- In recent months, corporations like Meta and Twitter have announced that they are holding off their hiring efforts across various sectors.
- Consumer demand hit record-level highs during the 2021 holiday season, but rising inflation could put a hamper on the post-pandemic spending spree people have been indulging in.
- While vaccines and virus-related restrictions being loosened have helped accelerate job growth, some industries are dealing with a sense of déjà vu due to hiring freezes.
It seems as if just yesterday companies were begging employees to join their team with the promise of numerous benefits.
However, in recent months, corporations like Meta and Twitter have announced that they are holding off their hiring efforts across various sectors.
So what changed?
Consumer demand hit record-level highs during the 2021 holiday season, but rising inflation could put a hamper on the post-pandemic spending spree people have been indulging in.
According to research from Deloitte, 76% saw higher grocery prices in May, which inevitably has an impact on their spending habits.
Pairing this loss with the increased cost of shipping and employment, companies are finding themselves with few options that would help cut down on expenditures.
Which Companies Are Pausing Hiring?
Possibly the most surprising is the fact that technology companies are among the leaders freezing their hiring efforts.
Typically, the future of work has revolved around the acceleration of tech-related jobs, from engineers, to graphic designers, and everything in between.
However, the stock market isn’t so sure about the industry’s reliability anymore as has been proven by falling shares across the entire industry.
After Facebook parent company Meta announced record-high losses in usership and revenue, the firm revealed that certain sectors of its company would pull back on hiring.
Earlier this year, following the company’s commitment to the metaverse, Meta’s stocks plummeted by over 40%.
This has occurred for a variety of reasons, but can largely be linked to the war in Ukraine, public scrutiny, and Apple cracking down on privacy settings — a factor that helps Meta revenue.
Last year, Apple introduced a new feature that allowed users to have more control over the use of their information and data tracking. For companies like Meta, this spelled trouble.
Much of Meta’s operations rely on the ability to track data and create targeted ads for users.
Following Apple’s policy, data from Refinitiv forecasted that Meta’s ad revenue would grow at 8.7%, which is the slowest rate since the tech giant went public in 2012.
“We are dependent on the interoperability of Facebook with popular mobile-operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our products’ functionality or give preferential treatment to competitive products could adversely affect Facebook usage on mobile devices,” Meta said back in it 2012 IPO prospectus.
Last month during an earnings call, CEO Mark Zuckerberg revealed that the company would slow down their hiring, citing declining usership, among other factors.
Online retail giant Amazon also claimed it “overstaffed” after high demand from the pandemic caused the company to go on a hiring spree.
In fact, the company was found to hire 270,000 workers during the latter half of 2021.
However, the firm is unlikely to resort to layoffs to offset this hiring primarily due to its already high resignation rates. In fact, Business Insider revealed that Amazon Web Services engineers have a 35% turnover rate.
As easy as it is to be hired at Amazon, it’s just as easy for employees to become burned out due to its infamous demanding work culture.
Ride-sharing platform Uber has not been immune to increased cost for operations, which has forced it to cut back on various expenditures – including hiring.
In early May, CEO Dara Khosrowshahi revealed that hiring would be treated “as a privilege.” Those who are brought on at the company will be done so purposefully as the company looks to slash its expenses.
Despite Uber seeing their revenue grow in the post-pandemic era, it still reported a $5.9 billion loss during the first quarter of 2022.
Implications For The Future Of Work
The pandemic instilled a valid fear of being fired as companies looked to mitigate their costs and stay afloat during this unprecedented time.
While vaccines and virus-related restrictions being loosened have helped accelerate job growth (the U.S. added 428,000 jobs in April) some industries are dealing with a sense of déjà vu due to hiring freezes.
Layoffs haven’t quite hit major tech companies just yet, but other notable firms haven’t been as lucky.
Just last month, streaming giant Netflix revealed that it had to fire 150 employees due to “business needs” rather than performance.
Better.com, which made headlines last year after its CEO fired 900 people over Zoom, also conducted its third round of layoffs in recent months. This will reportedly bring the firm’s total headcount to less than 5,000 employees.
The company cited the firings occurred due to a falling mortgage market.
The correlation between these two companies, and those pausing their hiring, is the need for reducing expenditures in the face of decreased demand.
Although this may instill fear into professionals, there are industries that are still steadily searching for new talent.
In fact, the most recent report from the Bureau of Labor Statistics showed that hiring in April remained largely unchanged with a rate of 6 million new hires. Even more, discharges and layoffs slightly cooled off to 1.2 million.
Simultaneously, job openings decreased to 11.4 million as of the last business day in April.
In the 12 months ending in April, hiring clocked in at 78 million, while separations (including quit rates and layoffs) came in at 71.6 million.
“When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining,” the report read. “Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.”