Mass layoffs across Big Tech continue to dominate headlines, and workers in information services are projected to be the most at risk of losing their jobs in the next few months, according to a new "job loss risk index" from The Conference Board, a think tank and business membership organization
Based on the current economy, the three sectors facing the highest layoff risks in the coming months include:
- Information services
- Transportation and warehousing
- Construction
The index calculates each industry's layoff risk based on six factors, including: its exposure to labor shortages; sensitivity to monetary policy; job function and education levels required; the state of its pandemic recovery; longer-term trends in labor demand; and the age composition and experience levels of its workforce.
Information services jobs, ranging from software engineers to recruiters for tech talent, are most at-risk of layoffs in a potential recession because headcount grew so quickly during the pandemic, fueled by shifts in consumer behaviors that required businesses to move everything online, says Frank Steemers, a senior economist with The Conference Board.
High-growth tech companies are also more sensitive to interest rate hikes that have happened for the better part of a year now.
However, while tech layoffs are taking up headlines, Steemers says these workers are getting rehired quickly across other sectors like health care and business, so they're not being captured by unemployment figures.
Jobs in transportation and warehousing, construction, repairs, personal and other services are at risk of being cut because customer demand for e-commerce has slowed now that buying and experiencing things in-person is back on the table. People are also shopping less due to high inflation, high interest rates on debt and high job insecurity with layoff headlines in the news.
Sectors that'll be resilient in a 'short and shallow' recession
Steemers says the U.S. is projected to fall into a "short and shallow" recession in the second quarter, and it could last for three quarters. But he expects a potential recession to be "mild" and not as devastating as the Covid-19 recession or aftermath of the financial crisis of 2007-2008. He adds that even if we fall into a recession, many sectors will still have labor shortages for a host of reasons, like retiring Baby Boomers and limited immigration policies.
"It's always hard to hire, but now it's harder because the demographics are simply not adding up anymore," Steemers says.
With that said, sectors that are likely to be most resilient in a future recession with the lowest risk of layoffs include:
- Government
- Private education services
- Health care
- Accommodation and food services
Jobs in government, private education, and health and social assistance are expected to remain resilient because they're less sensitive to interest rate changes, and employers in these sectors didn't over-hire like others.
And accommodation and food services sectors are still trying to recover all the jobs lost during Covid, Steemers says.
Companies are still trying to hire and worried about quitting
All that said, HR leaders are optimistic about hiring and retaining workers in the coming months, despite headlines projecting a recession and continued layoffs in 2023.
Some 3 in 4 chief HR officers expect hiring to stay steady or even ramp up in the next six months, according to The Conference Board CHRO Confidence Index for the first quarter of 2023, which measures responses from 172 HR leaders from January to February.
And HR leaders are still worried about people quitting — roughly 1 in 5 is concerned about their workforce leaving.
Nearly half, 45%, of HR leaders say their employees' engagement increased in the last six months, and 14% say engagement decreased.
However, in a September 2022 survey of 1,600 employees, just 27% of workers themselves reported an increase in employee engagement, while 30% reported a decrease.
The timing doesn't completely align, but it does overlap and points to a big gap in understanding between employees and HR leaders, says Rebecca Ray, executive vice president of human capital at The Conference Board.
"CHROs may be somewhat more optimistic than what employees told us," Ray says of the disconnect.
"I wonder if CHROs are hearing what employees really feel," she says. "Sometimes that won't surface in a survey. That takes a lot of work and an environment of trust where employees can be open without fear of retaliation."
As part of hiring and retention, Ray says companies have more work to do to ensure their employees feel included and motivated by their work. "You can't get productive employees if they're not engaged, and you can't get engaged workers unless you make them feel they belong and are respected there," Ray says. "That's not different from any generation. Those are table stakes."
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