US businesses hoarding workers even as economy cools
Kevin Kelly knew his small factory outside San Francisco would soon see demand wilt for the plastic bags it churns out for pre-cut salads and other produce. In the past, he would have swiftly chopped 10% of the workers that run his bag-making machines, or about 15 people. But after struggling to fill jobs during the boom triggered by the COVID-19 pandemic, he didn't this time.
«I knew it would be hard to find people when business came back, let alone train them,» said Kelly, the CEO of Emerald Packaging. So he held on to his employees and found ways to curb their hours, including cutting overtime. Employers across the U.S.
are making a similar calculation. Faced with the tightest job market in decades, many have become less trigger-happy with layoffs, even in the face of a cooling economy. Indeed, a monthly report from outplacement firm Challenger, Gray & Christmas on Thursday showed that announced layoffs hit their lowest level in nearly a year last month as companies were «weary of letting go of needed workers.» It's unclear whether this strategy — dubbed labor hoarding by economists — would endure if the economy slipped into a deep recession, as some have predicted it would after the Federal Reserve embarked last year on an aggressive campaign to raise interest rates to curb high inflation.
But, so far, the economy has continued to grow, albeit more slowly, and the job market has powered onward. Ahead of the Labor Department's release on Friday of the monthly employment report for July, the U.S. jobless rate stood at 3.6% in June — up only slightly from more than a half-century low of 3.4% earlier in the year.'HOLD ONTO YOUR LABOR FORCE' At least one major company has adopted a formal strategy of hoarding workers.
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