Job surge confounds recession predictions…
A surge in job creation in January is confounding those who believe the country is headed for recession. New data from the Labor Department reveals employers added more than half a million (517,000) jobs last month – much more than had been expected. In fact, the jobs spike now means unemployment is now at its lowest since the moon landing in 1969. According to the BBC, “analysts are struggling to figure out what is happening in the world’s largest economy, which is [also] being buffeted by a mix of higher borrowing costs and rising prices.” It reports Justin Wolfers, a professor at the University of Michigan, who said the gains are a “breathtaking number.” Others analysts however, caution against reading too much into one month’s figures, suggesting that America may already have fallen into recession. “The market is going to go through a rollercoaster ride as it tries to decide if this [the jobs growth] is good or bad news,” conceded Seema Shah, chief global strategist at Principal Asset Management. According to Gary Cohn, the former director of the National Economic Council, the jobs rise can be attributed to people returning to the office, causing renewed demand for services like office cleaning; security; parking attendants etc.
…as Zoom lays off 15% of its workforce
Zoom, the company that went stratospheric during the Covid-19 pandemic, has said it will be shedding a massive 15% of its total workforce – or around 1,300 employees. In blog posted to staff, CEO Eric Yuan said the company needed to adapt to the “uncertainty in the global economy.” He said: “We worked tirelessly and made Zoom better for our customers and users. But we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities.” In posts similar to other tech leaders, the boss indicated that he had staffed-up too quickly and was now regretting it. Workers being laid off will be eligible to 16 weeks’ salary and health care coverage. To help curb criticism, Yuan said he would be reducing his salary by 98% this year, and will forego his 2023 bonus. “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today,” he said. “I want to show accountability not just in words but in my own actions.”
Dell adds to tech misery, announcing 6,500 staff will go
Job losses at Zoom followed those also announced at tech company, Dell, which this week revealed it was cutting 6,500 staff – around 5% of its workforce. Around a third of Dell’s workforce are based in the US, but in defending the cuts, co-chief operating officer, Jeff Clarke said: “The company is experiencing market conditions that continue to erode with an uncertain future.” The reduction in staff numbers coincides with a 37% decline in PC shipments in Q4 of 2022 compared to Q4 of 2021. This represents a significant fall, given more than half (55%) of Dell’s revenues comes from PCs. When the cuts are complete, headcount at the Texas-based tech giant will be at its lowest for six years. In November Dell posted a 68% rise in quarterly operating profit, thanks to strong demand for servers and network equipment. But total revenue still slipped 6% to $24.72 billion. Clarke added: “We’ve navigated economic downturns before and we’ve emerged stronger. We will be ready when the market rebounds.”
Location-based pay will evolve into national-based pay
Paying two people differently just because of where they are located could evolve itself out of existence, into more of a nationwide pay policy, predicts Jafar Owainati, co-founder and CEO of Barley, a Toronto-based HR technology firm. According to an article in HRD, he says the post-pandemic move towards location-based pay has “ruffled a few feathers,” and suggests it will now settle down. He says: “[Before Covid-19] There wasn’t a mutual understanding between employees and employer…now we’re in a really good position where employers can be upfront about their location-based pay approach.” He added: “For a candidate looking to join a company, now they know what they’re signing up for.” According to Barley’s just-published 2022-2023 Salary & Incentive Survey, more than half (51%) of companies adjusted remote employees’ pay. He said: “We’re now starting to see more of a national-based pay, and specifically for companies that hire remotely, we’re going to see less focus on location-based pay within a country. But there still will be differentiation of pay from one country to the next.”
Immigration rebound helps US firms recruit
A partial recovery of immigration is helping employers tackle staff shortages, according to a report in this week’s New York Times. While levels are still not at pre-Trump numbers, the article suggests that caps placed on numbers from 2017 are starting to rebound, with visas for visitors, temporary workers and permanent immigrants rising to 7.3 million in 2022, up from 3.1 million the previous year. In each of the three years before the Trump presidency, these visa numbers topped 10 million. Rising visa numbers means net immigration hit one million last year – the highest since 2017 according to the Census Bureau. Data indicates that the growth in immigration has helped power job recoveries in leisure and hospitality, as well as in construction, where immigrants typically make up a higher share of employment, and where there were bigger increases in wages and vacancies. Due to declining birth rates The Congressional Budget Office projects that by 2042 net immigration will be the nation’s only source of population growth.
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New data shows support for a four-day week
Americans currently work some of the longest hours on the planet, but according to new data, support is growing – and most crucially from managers – for a four-day week. Fox Business reports that more US firms are now investigating the feasibility of a four-day working week, with it quoting research by Robert Half that finds an overwhelming majority of US managers (93%) support a four-day work week for their team. In addition to this, 64% anticipate their company will adopt a four day week model within the next five years. “It’s nice to actually feel like we do have off time, and that we are protective of that time,” said Nate Jones, head of research at CX Pilots, a business consulting company that’s trying out a four-day, ten-hour schedule. This week state lawmakers in Maryland proposed a bill that would offer tax incentives to businesses that try the four-day workweek. If passed, it would be the first program of its kind in the US.
New data shows manufacturing is booming
Tech sector jobs might well be tumbling, but revised data from the US Bureau of Labor Statistics has revealed that manufacturing is enjoying a renaissance, with the sector now employing more than 13 million people – the highest since 2008. Although the percentage of workers in manufacturing is nowhere near the 30%-plus level it was between the 1940s-50s, the 8.4% it stands out now represents something of the turnaround in its fortunes. However, according to moneycontrol.com the rebound may still only be temporary. It notes that more than a quarter of production workers are currently over the age of 55, meaning manufacturers will have to replace millions of retiring workers. The more likely scenario, it suggests, is that automation will improve efficiency and reduce the need for replacement headcount. But, even though hourly pay of non-supervisory and production workers is almost 9% lower in manufacturing than in the US private sector overall, steadier hours mean average weekly pay for manufacturing workers is almost 10% higher.