Hiring slowdown to be inevitable in the US

varsha sarkar

July 31, 2023

5:21 pm

Evidence that the acceleration in U.S. wages, which has helped workers but also increased inflation, is slowing is one reason for the cautious optimism. Jerome Powell, the head of the Federal Reserve, has frequently cited rapidly growing worker pay as the reason why the Fed had to raise interest rates so quickly. If the Fed raises rates far enough and for long enough, the economy may become so weak enough to cause a recession. Still conceivable is a slump in the economy.

However, a more upbeat viewpoint has gained ground recently as inflation began to show widespread signs of lowering. Perhaps a recession isn’t inevitable after all.

In response to a “stream of dismal news for the business,” a number of tech companies took action on Thursday to enforce hiring freezes and widespread layoffs. The corporate offices of giants like Apple, Oracle, and Amazon, as well as payment processor Stripe and ride-hailing company Lyft, were affected by the layoffs and hiring halts. While the Federal Reserve’s determination to fight decades-high inflation by sharply raising interest rates has corporate leaders prepared for an apparent impending recession in the U.S., the IT industry has been battered by layoffs for much of the year.

The likelihood that the Fed will be able to construct the often-elusive soft landing,” in which the economy slows but doesn’t reverse course and the unemployment rate increases somewhat but remains low, is increasing as a result of these trends. For many others, it would still mean difficult times. However, it wouldn’t cause the widespread unemployment that a recession usually brings about.

However, according to the 2022 Worldwide Skills Report from Mountain View, California-based Coursera, a global online learning platform, U.S. continues to have stagnant levels of overall skill competency, coming in at number 29 out of more than 100 nations. Although business skill competency has increased in the United States, there is still much space for development. Particularly, communication abilities fell to 27% from 60% in 2021. The majority of analysts predict that this year will see the official declaration of a recession, and many of the biggest firms in the US have already made preparations.

Despite weaker domestic demand and worse international markets, the American employment machine remains in good working order. Technology businesses (and others) were inundated with cash as a result of this “risk-free financing,” anticipating constantly rising billion-dollar values. Thus, they made as many hires as they could.

In an effort to keep up with their competitors, the largest companies, like Google, Meta, Amazon, Salesforce, and Microsoft, expanded quickly. The majority of the HR technology businesses informed that their investors were pressuring them to employ and require that they scale up quickly. The employment data for April will show whether it will continue to be so. 

According to Joseph Laverna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, employment in April will be ok. A bad payroll report has a considerably greater ability to alter expectations than trend-like data, which has less impact. People will bring up the second-quarter rebound again. 

Payrolls

According to the median prediction of economists surveyed by Bloomberg, employers increased employment by 200,000 after increasing it by 215,000 the previous month. That is in line with the 209,000 average for the first quarter. Organizations will need to keep putting a people-first culture in emphasis because of layoffs and the challenging economy, Smith adds, “so those they do have still working can continue to be engaged. Even if a firm decides to shrink, it must still put a strong emphasis on its employee value proposition, benefits package, and core messaging about its people-first culture.”

However, labels are difficult for people since most detest labels, according to Smith. Organizations must recognise where a person is on the continuum of their contributions, growth and learning, skills and abilities, and velocity of their career momentum, in order to determine how quickly they should continue to focus on their present role rather than prepare for their next role. “You don’t assign someone a name that defines their accomplishments in a once-a-year conversation. Organizations can access new talent sources and create a more diverse and inclusive workforce by prioritising skills in hiring and going beyond the four-year degree. Companies are now utilising previously untapped talent pools, such as people with impairments and those who have served time in prison.

varsha sarkar

July 31, 2023

5:21 pm

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