BEcky Frankiewicz recently returned from hanging out in Davos with other top business leaders, and the President of ManpowerGroup North America couldn’t help but notice a disconnect while there. On Stage: Lots of chatter about the prospect of a recession, and what it might look like for jobs and the economy. But in at least 15 different conversations with C-level executives she had during the global titans meet, only one said they were giving up on hiring.
“The data doesn’t necessarily match the narrative,” says Frankiewicz Forbes. “We are seeing a somewhat divergent employment landscape, but the job market as a whole is still very tight.”
Every day seems to bring a story of two labor markets. On the one hand, data like Friday’s better-than-expected job numbers show a labor market where unemployment remains low and the economy continues to add jobs, even beating economists’ forecasts. Earlier this week, the Labor Department reported that job postings had fallen but the demand for hiring remained strong, while the turnover rate remained high.
Yet, on the other hand, the news cycle seems to bring almost daily stories of hiring freezes and layoffs, particularly in the tech sector and among startups. Tesla’s Elon Musk, Reuters reported on Friday, wants to cut jobs and suspend hiring amid what he reportedly called a “super bad feeling” about the economy. Other big tech companies, like Meta and Microsoft, said they would slow hiring in parts of their business. Uber CEO Dara Khosrowshahi said in early May that he would treat hiring “like a privilege”.
Meanwhile, job cuts tracked by aggregator site Layoffs.fyi found that at least 15,000 tech workers lost their jobs in May, with job cuts at companies like Bolt (25% of its workforce), Klarna (10%) and Carvana (12%), as well as numerous small startups laying off workers.
Headhunters say they’re seeing a sea change in the way people respond to inquiries in recent weeks, particularly in sectors or at job levels where equities play a role.
“Even a month ago, we were going through hurdles, doing everything we could to get people to respond to us — multiple posts on LinkedIn platforms, multiple social media platforms, text messaging,” says Jeff Christian, CEO of the executive recruitment company Christian & Bois. “We are now seeing a 70% increase in response rates. People are curious. And they are afraid.
Higher interest rates, geopolitical turmoil and an ongoing global pandemic — combined with a punishing stock market — have caused investors to put the brakes on, leading more venture-backed companies to slow down or scale back. their hires. In May, Forbes reported that an internal survey of Andreessen Horowitz’s portfolio companies showed more than half giving up hiring in 2022.
“It’s about companies not being able to access financing or at least get the valuations they’re hoping to achieve — that’s a big part of what’s driving some of these layoffs and hiring freezes,” he says. Glassdoor Economist Daniel Zhao. He finds similar trends in mortgage-related jobs in financial services, which also depend on interest rates.
But he says that while there’s clearly a lot of concern about the economy, the headlines about the job cuts are “not really showing up in the data yet as a wave of layoffs that would be comparable to the perceptions or past slowdowns”. Overall, he says, “the holistic picture is still one where employer demand is extremely high and there aren’t enough workers to fill those jobs.”
Zhao says it’s common at an inflection point in the economy, like where we find ourselves now, to see stories that suggest two directions. In these times of change, “it’s always a bit difficult to reconcile the anecdotes you hear with the data that evolves in real time“.
Still, he thinks some things are different about the current economic intersection. All the attention on the “big quit” over the last year or so, along with the difficult time many industries have had finding workers, could influence what they do in the future. “I wouldn’t be surprised to see employers continue to try to retain and attract workers, even in a moderate downturn,” he says.
Brian Kropp, research vice president at Gartner, points to other disconnects he notices. “In the past, revenue and headcount went almost perfectly together,” he says. “Three months from now it might be different, but at least for now the relationship between earnings and hiring just isn’t as consistent and highly correlated as it used to be.”
This could be due to the backlog that many companies already have when it comes to filling unfilled positions, as well as the increased churn that Kropp thinks companies will see, as hybrid working allows people to change jobs more frequently. “The labor market for places not impacted by interest rate worries or equity worries –this labor market? It’s always hot, it’s going a thousand an hour.
Just as many companies learned that just-in-time supply chains couldn’t withstand the ravages of a global pandemic, they’re also learning that the same lean approach can hurt them when it comes to talent. Frankiewicz says many employers, especially those with the resources to hire more workers, have adapted to a more “just in case” philosophy regarding their workforce to try to avoid the shortage. of staff. At a time when more and more workers aren’t even showing up for their shifts, Frankiewicz says, it’s “not just in case I don’t find the talent, [but] just in case I can’t fill the shifts.
Recent data from ManpowerGroup shows talent shortages are at their highest levels in 16 years, and Frankiewicz said in an email regarding Friday’s jobs report that “the tension is palpable, but the reality is optimistic”.
She wonders how the current market could impact a downturn. “We have never faced entering a recession like the one we are facing now” with such a tight labor market, says Frankiewicz, saying two key differences are a structural change in the number of workers in the economy. , citing lower birth rates. , and the demand for tech skills not just in tech companies, but across industries. “That’s why we’re having this conversation – because there’s no playbook.”