Companies across the country are planning to scale back their headcounts after a year of frenzied hiring.
That’s according to a new survey published on Thursday by consultant PwC, which last month polled more than 700 U.S. executives and board members from various industries. About half of respondents said they are preparing to reduce headcount — or already have — while 52% have implemented hiring freezes.
On top of that, roughly 46% of companies are either dropping or reducing signing bonuses, which became commonplace over the past year as businesses tried to lure in new workers amid an increasingly tight labor market. Another 44% are rescinding offers entirely, the survey showed.
“Respondents are also taking proactive steps to streamline the workforce and establish the appropriate mix of worker skills for the future,” the survey said. “This comes as no surprise. After a frenzy of hiring and a tight labor market over the past few years, executives see the distinction between having people and having people with the right skills.”
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Still, the report showed some incongruities within the labor market: Although businesses are scaling back their workforce, roughly two-thirds said they have increased wages or expanded mental health benefits. Nearly 70% of businesses reported allowing more employees to work from home permanently.
The survey comes amid growing concerns that the Federal Reserve’s war on inflation could trigger a recession.
Policymakers approved another mega-sized, 75 basis point rate hike — triple the usual size — at their meeting in July and have since signaled they are “nowhere near” ending this tightening cycle, despite signs of a slowdown in the economy.
While some parts of the economy appear to be softening — namely the housing sector — the labor market has proven to be a bright spot for months.
Job growth last month blew past expectations, with employers adding a stunning 528,000 new positions, pushing the unemployment rate to a historic low of 3.5%.
However, there are signs that the labor market is starting to weaken. A plethora of companies, including Alphabet’s Google, Walmart, Apple, Meta and Microsoft, have announced hiring freezes or layoffs in recent weeks.
Fed Chairman Jerome Powell last month described the labor market as “very hot” — and that was before the blowout July jobs report — but suggested that there will likely be some “softening in labor market conditions” as a result of higher interest rates. But he has remained optimistic that the unemployment rate won’t increase too much as the central bank aims to achieve the elusive soft landing.
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“I also said that our goal is to bring inflation down and have a so-called soft landing, by which I mean a landing that doesn’t require a significant increase, a really significant increase in unemployment,” Powell said. “We’re trying to achieve that.”