Why Are Companies Still Hiring in an Unsettled Economy?
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Here's your Money Briefing for Friday, August 5th. I'm J.R. Whelan for The Wall Street Journal. Our economy that's been at cruising altitude for the past year and a half is running into turbulence. But even as the stock market wavers, consumers pull back on spending, and some companies announce layoffs, many more businesses have kept the help wanted sign in their window.
Job openings still exceed the number of people who are looking for work. In other words, companies still need a lot of workers, even though they're back to their 2020 staffing levels, but they just can't find them.
But how long are companies likely to stay in hiring mode amid an unsettled economy? Our economics reporter Sarah Chaney-Kambon has been talking to small business owners and economists about that, and we'll get her insights after the break.
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Despite economic data showing the economy is slowing down and even areas of the strong labor market showing cracks, companies continue to hire, and some haven't even put the possibility of layoffs on the table.
Why are companies still hiring despite signs of an economic slowdown?
So why is that happening? WSJ economics reporter Sarah Chaney-Kambon joins us to explain. Hey, Sarah, thanks for being with us.
Thanks so much for having me, JR.
So, Sarah, to be sure, we've seen several companies, namely in the tech sector, announce layoffs. But in what sectors recently have we seen companies still bringing on workers?
There are a lot of sectors that have brought on workers in recent months and are trying to bring on workers, notably leisure and hospitality, which includes restaurants, bars and hotels. have been adding back workers after really steep cutbacks at the beginning of the pandemic. We've seen retailers, health care companies, and a lot of kind of white-collar jobs and what we call professional and business services hiring as well.
But in almost any other situation where the economy trends downward, companies lay off workers to conserve money. Why are we seeing this disconnect?
One key reason we're seeing this disconnect is that employers just haven't been able to find enough workers over the past year, year and a half, as they've seen a lot of consumers coming out and spending money on their goods and services. And so they're still recovering from losses at the beginning of the pandemic. And some employers are almost scarred by the labor shortages of the past year or so. And by that, I mean it's been really hard for them to find workers. And so now if they're at a place where demand is slowing some, they're way more hesitant to lay off workers and might still even be looking to add a couple of people. Also, it's been really expensive for employers to hire over the past year.
They've had to raise wages to find workers, and they're scared of losing them.
But how about companies that have brought their staffing up to pre-pandemic levels? What's going on with them?
Companies in a lot of industries are back to their pre-pandemic employment levels.
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