Workers will be spared the agony of mass layoffs this recession go-around, economists and executive recruiters say.
While Big Tech job cuts have grabbed the headlines, with 9,587 layoffs in IT in October alone, that industry represents less than 2% of the U.S. labor force, Bloomberg reports.
Layoffs have, for certain, been piling up in information technology, banking and real estate, particularly for white-collar workers—but jobs in service and manufacturing industries, which continue to be hard pressed to find talent, are likely to hold up. In fact, U.S. leisure, hospitality and restaurant payrolls are more than 1 million lower than they were before COVID-19.
Hoarding Labor
Employers in the U.S., and around the world, are still struggling to find the qualified workers that they need, and are more willing than in previous economic downturns to keep people on the payroll during any economic challenge ahead, and the next one, too.
Should a recession in 2023 and possibly 2024 take root, employers will nevertheless bite the bullet on their ranks, says ManpowerGroup Inc. CEO Jonas Prising.
“They’ll absorb a drop in demand for their products and services but maintain their workforces,” Prising says. “They’re not going to be hiring. But I think we can expect payrolls to be healthy.”
Cleveland Federal Reserve Bank President Loretta Mester echoes that exact same thought: “Business contacts are telling us that they plan to keep workers even as the economy slows because it was just so difficult to attract them and retain them over the last few years. That would be a good thing in the sense that the unemployment rate would not have to go up as much.”
The aging population and fewer skilled immigrants are two factors in workers’ favor. Bloomberg Economics estimates that among developed nations worldwide, there will be 3.3 million people unemployed by 2024—far less than the 5.1 million who found themselves out of work following the dot-com crash in 2001.
Unemployment in major developed nations is now 4.4%, according to the Organisation for Economic Cooperation and Development. In the U.S., it’s currently 3.7%, according to the Bureau of Labor Statistics.
The Great Resignation Continues
As workers were inundated with news of COVID deaths during the pandemic, millions began to reassess their priorities in life, including whether or not their jobs or chosen careers were fulfilling. That prompted The Great Resignation.
While a recession would dampen that movement, people are still looking for more enlightening and better-paying opportunities, according to LinkedIn CEO Ryan Roslansky.
In a word, people are trying to “upskill,” Roslansky says:
“There is a great talent reshuffle happening across the world. People are trying to find new jobs and opportunities.”
Even those who get pink slips, like those at major technology conglomerates, should be able to find jobs at smaller companies, just not at “outrageous salaries,” maintains Tom Gimbel, CEO of executive search firm LaSalle Network.
A job-plentiful recession would be another confounding challenge for the Federal Reserve, says Frederic Neumann, chief Asia economist at HSBC Holdings Plc.
Fed Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen have, without a doubt, been flummoxed by various, unforeseen economic forces in consumer demand and labor during the pandemic and economic recovery. One mistake they, and the Biden administration, made was failing to see inflation—which neared 10% in June and has been at a record high not seen since the 1970s—coming.
“Labor markets, in other words, may prove far more resilient in this cycle than in the past—leading central bankers little room to turn accommodative once growth begins to wobble,” Neumann says.
That is a future chapter in the inflation/recession saga yet to play out. In the near term, the Fed will get its latest progress report card on Friday with the November payrolls report.
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