The division in the US labor market boosts the prospects for some workers, others note

Gaps are forming in the US labor market as some companies seek to limit hiring while others are desperately seeking employees.

Microsoft, Twitter, Wayfair, Snap, and Meta – the parent company of Facebook – announced recently that they plan to be more conservative about adding new employees. Peloton and Netflix have announced layoffs as demand for their products slows, and online car dealer Carvana has cut its workforce as it grapples with inflation and surging stock prices.

“We will treat hiring as a privilege and be thoughtful about when and where to add headcount,” Uber chief Dara Khosrowshahi wrote to employees earlier this month, vowing to cut costs.

U.S. employers reported cutting more than 24,000 jobs in April, up 14% from the previous month and 6% higher than the same month a year ago, according to outsourced recruitment firm Challenger, Gray & Christmas.

But airlines, restaurants and others still need to fill the positions. Job cuts for the first four months of the year were down 52% compared to the same period in 2021. Just under 80,000 jobs were announced from January to April, the lowest tally in nearly three decades the company has been tracking data.

What emerges is a tale of two job markets – albeit not equal in size or pay. Hospitality and other services sectors cannot hire enough workers to hire what is expected to be a tumultuous summer recovery after two years of Covid hits. The tech sector and other big employers are warning that they need to cut costs and notify employees.

U.S. job opportunities rose to 11.55 million seasonally-adjusted jobs at the end of March, according to the latest report available to the Department of Labor, a record number of data going back to 2000. The number of employees leaving their jobs also hit a record high, at more than 4.5 million. Appointments reached 6.7 million.

Wages are rising but not enough to keep up with inflation. And people are changing where they spend their money, especially as household budgets tighten thanks to the highest increases in consumer prices in four decades.

Economists, employers, job seekers, investors and consumers look for clues about the direction of the economy, and find emerging divisions in the labor market. The difference could mean a slowdown in wage growth, or employment itself, and could eventually reduce consumer spending, which has been solid despite deteriorating consumer confidence.

Companies from airlines to restaurants large and small are still unable to hire fast enough, forcing them to scale back growth plans. Demand fell more quickly than expected after those companies laid off workers during the drop in sales caused by the pandemic.

JetBlue Airways, Delta Air Lines, Southwest Airlines and Alaska Airlines have scaled back growth plans, at least in part, due to staff shortages. JetBlue said the attrition of pilots is operating higher than usual and is likely to continue.

“If your attrition rates are, say, 2x to 3x what you’ve seen historically, you need to hire more pilots just to stand still,” JetBlue CEO Robin Hayes said at an investor conference on May 17.

Denver International Airport franchises such as restaurants and shops have made headway in hiring but there is still a staff shortage of about 500 to 600 workers to get to nearly 5,000, according to Pam DeChant, vice president of franchises for the airport.

She said many chefs earn about $22 an hour, up from $15 before the pandemic. Airport employers offer to hire and retain, and in at least one case, what she calls “a bonus if you come to work every day this week.”

Consumers have “spent a lot on goods and not a lot on services during the pandemic, and now we see in our card data that they’re returning to services, literally,” said David Tinsley, an economist and director at Bank of America. institute.

“Maybe it’s a jolt from these people [had] I overestimated it in terms of hiring,” he said of current trends.

Companies driving job growth are hardest hit early on in the pandemic.

Jessica Jordan, managing partner of Rothman Foods Group, is struggling to hire the workers she needs for two of her Southern California businesses, Katilla Deli & Bakery and Manhattan Beach Creamery. She estimates that both are only about 75% functional.

But half of the applicants didn’t answer her emails for an interview, and even new hires who had already submitted their papers often disappeared before their first day, without explanation, she said.

“I work really hard to hold their hand through every step of the process, just to make sure they come in that first day,” Jordan said.

Larger restaurant chains also have lengthy job applications. For example, sandwich chain Subway said Thursday that it is looking to add more than 50,000 new workers this summer. Taco Bell and Inspire Brands, which owns Arby’s, said they are also looking to add employees.

Hotels and food services had the highest quit rate across industries in March, with 6.1% of workers leaving their jobs, according to the Bureau of Labor Statistics. The overall rate of smoking cessation was only 3% in that month.

Some of these workers are moving away from the hospitality industry altogether. Julia, a 19-year-old who lives in New York City, quit her job at the restaurant in February. She said she left due to hostility from both clients and her superiors and the many extra shifts being added to her schedule at the last minute. She now works in childcare.

“You have to work really hard to get fired in this economy,” said David Kelly, chief global strategist at JPMorgan Asset Management. “You have to be really incompetent and obnoxious.”

And if industries in recovery are hiring to catch up, the opposite is also true.

After a hiring boom, several major tech companies announced hiring freezes and layoffs, as fears of an economic slowdown, the COVID-19 pandemic and the war in Ukraine curbed growth plans.

Abundantly funded startups aren’t immune either, even if they haven’t undergone the same level of market value deterioration as generic tech stocks. At least 107 tech companies have laid off staff since the start of the year, according to Layoffs.fyi, which tracks job cuts across the sector.

In some cases, companies like Facebook and Twitter cancel job offers after new hires have already been accepted, leaving workers like Evan Watson in a precarious position.

Last month, Watson received a job offer to join Facebook’s emerging talent and diversity division, which he called one of his “dream companies”. He gave notice at the real estate developer where he was working and set a launch date for the social media giant on May 9.

Just three days prior to that date, Watson received a call regarding his new contract. Facebook recently announced that it will pause hiring, and Watson anxiously speculated that he might receive bad news.

“When I got the call, my heart pounded,” Watson said in an interview. Meta was freezing hiring, and Watson’s joining was on hold.

“I was completely silent,” Watson said. “I had no words to say.” Then I said, ‘What now?’ “I don’t work for my other company.”

The news left Watson disappointed, but he said Facebook offered to pay him compensation while he searched for a new job. Within a week, he landed a job at Microsoft as a talented scout. Watson said he “feels good” about the drop at Microsoft, as the company is “much more stable in terms of share price.”

For months, retail giant Amazon has hung up on generous login bonuses and free college fees to lure workers. The company has employed 600,000 people since the start of 2021, but now finds itself crowded into its fulfillment network.

Many of the company’s recent hires are no longer needed, with e-commerce sales growth slowing. In addition, employees who went on sick leave amid an increase in Covid cases returned to work earlier than expected, Amazon Chief Financial Officer Brian Olsavsky said in a call with analysts last month.

“Now that demand is more predictable, there are locations in our network where we slow or pause hiring to better align our operational needs,” Amazon spokeswoman Kelly Nantel told CNBC.

Amazon did not respond to questions about whether the company expects to lay off workers in the near future.

Cuts and hiring shifts are isolated at the moment, but they have some CEOs on edge.

“What kind of news flow…when their top companies about job losses have the potential to take sentiment down a little bit,” Bank of America’s Tinsley said, warning that the job market was still going strong. “Things are probably not as bad as the picture some might paint.”

He said the pace of job growth in the service sector is likely to begin to slow.

JPM’s Kelly said that even if the market lost 3 million jobs, it would still be a market for job seekers.

“There is a strong excess demand for workers. It really protects the economy from recession,” he said.

But the job cuts could spread to other sectors.

A sharp increase in hiring freezes, job cuts, stagnating wages or even a dip in company spending on things like employee benefits and a return to business travel could hurt service sectors that have thrived as Covid cases decline.

“The question is, will consumer spending keep its head above water?” Tinsley said.

– CNBC channel Jordan Novett Contribute to this story.