The last two years have seen tremendous job market recovery, but according to recent statistics, it may not last throughout 2023.
In December 2022, the U.S. saw 223,000 additional jobs–a noticeable increase, but still the lowest monthly gain in the past two years, and a sign that the job market is tightening up. Those gains were still smaller than even half of the 540,000 jobs filled in July 2022, making it clear that employers aren’t as eager to hire with a recession lurking in the background.
On a positive note, December’s job growth marked a second consecutive year of hiring, regaining all 20+ million jobs lost during the COVID pandemic. But with Fed officials regarding wage growth as an inflation catalyst, experts are looking at rapid hiring and pay raises as major contributors to current inflation, which is at its highest level in 40 years.
Bringing us forward to 2023, the outlook for continued job market growth is a bit dim. With a recession forecasted to hit during the second half of the year, officials are projecting the unemployment rate to rise to nearly 5% by the end of 2023.
And while the Fed’s higher rates have calmed inflation since summertime, they’ve collaterally spiked the prices of mortgages, car loans, and other borrowing options.
We’re also seeing the detrimental effects of rapid hiring in response to COVID, most notably in the tech sector. From Amazon and Meta to now Google, companies in big tech have been laying off waves of workers for the past few months. In January alone, nearly 50,000 workers at U.S. tech companies were laid off due to a handful of high-volume job cuts. This is apparently a result of the overhiring that occurred during COVID’s peak.
COVID-19 was a period of rapid growth for many businesses, and the labor market exploded as a result. However, many of those business owners may have overestimated how long the pandemic-induced growth would continue.
Now, as high interest rates, inflation, and fear of a recession impact advertising and consumer spending, threatening the profits of particularly big tech companies, they’re cutting costs in the form of layoffs.
Despite the outlier at hand (tech sector), the job market is surprisingly stable as of now considering the higher interest rates as of late. In 2022, employers added 4.6 million jobs, following the nearly seven million jobs filled in 2021. Considering the damage COVID dealt on the job market in 2020, this rebound in 2021 is nothing to scoff at–especially with smaller companies.
While big enterprises are cutting costs due to rapid hiring and in anticipation of a recession, businesses smaller than 500 employees have been posting historically high numbers of job openings.
Throughout 2023, we can expect a push-and-pull between employers and employees–while the recession will render employers hesitant to hire, workers may be hesitant to sign on without the promise of remote options, well-being initiatives, and improved employee benefits.
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Experienced Employment Law Attorney, Mediator, Arbitrator, Investigator, Legal and Media Commentator
Twice-named a U.S. News Best Lawyer in America for employment and labor law, Angela Reddock-Wright is an employment and labor law attorney, mediator, arbitrator, and certified workplace and Title IX investigator (AWI-CH) in Los Angeles, CA. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing, and bullying issues. Furthermore, she’s been named a “Top 50 Woman Attorney” in California by Super Lawyers, a “Top California Employment Lawyer” by the Daily Journal and one of Los Angeles’ “Most Influential Minority and Women Attorneys” by the Los Angeles Business Journal.
Angela is a regular legal and media commentator and analyst and has appeared on such media outlets as Good Morning America, Entertainment Tonight, Law and Crime with Brian Ross, Court TV, CNN, NewsNation, ABC News, CBS News, Fox 11 News, KTLA-5, the Black News Channel, Fox Soul – The Black Report, NPR, KPCC, Airtalk-89.3, KJLH Front Page with Dominique DiPrima, the New York Times, the Washington Post, the LA Times, Forbes.com, Yahoo! Entertainment, People Magazine, Essence Magazine, the Los Angeles Sentinel, LA Focus, Daily Journal, Our Weekly and the Wave Newspapers.
Angela is a member of the panel of distinguished mediators and arbitrators with Judicate West, a California dispute resolution company. She also owns her own dispute resolution law firm, the Reddock Law Group of Los Angeles, specializing in the mediation, arbitration, and investigation of employment discrimination, harassment, retaliation, and other workplace claims, along with Title IX, sexual harassment, assault, and misconduct conduct cases, along with hazing and bullying cases in K-12 schools, colleges and universities, fraternities and sororities; fire, police and other public safety agencies and departments; and other private and public sector workplaces.
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This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.