It wasn't long ago that Amazon doubled their workforces to manage through the surge, while Morgan Stanley staffed up to handle a record amount of IPOs, and mortgage lenders added staff as rock-low rates led to a refinancing boom.
Delta Air Lines, Hilton Worldwide, and legions of restaurants slashed their staffs because of the lock downs that rolled through much of the country and the world.
They're trying to reverse course.
With a possible recession on the horizon, companies that hired too much in 2020 and 2021 are having to make sweeping cuts or freeze hiring. CEOs went from hypergrowth mode to concerns over macroeconomic uncertainty in a matter of months. After their splashy market debut in 2020, stock trading app Robinhood and cryptocurrencies exchange Coinbase have slashed more than 1,000 jobs.
The businesses of airlines, hotels, and eateries face the same problem as they continue to recover from the Covid-caused shutdowns. They can't hire quickly enough to satisfy demand and are dealing with a labor market vastly different from the one they experienced before the cutbacks.
Julia Pollak, chief economist at ZipRecruiter, said that the Pandemic caused a dramatic reallocation of capital in many industries. Capital is being reallocated back to normal patterns because many of the conditions no longer apply.
The Fed has lifted its benchmark rate on consecutive occasions for the first time since the early 1990s, and inflation is at a 40-year high, making it difficult for employers to navigate.
Concerns that the U.S. economy is heading for a recession have been raised by the central bank. The rule of thumb for recession is that gross domestic product has fallen for two quarters in a row.
Market experts lamented the frothiness in stock prices and absurdity of valuations as late as the fourth quarter of last year, when the major indexes hit record highs.
Rivian went public on almost no revenue and quickly reached a market cap of over $150 billion. On the same day, the digital currency hit a new all time high.
The value of Rivian has lost 80% of its value since then. The car company began layoffs in July. Between late 2020 and mid-2022, Rivian's headcount almost quintupled to savesay savesay savesay's headcount almost quintupled to savesay savesay's headcount almost quintupled to savesay's headcount almost quintupled to savesay'
Tech earnings calls last week had a lot of talk about job cuts and hiring slow downs.
At the end of the second quarter, Amazon had 1.52 million employees, a reduction of 99,000 from the beginning of the year. Around 10% of the global workforce was cut by Shopify, which helps retailers build and manage online stores. The business boomed from the number of stores and restaurants that had to suddenly go digital as the company doubled its staff over the course of two years.
In a memo to employees, the company's CEO said that the company had bet that the surge would cause the transition from retail to online.
The picture was starting to look more like it did before Covid, and that bet didn't pay off. I made a mistake by placing this bet. We have to make adjustments.
After Facebook parent Meta missed on its results and forecast a second straight quarter of declining revenue, the company will be reducing job growth over the next year. During the Pandemic, the headcount grew by about 60 percent.
With fewer resources, I expect us to get more done.
During the two Covid years, when the workforce grew by over 30%, the company told employees to focus and improve their productivity. Suggestions on how to be more efficient were requested by the company.
The CEO said in a meeting with employees that they are facing a challenging macro environment. The bar for both product excellence and productivity should be raised.
Peloton, whose fitness equipment and on-demand classes became an instant gym replacement during lockdowns, has suffered from massive oversupply issues and out-of-control costs. In February, the company said it would cut 20% of corporate positions as it named a new CEO.
The perks for junior bankers who were needed to manage a boom in IPOs, mergers and stock issuance were being offered by the Peloton products. Junior bankers were complaining about 100 hour workweeks and banks started looking for talent in unusual places.
The industry picked up the full population of a Morgan Stanley or a Goldman Sachs in a little over two years.
Investment banking wasn't the only thing that happened. The government spent trillions of dollars to keep the economy moving during the shutdown. Banks took in an unprecedented amount of deposits despite a feared wave of loan defaults. Repayment rates were better for Main Street lending operations.
Morgan Stanley's employee levels increased by 29% from early 2020 to the middle of this year. The growth was spurred by the acquisitions of money management firms.
Staffing levels at Goldman increased 22% in the same time frame as CEO David Solomon broke into consumer finance and strengthened wealth management operations.
JP Morgan Chase became the industry's largest employer after adding 8.5% to its workforce during the H1N1 epidemic.
The good times on Wall Street ended. IPOs dried up and the stock market had its worst half a century. The revenue from investment banking fell in the second quarter.
A person with knowledge of the bank's plans says Goldman is considering a return to year-end job reductions. When markets crater, layoffs are usually on the way because employees make up the single biggest line item in banking.
Jamie Dimon, the CEO of JP Morgan, told investors in June that an economic storm was on its way and the bank was bracing for it.Jamie Dimon, chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview in London, U.K., on Wednesday, May 4, 2022.
According to Pollak, one area in finance where there will likely be a hemorrhaging of workers is in mortgage lending. Record low mortgage rates and rising home prices led to more people buying real estate in the next two years. Hundreds of mortgage staffers have been cut by Wells Fargo and JP Morgan.
Pollak said that sales are slowing. You need to see employment levels and hiring slows down. It was all about that moment.
The intersection of Silicon Valley and Wall Street is gloomy at the moment as rising rates and crumbling stock multiples combine. In June it was announced that it would lay off 18% of its workforce and even cancel job offers it had made to people it had hired. The headcount increased to 3,730 employees.
Less than three months after eliminating 9% of its full-time staff, stock trading app Robinhood is cutting 23% of its workforce.
The chief economist at Glassdoor said that we are at the tail end of the distortion. It isn't going away, but it is changing to a more normalized period, and companies are adapting to that.
The story in retail is more complex. There was a divide between businesses that were essential and those that were not at the beginning of the Pandemic.
While malls filled with apparel shops and department store chains were forced to shut down, Target and Walmart were allowed to keep their lights on. Most of the retail employees at Macy's and other stores had to take a day off.
Demand returned to shopping malls and retailers websites after the businesses reopened. As soon as possible, companies hired people back or added them to their workforce.
In August of last year, Walmart started giving bonuses to warehouse workers and covering college costs for employees. Target increased staff by 22% from early 2020 to the start of 2022, thanks to the introduction of a debt-free college education for full- or part-time employees. Macy's said it would pay better hourly wages.
They didn't know how quickly the dynamic would change as Americans tightened their belts. Retailers are left with bloated inventories after warnings of waning demand. Gap's gross margins will be hurt by higher promotions. Walmart last week slashed its profit forecast and said soaring prices for food and gas are squeezing consumers.
Pain is entering the ad market. It missed Wall Street estimates for second-quarter earnings and revenue due to lower than expected demand from U.S. big box retailers and mid- market advertisers.
Smaller players are in cut mode and retail giants have avoided big layoffs. Stitch Fix, 7-Eleven, and Game Stop have all said they will be eliminating jobs.
With all of the downsizing taking place in the U.S. economy, the applicants pool should be wide open for airlines, restaurants and hotels, which are trying to rebuild their workforce after being laid off.
It is difficult. Amazon still has more people working in its warehouses than it did two years ago. The company lifted average starting pay to $18 an hour last year, a level that is hard to find in the services industry.
On the earnings call in May, Christopher Nassetta said that he wasn't happy with customer service and that the company needed more workers. At the end of last year, even as travel was getting back to normal, the number of employees at the company's managed, owned and leased properties as well as corporate locations was down by over 30,000 from two years earlier.
Customer service is a challenge. According to a report last week from McKinsey, revenue per available room in the U.S. is growing at a faster rate than previous years.Delta Airlines passenger jets are pictured outside the newly completed 1.3 million-square foot $4 billion Delta Airlines Terminal C at LaGuardia Airport in New York, June 1, 2022.
Even though it wasn't supposed to happen, airlines had a low headcount in November 2020. The U.S. carriers received $54 billion in taxpayer aid. Even though layoffs were not allowed, airlines like Delta and Southwest were able to lay off thousands of workers. Delta said last month that it has added 18,000 employees since the beginning of the year in order to save money.
It takes several weeks for the industry to meet federal standards for hiring and training pilots. Delta, American Airlines and Spirit Airlines recently trimmed their schedules.
Ed Bastian, CEO of Delta, said on the quarterly earnings call that the main issue is not hiring but a training and experience bubble. There has been a reduction in crew availability and higher overtime as a result of Covid. We will continue to improve our operational integrity by making sure capacity does not exceed our resources.
Travelers have not been happy. Bad weather and not enough staff caused more than 12,000 flights to be delayed over the Fourth of July holiday weekend. Now that their services are in high demand, pilots who took early retirement don't seem to mind.
"When we look at labor shortages related to travel, you can't just flip a switch and suddenly have more baggage handlers that have passed security checks, or pilots." People aren't opting in to come back because they don't like what their employers are telling them
The report was contributed to by CNBC employees.
Big tech earnings are higher than expected.