Matt Miller thought he was getting a promotion when he met with his boss Tuesday. Instead, he got laid off.
Business at the Pennsylvania art industry firm where he worked had been brisk up until a few months ago. But lately jitters about the stock market and a possible recession had many regulars tapping the brakes on new purchases.
“Over the last 3 months, sales dropped 50%, then 50% again, until they were basically at zero,” said Miller, 32, who is worried about job prospects. “Most of our clients were in real estate or tech, and they’ve just disappeared. They don’t want to spend $10,000 on a painting if they’re worried things are going to crash in a few months.” The labor market, until now a pillar of economic resilience, is showing cracks.
Job growth is slowing, unemployment claims are ticking up and several bi g companies, including Apple and Meta, are putting hiring plans on hold. There are signs that more firms are eliminating jobs in industries as varied as tech, advertising, health care, finance and law.
Convenience store chain 7-Eleven deleted 880 corporate jobs in Texas and Ohio after its purchase of a rival chain, a company spokesperson said in an email. Ford Motor Co. is planning to cut 8,000 positions in the coming weeks, Bloomberg reported. Meanwhile, electric carmaker Rivian is cutting 700 positions, delivery startup Gopuff is letting 1,500 employees go, and mortgage lender LoanDepot cut 4,800 jobs this year, according to reports.
“What had been universally positive labor market news is certainly less so now,” said Liz Ann Sonders, managing director and chief investment strategist at Charles Schwab. “The anecdotes are starting to stack up of companies laying off workers or freezing hiring or limiting job postings.” The number of active job postings across multiple online platforms has declined nationwide for five straight weeks, according to an analysis by Julia Pollak, a labor economist at ZipRecruiter.
Meanwhile, first-time filings for unemployment benefits rose by 7,000 last week and are up 51% from mid-March, although they are still near historic lows, Labor Department data show.
The cooling of the hot labor market is, in many ways, exactly what policymakers have been trying to engineer. Next week, the Federal Reserve is expected to raise interest rates for the fourth time this year in hopes of slowing the economy enough to control inflation without leading to widespread job losses or recession. The Fed expects the unemployment rate to gradually rise from a near 50-year low of 3.6% to 4.1% by 2024 — with the hope that most of the slowdown comes in the form of fewer job postings and hirings instead of job cuts and layoffs.
But achieving that balance can be tough. Labor economists say they’re increasingly worried that the picture could quickly sour.
“Things have slowed down — in some places, pretty sharply,” said Guy Berger, principal economist at LinkedIn. “There’s nothing right now that looks like we’re experiencing a recession, but at some point we can easily tip into rising layoffs and unemployment. The range of [layoff] anecdotes and where they’re coming from is getting broader.” This latest reckoning follows two years of torrid jobs growth, marking the fastest labor market recovery in history. Nearly all of the 20 million jobs lost in the early weeks of the pandemic have been recovered. U.S. employers created more than 6 million jobs in the past year alone, and job openings continued to outpace job-seekers by nearly two to one in May.
But a broader slowdown in other parts of the U.S. economy is beginning to have ripple effects on the job market.
The most pronounced cool-down, Berger said, has been in the tech industry which experienced rapid growth during the pandemic. Tech hiring has fallen 9.1% in the past month, compared to 5.4% dip in hiring across all industries, according to data from LinkedIn.
The number of tech firms and start-ups laying off workers has picked up in recent weeks. Netflix, Tesla and Coinbase have all announced job cuts or hiring freezes. Vimeo, the online video platform and one-time tech darling, announced this week it was culling 6% of its staff.
“We are making this decision in order to ensure we come out of this economic downturn a stronger company,” Anjali Sud, the company’s chief executive, said in a memo to employees. “The reality is that the challenging economic conditions around us have impacted our business. We must assume that these conditions will remain challenged for the foreseeable future, and that we aren’t immune.” Recession fears can be self-fulfilling: If families and businesses begin pulling back because they’re nervous about their financial futures, that can be enough to trigger a downturn. Until now, Americans have continued to spend heavily, particularly on services as well as food, gas and other necessities, even as prices go up. But economists warn that could quickly change if job losses pick up — or Americans begin to cut spending because they worry they could lose their jobs.
“People are much more careful than [during] 2021’s corporate hiring frenzy,” said Katherine Loanzon, managing director at Kinney Recruiting. “We haven’t seen layoffs yet but … that’s usually the next step.” Some of the very workers who were ceremoniously courted and hired in 2021 are among those being laid off now.
Pete Basgen was happily employed at a tech firm last fall when he was approached by recruiters at a live-stream software firm with a 40% pay increase and the promise of building his own creative strategy team. He took the position in November and managed to hire a handful of employees before he — along with most of his team — was laid off last month. Executives at the San Francisco firm were worried that business would quickly dry up if there was a recession, he was told.
“They poached me from my last job, offered me a very big salary and a whole lot of equity, then laid me off,” he said, adding that he wasn’t at the company long enough for the stock benefits to kick in.