Last year, Klaussner Home Furnishings was desperate for workers, so they rented a billboard near their headquarters in Asheboro, North Carolina, and began posting job ads. Fierce labor competition has seen wages rise by 12-20% for workers on the floor of a furniture maker. The company began offering him a $1,000 signing bonus to sweeten the deal.
Klaussner President and CEO David Cybulski said: “We couldn’t get enough workers fast enough.”
But in recent months, Cybulski has noticed that the enthusiasm is waning.
He said it has made it easier to hire open positions, making it less likely for Klausner employees to find another job. The company, which has about 1,100 employees, is testing performance-based compensation to keep employees happy, rather than competing to raise wages. The $1,000 signing bonus ended in the spring.
“No one is chasing employees for money anymore,” he said.
Despite looming recession threats by many indicators, the labor market remains very strong. The unemployment rate, which stood at 3.7% in August, remains at its lowest level in 50 years. There are twice as many vacancies as him for unemployed workers. Layoffs are nearing record lows, despite several high-profile announcements in recent weeks.
But there are signs that the hot labor market is exiting its boiling point.major employers such as walmart Amazon announced a slowdown in hiring. FedEx and others have completely frozen hiring. Americans’ turnover rate in July is his lowest in over a year. Wage growth, which surged as companies competed for workers, has also slowed, especially in industries such as restaurants and travel, where the labor market was particularly hot last year.
More broadly, many businesses across the country say they find it less difficult to attract and retain employees. One of the reasons is that many companies are scaling back their hiring plans, and the pool of available workers is expanding as the economy grows on the sidelines. The workforce grew by more than three-quarters in August, the biggest increase since the early days of the pandemic. Some executives expect hiring to continue to get easier as the economy slows and layoffs rise.
“While I don’t wish people out there any unhappiness in terms of layoffs or anything like that, I think there’s an opportunity to increase some of that hiring in the coming months,” said the then-Chief Financial Officer. One Eric Hart said Expedia told investors on its August earnings call.
Current state of jobs in the United States
Economists have been surprised by recent strength in the labor market as the Federal Reserve (Fed) plots to slow the economy and curb inflation.
Taken together, these signs point to an economic environment in which employers may be regaining some of the influence they had on workers during the months of the pandemic. This is bad news for workers, especially those at the bottom of the pay scale who have been able to take advantage of an overheated labor market to demand higher wages, more flexible schedules and other benefits. Bad news for people. With inflation still high and wage growth slowing, more workers will face lower living standards.
But for employers, and for Federal Reserve policymakers, the math looks different. A gradual recession would be welcomed after months when employers struggled to find enough staff to meet strong demand and rapid wage increases contributed to the fastest inflation in decades. But if the slowdown is too pronounced, it could lead to a sharp rise in unemployment, which will almost certainly lead to a decline in consumer demand and create a new set of problems for employers. I have.
Leila and David Manshoory struggled for months to recruit employees for Alleyoop, a fast-growing skincare and beauty brand. But in the last few weeks, that started to change. They have started getting more applications from more qualified candidates, some of whom have been fired by other e-commerce companies. And it’s worth noting that applicants aren’t asking for a very high salary like they were last spring.
“I think the tables have turned a little bit,” Manshury said. “There are people who need to pay their bills and are realizing there may not be a million jobs out there.”
Alleyoop has also cut some hiring plans in preparation for a possible recession. But not too much — Manshuree sees this as a great opportunity to acquire talent that the three-year-old company might struggle to recruit in a different economy. said.
“You’ll want to lean on when others are backing up,” he said. “It just gives you more options. Unfortunately, there are a lot of really talented people who get laid off from big companies.”
The resilience of the labor market has surprised many economists, who expected firms to cut back on hiring as economic growth slows and interest rates rise. Instead, employers are rapidly adding jobs.
“The labor market data show some signs of a slight cooling off since the beginning of the year or since the spring, but not much,” said Nick Bunker, director of North American economic research at CareerWeb. That’s right. “Maybe the temperature has dropped a degree or two, but it’s still pretty high.”
But Bunker said there was evidence that the frenzy that had characterized the labor market over the past year and a half was beginning to subside. His Indeed data, which is more recent than the government tally, shows a steady decline in job openings. Banker also said much of the recent wage growth has been due to workers switching jobs in search of better wages, so the decline in voluntary retirements has been particularly pronounced.
Recent research Poaching, where companies hire workers away from other jobs, has increased significantly during the recent job boom, according to economists at the Federal Reserve Banks of Dallas and St. Louis. If firms were less willing to recruit workers from competitors and pay the necessary premiums to do so, or if workers were less likely to hop from job to job, wage growth would increase even if layoffs did not recover. may slow down.
There are possible implications. A recent survey by ZipRecruiter, another job site, found that workers are less confident in their ability to find work and are more focused on finding jobs they feel are safe.
Zip Recruiter chief economist Julia Pollack said: “Workers and job seekers are a little less daring, a little more worried about future job opportunities, a little more worried about the security of their jobs. .
On the other hand, some companies are becoming less enthusiastic about hiring. A survey of small businesses conducted by the National Federation of Independent Business found that while many employers still have open vacancies, those expecting to fill those jobs within the next three months It turns out less.
Further clues about the strength of the labor market could come in the coming months, a time when businesses, including retailers, traditionally ramp up hiring ahead of the holiday season. Walmart announced in September that it would hire some of the employees it hired last holiday season this year.
Signs of a cooldown extend to sectors with the greatest employment challenges: leisure and hospitality. Openings in the sector plummeted from last year’s record levels, with hourly wage growth slowing from more than 16% last year to less than 9% in August.
Until recently, Biggby Coffee’s labor shortage was so severe that many of the chain’s 300+ stores had to close days in advance, or in some cases, open at all. But while hiring remains a challenge, the pressure is starting to ease, said co-founder and co-CEO Mike McFaul. One franchisee recently said that 22 of his 25 stores are fully staffed, with only one being severely understaffed.
“It’s definitely less of a burden in terms of getting people to do the work,” McFaul said. “We are getting more applications and we are getting more people through training.”
The shift is a welcome one for business owners like McFaul. He said franchisees had to raise wages by more than 50% to attract and retain workers.The cost increase was offset by raising prices.
“Consumers expect higher prices, so if we don’t take advantage of the moment, we will be in trouble,” he said, referring to pressure to raise wages. “So we’ll manage that by raising prices.”
So far, the price hike hasn’t deterred customers, McFaul said. Still, he said, times of severe labor shortages are not without costs. He has seen not only a loss of sales, but also a loss of efficiency and experienced workers. He said the rebuilding would take time.
“When we were at stake, that was all we were focused on,” he said. “Now that the crisis has eased and it feels a little better, we can focus on store culture and try to build it again.”