas. , a business consulting firm.
The tech industry accounts for about a quarter of job cuts this year, according to data from Challenger. About two-thirds of tech job cuts were announced in November alone.
“The tech sector was special. They overdeveloped and overhired,” said William Lee, chief economist at the Milken Institute, a nonpartisan, nonprofit think tank. “They thought their ad revenue would go on forever, and once those started getting cut in the post-pandemic era, they said, ‘God, we’ve got too many people.'”
But other white-collar industries are now being hit by cuts, particularly those in interest-rate-sensitive sectors like finance, real estate and autos, according to Challenger data. This is largely due to the Federal Reserve’s aggressive rate hike campaign to combat inflation which has continued to hover around 8% for much of 2022.
The finance sector has announced 17,571 job cuts this year, down from 8,568 in the same period last year, with an additional 8,125 cuts in the fintech sector, according to Challenger data.
According to Andy Challenger, head of sales and media at Challenger, financial firms of all stripes have announced cuts to their investment banking divisions as deals have slowed. In November, Bloomberg reported that Citigroup planned to cut dozens of jobs in its investment banking division, while Reuters reported that Morgan Stanley was also planning another round of layoffs. These announcements follow similar announcements made by Goldman Sachs in September and Deutsche Bank in October.
The auto industry announced 30,669 job cuts, down from 10,277 through November 2021. And real estate announced 7,919 job cuts this year, down from 2,762 in 2021 year-to-date.
“As interest rates have risen, Americans are spending less on large items,” Challenger said. “We’ve seen a lot of job cuts around mortgage origination and fintech companies in mortgage lending. And then also on the realtor side of the housing side – cuts in research , the purchase and sale of goods.
Still other companies used the slowing global economy to signal impending cuts. In October, Johnson & Johnson said it would seek to “adjust” its business amid inflationary pressures and a stronger U.S. dollar.
“We are looking to ensure that our resources are deployed on those projects, those initiatives, those services that really add the most value to our business,” J&J chief financial officer Joseph Wolk told Reuters.
And two energy companies, Phillips 66 and Chesapeake Energy Corp., are also cutting jobs, including some corporate positions. Reuters reported that the cuts at Phillips 66 would affect “salaried employees in management and higher-level technical services in multiple locations,” while those at Chesapeake would affect its geologists and geoscientists.
ING’s Challenger and Knightley suggest we could still be at the start of job cuts given the slowing economy. U.S.-based employers announced 76,835 cuts in November alone, more than double the 33,843 cuts announced in October and four times the number of cuts announced last November, according to Challenger data.
“I think we’re kind of at the start — we just came out of the last two years being the lowest period for layoffs in American history,” Challenger added. “We were in such a labor crunch, and now with the Fed rate hike, it’s affecting all industries.”
The Conference Board’s survey of CEOs found the lowest level of confidence among CEOs since 2009, with 98% saying they were preparing for a recession in the United States.
“The Fed says unemployment could hit 4.4 to 4.5 percent, which translates to about 1.2 million Americans losing their jobs,” Knightley said. “And that’s when they were saying there wouldn’t be a recession, so we might see more Americans losing their jobs than that.”
Knightley said the bursting of the tech bubble more than 20 years ago, which had economic conditions similar to today, resulted in the loss of approximately 2 million Americans.
“That could be the order we’re talking about in terms of a slowdown, but with more of a focus on white-collar areas than manufacturing, where there are still real shortages,” Knightley said.
The surest path to keeping a job remains college, at least according to the unemployment rate which, in November, stood at 2% for workers aged 25 and over with a bachelor’s degree or more. Even for workers 25 and older with only a little college, the unemployment rate is still low at 3.2%.
But a different measure of the employment situation in the United States – the overall labor force – reveals a more troubling trend. Among university graduates aged 25 and over, the size of the labor force has now shrunk for three consecutive months after peaking at 63.7 million, representing losses of 648,000 workers. This is the greatest loss suffered since the start of the pandemic.
These are workers who no longer look for work if they find themselves unemployed.
For those with only a university education, the situation is even more dire: the pandemic has reduced this workforce by 1.5 million workers to a total of 35.9 million, and stands now at a level not seen since April 2007.
“I think looking at middle management jobs — that’s what we think they are — there may have been a lot of stress for those managers,” said Jane Oates, president of WorkingNation, a non-profit organization focused on workforce development. “They might take a break to reduce stress.”
According to experts, these trends could reflect more sustained economic changes than a slowdown in economic growth.
“Companies are starting to reshape their businesses,” said Lee of the Milken Institute. “They want to be more profitable in this time when labor is scarce and expensive, so they’re integrating more technology.”
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