From the New York Times this morning:
“Despite a year of aggressive interest rate increases by the Federal Reserve aimed at taming inflation, and signs that the red-hot labor market is cooling off, most companies have not taken the step of cutting jobs. Outside of some high-profile companies mostly in the tech sector, such as Google’s parent Alphabet, Meta and Microsoft, layoffs in the economy as a whole remain remarkably, even historically, rare.
“There were fewer layoffs in December than in any month during the two decades before the pandemic, government data show. Filings for unemployment insurance have barely increased. And the unemployment rate, at 3.4 percent, is the lowest since 1969 … For Federal Reserve policymakers, the surprising strength of the job market is a source of both optimism and concern. The low rate of unemployment suggests that a recession is not imminent, but also that the Fed has not achieved its aim in slowing down the economy.
“For workers, the picture is clearer: For now, at least, the historically strong job market remains intact.”
The Times goes on:
“Economists say a variety of factors could be driving employers to hold on to workers.
“Some may be scarred by how difficult and costly it has been in recent years to recruit and train employees. Some may be worried about finding themselves short-handed if they need to hire quickly after a fleeting downturn — as was the case when the economy reopened rapidly early in the pandemic. Others may still be trying to make up for staffing shortfalls after the pandemic’s upheaval. The leisure and hospitality industry, for instance, is still about half a million jobs below its prepandemic level.
“More fundamentally, the pandemic, and the persistently tight labor market that ensued, may have profoundly reshaped how the nation’s employers think about staffing levels and hiring.”
KC’s View:
I’ve made this point before, but quite frankly, I don’t think it can be made too often.
The most important thing that retailers can do is remember a word that was often used during the early days of the pandemic: essential.
In those circumstances, retailers maintained that front line workers were essential to businesses that had been deemed essential not just by authorities, but, more importantly, by the culture. But the thing is, those employees were essential before the pandemic, and they’re essential now. But the urgency has been lost in many workplaces, and that’s a shame.
I think that employers should be scarred by the events of the past, and so should commit to creating cultures of caring that reflect the essential roles that employees play in their organizations.
For many employers – not all, because there are some exceptions – it will be a moment lost if their attitudes about hiring and retention are not profoundly and fundamentally reshaped.
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