The US labor market is shifting, and it's causing a deep divide to emerge between two separate sectors of commerce.
Much like the stark political divide that has hallowed out the unity in the United States, the country’s labor market is essentially being split in two. The United States economy is currently in a state of flux. Many businesses are beginning to feel the effects that intense inflation brings. These businesses have started to respond in kind by scaling back portions of their companies. Whereas other sectors of commerce, namely the hospitality and service industries, are still clamoring to fill roles left vacant by industry-specific worker shortages. As a result, a deep divide in the US labor market is beginning to be carved out.
CNBC detailed that companies like Microsoft, Twitter, and Meta have started to slow and in some cases freeze hiring as a way to preserve revenue and reposition key areas of focus as they navigate the uncertainties of a hyper-inflated economy. This is a big change from just months prior when jobs across all industries seemed to be a-dime-a-dozen.
Some companies have already taken pretty big hits to growth and profit streams following an emerging shift in consumer spending. Both Netflix and PayPal have laid off measurable amounts of workers, with plans to lay off more in the coming months. Both Netflix’s and PayPal’s situations are not unique to them. As the fallout following a period of surplus that gave birth to intense inflation continues to reveal itself in the current labor market more companies will find, all but certainly, themselves will no other recourse but to trim the excess fat and let go of some workers.
On the flip side, as some industries, particularly those in the tech sector and other traditional corporate mediums, are making swift maneuvers to cut back, others barely have enough staff to remain operational. The airline industry’s current woes are a prominent example of this. Immense staffing shortages have caused a ripple effect felt across the nation. A group of the nation’s largest airlines are trying to fill thousands of openings for commercial pilots, flight attendants, and other vital roles. Unfortunately, as of now, they are having a negligible amount of success. This is particularly evident in the vast number of flight cancellations that occurred over Memorial Day.
Similarly, restaurants are also still trying to rebound and fill gaps left open in the labor market following the onset of the global pandemic that nearly halted the industry as a whole. Jessica Jordan, who works as a managing partner of the Rothman Food Group, told CNBC that many restaurant clients that she works with are operating with only 75% of a full staff and are struggling to attract any new applicants. Jordan detailed that whenever she finds a potential new hire she does everything in her power to make sure they come on board. “I am working so hard to hold their hand through every step of the process, just to make sure they come in that first day,” said Jordan.
Overall, while this labor market division may seem concerning, it actually might prove to be a good thing. This unique setup of circumstances may actually help to prevent a recession. This is because even though inflation is slowing growth in one sector of the economy, the other side is not being hampered as severely because of its necessity for more workers. That is the kind of momentum the economy needs to prevent itself from sinking into a full-on recessionary period.