Just because a company bulked up doesn’t mean that layoffs are coming.

Mega-corporations have turned America’s job market upside down. They start again

Part of what has made the US job market so tight is that big, publicly traded companies have been hiring like crazy after the pandemic hit. Now that many are backtracking, it looks like a wave of unemployment is underway.

The parent meta-platforms of Amazon, Disney and Facebook are all suddenly acknowledging that they have overhired and laid off workers. For those affected, the job losses are horrific. But when it comes to the labor market, rather than viewing these layoffs as a sign that things are collapsing, they could be an indication that it might be better balanced.

In its fiscal year ending December 2019, securities filings show Amazon.com had 798,000 employees. By the end of last year, that figure had risen to more than 1.6 million, a gain of 810,000 workers. For comparison, the population of North Dakota, the fifth smallest state, is around 750,000. Amazon’s gain was the biggest, in absolute terms, of any company, but it wasn’t the only one to dramatically increase its workforce. Meta grew from 44,942 to 71,970 employees over the same period, and by the end of the third quarter that figure had risen to 87,314. Salesforce, which also announced job cuts, fell from 49,000 employees in its fiscal year ended January 2020 at 73,541.

Number of employees at Meta Platforms

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Number of employees at Meta Platforms

In fact, more than 100 S&P 500 companies grew employment by more than a fifth between their last pre-pandemic fiscal year — here defined as the fiscal year that ended in March 2020 or earlier — and data from the most recent fiscal year are available for, according to FactSet. Of the 484 S&P 500 companies for which data is available, the number of employees between the pre-pandemic period and the last fiscal period fell from around 26.4 million to 28.5 million employees, a gain of about 2.1 million, or 8%.

Caveats abound, of course. Many multinationals employ significant numbers of people overseas, for example. In addition, when companies make acquisitions, they can increase their workforce without hiring anyone. Still, the gains are notable compared to what has happened in the labor market as a whole. According to the Labor Department, there were 131 million seasonally adjusted employees on private payrolls in October, a gain of 1.3 million, or 1%, from the pre-pandemic peak set in February 2020. Absence of job gains in large public companies, America could have even fewer jobs than before the Covid-19 crisis.

The hiring they engaged in reflects how well-positioned many were for the surge in business resulting from the pandemic. Many make and sell stuff. FactSet figures show that the 213 manufacturing and retail companies in the S&P 500, according to the classification system used by the Labor Department, account for more than half of the jobs in the index. In contrast, these industries account for only about one-fifth of total private sector employment in the United States.

Many others, like Meta, Netflix and Electronic Arts have taken advantage of the extra time Americans have been spending at home. And, surprisingly, some companies in sectors of the economy hard hit during the pandemic have also hired a lot of people. Domino’s Pizza and Chipotle Mexican Grill added workers, using their size and scale to overcome lockdowns and take advantage of increased takeout demand. The same can’t be said for many family restaurants, unfortunately — overall US restaurant employment remains below its pre-pandemic peak.

Job opening rate, education and health service

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Job opening rate, education and health service

Just because a company has grown doesn’t mean layoffs are coming. Employment at Moderna fell from 830 workers at the end of 2019 to 2,700 at the end of 2021, for example. But, given that it was one of the companies to develop a vaccine against Covid-19, and is now working to apply its messenger RNA technology to vaccines against other diseases, it doesn’t seem not excessive. And in some companies, increases in demand have exceeded job gains; for example, Etsy nearly doubled its workforce from 2019 to 2021 and has grown its workforce even further since then, but its sales have roughly tripled while net income has increased fivefold.

Yet given the number of people hired, further significant layoffs could occur, especially given that consumer consumption preferences have shifted towards services and away from goods as rates of interest increases and caution in the event of a pandemic fades.

But eye-catching layoff announcements might not be taken as a sign that the labor market is about to turn sour. So far, they have largely affected high-income, college-educated workers who, although undoubtedly worse off than if they had not been made redundant, can often find employment. somewhere else. The median Meta worker earned $292,785 last year, for example. The median Amazon worker earned significantly less – $32,855 – but Amazon’s layoffs target company employees rather than warehouse workers. Their ability to re-enter the labor market could help explain why, despite all the announcements of layoffs, the number of people filing new claims for unemployment benefits has remained so low.

Meanwhile, many industries that aren’t well represented in the stock market are struggling to hire. In the private sector education and health services sectors, for example, Labor Department figures show that employment has only recently exceeded its pre-pandemic level, while the rate of job openings – the number of job openings as a proportion of filled and unfilled positions – is at an all-time high. The leisure and hospitality sector employed more than a million fewer people in October than in February 2020, and there too the “request for help” signs abound.

So what could actually happen is a reshuffle in the labor market, with many workers who were taken away by state-owned companies after the pandemic hit and end up elsewhere.

It won’t be a lasting setback for many of those affected, nor might it be a bad thing for the economy.

(This story was posted from a news feed with no text edits.)

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