Half of US companies are preparing to cut jobs, study shows

Half of US companies are preparing to cut jobs, study shows

Companies across the country are planning to cut their workforces after a year of insane hiring.

That’s according to a new survey published Thursday by consultant PwC, which last month surveyed more than 700 American executives and board members from various industries. About half of respondents said they are preparing – or have already done – to reduce the workforce, while 52% have implemented the workforce freeze.

In addition, about 46% of companies are dropping or reducing signing bonuses, which became common in the past year as companies tried to recruit new employees in an increasingly tight job market. Another 44% withdraw offers completely, the survey shows.

“Respondents are also taking proactive steps to streamline the workforce and create the right mix of employee skills for the future,” the survey said. “This comes as no surprise. After a frenzy of hiring and a tight job market in recent years, executives are seeing the difference between having people and having people with the right skills.”

IS THE UNITED STATES GOING INTO A RECESSION?

US recruitment

Recruiters speak to job seekers at a Miami-Dade County job fair in Miami, Florida, on Dec. 16, 2021. (Eva Marie Uzcategui/Bloomberg via Getty Images/Getty Images)

Still, the report showed some inconsistencies in the labor market: While companies are scaling back their workforces, about two-thirds said they’ve raised wages or expanded mental health benefits. Nearly 70% of companies indicated that more employees would work from home permanently.

The research comes amid growing concerns that the Federal Reserve’s war on inflation could spark a recession.

Policymakers approved another mega-rate hike of 75 basis points – three times the usual size – at their July meeting and have since signaled that they are “not close” to ending this tightening cycle, despite signs of a slowing economy.

While some parts of the economy appear to be slowing down, namely the housing sector, the labor market has been proving to be a bright spot for months.

Last month’s job growth exceeded expectations, with employers adding a staggering 528,000 new jobs, pushing the unemployment rate to an all-time low of 3.5%.

However, there are signs that the labor market is starting to weaken. A plethora of companies, including Alphabet’s Google, Walmart, Apple, Meta and Microsoft, have announced freezes or layoffs in recent weeks.

Federal Reserve Jerome Powell in a suit with

Federal Reserve Chairman Jerome Powell speaks to the Senate Committee on Banking, Housing and Urban Affairs as he presents the monetary policy report to the committee on Capitol Hill in Washington on June 22, 2022. (AP Photo/Manuel Balce Ceneta / AP Newsroom)

Fed Chair Jerome Powell described the job market as “very hot” last month — and that was before the July jobs report — but suggested there will likely be some “softening in labor market conditions” due to higher interest rates. But he has remained optimistic that the unemployment rate will not rise too much as the central bank aims to achieve the elusive soft landing.

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“I also said that our goal is to lower inflation and have what’s called a soft landing, by which I mean a landing that doesn’t require a significant increase, a really significant increase in unemployment,” Powell said. “That’s what we’re trying to achieve.”

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