New analysis finds that ‘big layoff announcements don’t always mean big workforce cuts':
Sure, big layoff announcements make for big headlines. But according to a new Wall Street Journal analysis, announcements of those seemingly big cuts don't always “leave companies that much smaller.”
The Wall Street Journal looked at nine publicly traded companies that have made January layoff or job-cut announcements in recent years, and found that "their combined workforce at the end of the year had shrunk by two-thirds of the announced total.”
For example, in January 2021, Dropbox announced plans to lay off “about 11% of its workforce.” One year later, “Dropbox’s global workforce was about 3.4% smaller.”
Why would companies announce large layoffs and then see their overall workforces shrink by less? The analysis points to a multitude of factors, including improved business conditions, new initiatives that grow within an organization even as older initiatives shrink, and the amount of time some layoffs take to implement.
"A layoff announcement can serve more as a message than a blueprint, potentially signaling to investors that a company is serious about preparing for tougher times or trying to recover from poor performance."
Read more via Wall Street Journal
Some US companies are announcing significant layoffs, while others are “still scrambling to hire workers.” Experts say employers are responding to “wild swings in consumer priorities” since the start of the COVID-19 pandemic in 2020.
Major companies are announcing job cuts: Layoffs have been announced at Meta, Microsoft, Disney, Amazon, and Zoom, among others. US companies “cut nearly 103,000 jobs in January, the most since September 2020,” according to Challenger, Gray & Christmas.
But job growth continues: Meanwhile, US employers “added 517,000 jobs last month,” almost triple the number analysts forecasted.
Making predictions about the US economy is increasingly difficult: Experts say COVID-19 has left a “legacy of weirdness,” making it hard to predict just what is in store for the US economy.
Read more via CNBC
According to two S&P surveys, the US economy “showed signs of a rebound in February, largely because of steady growth in service-oriented companies such as restaurants, hotels, and health care."
The S&P Global flash US services sector index “climbed to 50.5 from 46.8 in the prior month, marking the first positive reading since last summer.”
The S&P Global US manufacturing sector index “edged up to a four-month high of 47.8 from 46.9.”
“February is seeing a welcome steadying of business activity after seven months of decline. The business mood has brightened amid signs that inflation has peaked and recession risks have faded.”
Read more via Marketwatch
Wage growth across advanced economies is either “plateauing or declining from high levels,” according to the latest data. It's good news for central bankers, but “less positive” for workers.
In 2022, wages increased faster than they did in 2020 or 2021. But wages did not increase as much as prices across major advanced economies, according to the International Labour Organization.
Nominal wage growth in the US has “slowed sharply since the middle of last year," with average hourly earnings for private-sector nonfarm workers up 4.4% in the 12 months through January, “down from 5.6% last March and less than the 6.4% rise in consumer prices in the year through January.”
Average wage growth across six countries in Europe “declined to 4.9% in December from 5.2% in November, according to a report by Ireland’s central bank and the recruitment company Indeed, which tracks advertised wages across millions of online job ads.” (Meanwhile, inflation in the eurozone ended the year at 9.2%.)
Experts say real wages (wages adjusted for inflation) "might recover soon" as inflation ebbs and that “absent a deep recession, unemployment could stay low enough to preserve some bargaining power for workers.”
According to a study published in the medical journal JAMA, workers who earn a low wage may have a more elevated mortality risk.
Middle-aged low-wage workers may have an "elevated mortality risk” according to a new study by researchers at Columbia University’s Mailman School of Public Health.
Researchers tracked employment and health metrics for 4,000 US workers over a 12-year period. They found that workers who had a “sustained history of low wages – annual earnings below the poverty line for a family of four – were 38% more likely to die over the course of 12 years than those who had never experienced low-wage earnings.”
Low-wage workers were “significantly more likely than others to report poor or fair health and elevated symptoms of depression, and to never have had health insurance covered by their employer.”
Read more via CNN, JAMA
Payscale's 2023 Compensation Best Practices Report was released last week, with highlights on “the push and pull between what employees want and where employers will invest” in compensation.
Pay: According to the survey, fewer employers are offering pay raises: only 80% say they plan to give base pay increases in 2023, compared to 92% last year. However, 56% of organizations say that in 2023 the average base pay increase will be over 3%. Less than half of organizations (45%) say they currently include pay ranges in job postings, but this number has more than doubled since 2022 (22%).
Remote work: 55% of employers say that “insisting that workers come to the office puts them in the back seat when it comes to hiring and competing for talent,” up 11% from last year. And 51% of organizations say they are “experiencing resistance by their workers when asked to return to the office.” According to the survey, “about a quarter of employers" pay workers who don’t come into an office less than those who do for the same position.
Worker shortages: 60% of employers “experienced labor shortages and trouble attracting and retaining talent in 2022.” Employers expect the turnover rate to drop from 36% in 2022 to “around 25%” this year.
Read more via Yahoo News, Payscale.com
Illinois Governor J.B. Pritzker says he will sign paid leave legislation into law. The new legislation will require Illinois employers to “give workers time off based on hours worked, to be used for any reason.” Only two other states (Maine and Nevada) require employers to give paid vacation. Fourteen states require employers to “offer paid sick leave via similar laws, although employees may only use it for health-related issues.” Under the new Illinois law, employees “will accrue one hour of paid leave for every 40 hours worked up to 40 hours total, although the employer may offer more.” What's more, Illinois workers will not be required to “explain the reason for their absence as long as they provide notice in accordance with reasonable employer standards.” The law is expected to take effect January 1, 2024. Read more via Associated Press
After years of supply chain issues, many of which were prompted or exacerbated by the COVID pandemic, at least some firms say they “expect fewer disruptions and lower freight rates this year.”
Importers of finished goods have said on earnings calls that the supply chain now represents a “bright spot among darker clouds from rising interest rates and a pullback in consumer spending.”
Freight costs have returned to “close to pre-pandemic levels,” and congestion at shipping ports has “cleared.”
“We feel like we’re pretty well ahead of our supply-chain issues, and the capacity of our vendors is pretty good.”
Some manufacturers remain “cautious” due to shortages of key parts that may “hold up production lines and hurt productivity.”
Some manufacturers are still struggling in “securing packaging materials for some products.”
According to new data, the microchip shortage is improving, but it hasn't subsided entirely for automakers, with some automakers "feeling pinched by the shortage much more acutely than others.”
Honda “told shareholders this month the semiconductor shortage is bottoming out.” BMW, Mercedes-Benz, Renault and Nissan have “not been affected so far this year by the shortage,” according to analysis by Bank of America Global Research. Volkswagen, however, is “projected to cut about 65,000 autos from its production schedules in the first quarter of this year because of the shortage,” according to BofA's research.
Overall, the automotive industry is “still about 10 percent under-supplied on semiconductors, compared with about 20 percent last year.”
Read more via AutoNews
Despite chip supplies having largely recovered, some automakers continue to be plagued by supply chain and production challenges. Experts say car-buying is “never going back to normal.” Ford was forced to stop production of its F-150 electric pickups earlier this month. GM is stopping Corvette production due to a "parts supply issue."
Some of the constraints are “residual impacts from the pandemic.”
But automakers are also facing issues related to shifting to electric vehicle lineups.
Newer automakers likely “don't have the same supplier relationships as their legacy competitors.”
On a recent earnings call, Rivian explained having lost 5 days of production “because of a single component supply shortage.”
“With a vehicle that has hundreds of suppliers and thousands of components coming from those suppliers, it only takes one part from one supplier to stop the line.”
Read more via Business Insider
UK airport strikes likely to impact travelers in months to come: Strikes are set to hit UK airports and will likely impact travelers in the weeks – and even months – to come. Workers are pushing for increased pay and improved working conditions. Officials are warning travelers to “be prepared for disruption, keep up with the latest advice from travel operators and check how the strike could affect them.” UK Border Force workers went on strike earlier this month, and a “further walkout is planned” for March which could involve as many as 100,000 workers. Airports, including London Heathrow, could be impacted. (Euronews)
German airport strikes impact multiple cities: A one-day strike brought airports in German cities to a “standstill” last week. The strike comes after a German trade union continues “ ongoing negotiations” with public sector employers. Read more via DW
In France, workers continue to hold strikes against pension reform: Thousands of workers went on strike across France last week, including teachers, nurses, and train drivers. French President Emmanuel Macron's plan to raise the retirement age has prompted demonstrations throughout France. The protests are “aimed at pressuring the Macron government to reverse a plan to raise the retirement age to 64 years old from 62 by 2030.” While the most recent protests “caused fewer disruptions than other recent demonstrations,” unions are promising to “dig in for a prolonged fight against Mr. Macron’s plan, saying it would penalize people who started working at a young age.” (Wall Street Journal)
Portugal teachers protest: “Tens of thousands of teachers” protested in Lisbon earlier this month, the latest in a string of demonstrations by teachers and school workers demanding higher pay. Officials say negotiations with union representatives are “ongoing.” (VOA)
Health workers in Spain protest salaries, working conditions: Healthcare workers in Spain are protesting over salaries and working conditions. Hundreds of thousands of workers protested in Madrid over “poor staffing in hospitals and primary healthcare centres.” (Reuters)
Australia: Last quarter, wage growth in Australia increased “at the fastest annual pace in a decade last quarter,” but it still fell short of forecasts. According to the Australian Bureau of Statistics, Australia's wage price index “rose 0.8% in the December quarter from the previous quarter," below forecasts of a 1.0% increase. (Reuters)
Switzerland: Scientific job vacancies in Switzerland fell by 6.2% in 2022 compared to 2021, according to the latest UK Life Sciences Labour Market Trends report by Cpl Life Sciences and market data analysts Vacancysoft. There were “over 3,600 new scientific vacancies published in Switzerland in 2022, down from over 3,800 jobs in 2021.” (SIA)
