‘We’re all scratching our heads’: the US labour market paradox
America’s largest newspaper publisher has a problem: it can’t find enough people to throw editions at readers’ doorsteps.
Gannett, which publishes more than 250 titles from the Abilene Reporter-News to USA Today, is short of about 1,000 drivers to drop off papers in the wee hours of the morning. About 12 percent of delivery routes are now unmanned.
But at the same time, Gannett has told employees that “painful” staff cuts are coming as it tries to contain costs in its dwindling print business.
The mismatch between job shortages and layoffs, even at one company, illustrates the mixed messages emanating from the US job market. A historic burst of hiring collides with questions about whether some employers have hired too quickly.
As industries from trucking to fast food complain about labor shortages, companies as diverse as Coinbase, Goldman Sachs, Microsoft, Netflix, Robinhood, Shopify, Tesla, Twitter and Walmart have warned of job losses in recent weeks.
The backdrop is an economy that added an unexpectedly high 528,000 jobs in July, pushing the unemployment rate to an all-time low of 3.5 percent, even after two quarters of declining gross domestic product.
“We’re all scratching our heads a bit,” admits Martine Ferland, CEO of Mercer, which advises companies on human resources and benefits.
“I’ve been in this industry for 25 years and I’ve never seen anything like it,” reiterated Joanie Bily, chief human resources analyst at EmployBridge, which places workers in manufacturing, logistics and call center positions. “Even if we’re in a technical recession, it’s a very different kind of recession because the job market is still strong,” she said.
According to Andrew Challenger, head of sales for Challenger, Gray & Christmas, the anecdotal evidence of widespread job losses is not supported by his staffing agency’s investigation. The number of layoffs was above 2021 levels in June and July, but the number is counted in the seven months between January and July was the lowest in a comparable period since it began tracking such cuts in 1993.
The US government’s data on job openings and employee turnover runs through June, but tells a similar story of layoffs still at historically low levels in most industries.
“We have faced a very serious labor shortage at a time when companies were completely focused on hiring and fully aware of their layoffs. That said, there are some reasons to believe we are at a turning point,” Challenger said.
The recent budget cuts that his company has followed have been concentrated in a few sectors, such as the automotive, construction and financial technology industries.
Financial areas sensitive to rising interest rates, such as mortgage lenders, have also been affected, noted EmployBridge’s Bily: “Two years ago, those jobs were in such high demand and wages went through the roof for credit processors and closers. That’s stalled.”
On Wall Street, too, the mood has shifted from bumper bonuses in 2021 to fears of layoffs in 2022 amid a sharp drop in investment banking costs. Many companies have realized they have a surplus of bankers after unprecedented levels of dealmaking meant they had to butcher fewer low-ranking players than usual.
Analysts attribute the suddenly curtailed hiring plans of tech companies like Etsy, Meta, Pinterest and Spotify to something else: delinquent cost control in a once free-spending industry whose funding and valuations have plummeted this year.
One change that has caught up with several industries is a slowdown in the pace of workers moving to better offers elsewhere.
The so-called quit rate remains well above pre-coronavirus levels in most sectors, but Mercer’s Ferland said turnover has stabilized in recent months, making it more difficult for employers to estimate how many people they will need to recruit to replace the leavers. .
Rob Sharps, chief executive of T Rowe Price, mentioned this factor in the fund manager’s latest earnings announcement. A drop in voluntary turnover “means that the workforce could increase significantly,” he noted when explaining why recruitment had become more cautious.
Such caution resulted in the number of vacancies falling by 5.4 percent between May and June, although the number of available vacancies at 10.7 million is still well above its early 2020 levels.
“For the last year and a half it’s just been on blinders, trying to hire as many people as you could get in. No one could keep up with the demand they had, but I think that’s starting to level off,” Challenger said. Now, he said, customers are starting to think more strategically about who they need in their workforce after a “wildly unpredictable” period.
In the meantime, he added, history suggests the continued resilience of hiring could be a small guideline to the outlook for the US economy. “We know that employers always hire two or three months after a recession. . . It is a lagging indicator.”
at Gannett, which advertises the chance to earn up to $600 a week delivering newspapers, the deficits have eased a bit since June. But it sees several reasons why they will continue to be a problem.
“A lot of these delivery guys [also] work from 9 a.m. to 5 p.m.,” said Wayne Pelland, senior vice president of publishing operations. While other companies are raising wages and offering more flexibility to fill entry-level positions, people are turning away from low-paying, part-time jobs that require early starts and expensive gas bills.
As competition from employers offering better wages and career opportunities continues to drain the group of people interested in part-time jobs, Pelland said, “we are facing a perfect storm.”
Additional reporting by Caitlin Gilbert, Joshua Franklin and Lydia Tomkiw