Connect with us

Business News

Help (mostly) wanted: A diverging job market boosts some workers’ prospects and puts others on notice

Published

on

A help wanted sign is displayed in the window of a Brooklyn, New York business.

Spencer Platt | Getty Images

Cracks are forming in the U.S. labor market as some companies look to curb hiring while others are desperate for employees.

Microsoft, Twitter, Wayfair, Snap and Facebook-parent Meta recently announced they plan to be more conservative about adding new employees. Peloton and Netflix announced layoffs as demand for their products slowed, and online car seller Carvana cut its workforce as it faces inflation and a cratering stock price.

“We will treat hiring as a privilege and be deliberate about when and where we add headcount,” Uber boss Dara Khosrowshahi wrote to staff earlier this month, pledging to reduce costs.

U.S.-based employers reported more than 24,000 job cuts in April, up 14% from the month before and 6% higher than the same month last year, according to outplacement firm Challenger, Gray & Christmas.

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

What’s emerging is a tale of two job markets — albeit not equal in size or pay. Hospitality and other service sectors can’t hire enough workers to staff what’s expected to be a bustling summer rebound after two years of Covid obstacles. Tech and other large employers are warning they need to keep costs down and are putting employees on notice.

Record job openings

U.S. job openings soared to a seasonally adjusted 11.55 million at of the end of March, according to the latest available Labor Department report, a record for data that goes back to 2000. The numbers of employees who quit their jobs also hit a record, at more than 4.5 million. Hires stood at 6.7 million.

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

Economists, employers, job seekers, investors and consumers are looking for signals on the economy’s direction, and are finding emerging divisions in the labor market. The divergence could mean a slowdown in wage growth, or hiring itself, and could eventually curtail consumer spending, which has been robust despite deteriorating consumer confidence.

Companies from airlines to restaurants large and small still can’t hire fast enough, which forces them to cut growth plans. Demand snapped back more quickly than expected after those companies shed workers during the pandemic-induced sales plunges.

JetBlue Airways, Delta Air Lines, Southwest Airlines and Alaska Airlines have scaled back growth plans, at least in part, because of staffing shortages. JetBlue said pilot attrition is running higher than normal and will likely continue.

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

Denver International Airport’s concessions like restaurants and shops have made progress with hiring but are still understaffed by about 500 to 600 workers to get to roughly 5,000, according to Pam Dechant, senior vice president of concessions for the airport.

She said many cooks are making about $22 an hour, up from $15 before the pandemic. Airport employers are offering hiring, retention and, in at least one case, what she called an “if you show up to work every day this week bonus.”

Consumers “spent a lot on goods and not much on services over the pandemic and now we’re seeing in our card data they’re flying back into services, literally flying,” said David Tinsley, an economist and director at the Bank of America Institute.

“It’s a bit of a shakeout from those people that maybe [had] overdone it in terms of hiring,” he said of the current trends.

Snap back

The companies leading job growth are the ones that were hit hardest early in the pandemic.

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

But half of applicants never answer her emails for an interview, and even new hires who already submitted their paperwork often disappear before their first day, without explanation, she said.

“I am working so 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 tall hiring orders. Sandwich chain Subway, for example, said Thursday it’s looking to add more than 50,000 new workers this summer. Taco Bell and Inspire Brands, which owns Arby’s, said they’re also looking to add staff.

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 quit rate was just 3% that month.

Some of those workers are walking away from the hospitality industry entirely. Julia, a 19-year-old living in New York City, quit her restaurant job in February. She said she left because of the hostility from both customers and her bosses and too many extra shifts added to her schedule at the last minute. She now works in child care.

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

Slowdown in Silicon Valley

And if industries in rebound are hiring to catch up, the reverse is equally true.

After a boom in recruiting, several large tech companies have announced hiring freezes and layoffs, as concerns about an economic slowdown, the Covid-19 pandemic and the war in Ukraine curb growth plans.

Richly funded start-ups aren’t immune, either, even if they aren’t subject to the same level of market value degradation as public tech stocks. At least 107 tech companies have laid off employees since the start of the year, according to Layoffs.fyi, which tracks job cuts across the sector.

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

Last month, Watson received a job offer to join the emerging talent and diversity division at Facebook, what he called one of his “dream companies.” He gave notice at the real estate development firm where he worked and set a start date at the social media giant for May 9.

Just three days before then, Watson received a call about his new contract. Facebook had recently announced it would pause hiring, and Watson anxiously speculated he might receive bad news.

“When I got the call, my heart dropped,” Watson said in an interview. Meta was freezing hiring, and Watson’s onboarding was off.

“I was just like silent. I didn’t really have any words to say,” Watson said. “Then I was like, ‘Now what?’ I don’t work at my other company.”

The news left Watson disappointed, but he said Facebook offered to pay him severance while he searched for a new job. Within a week, he landed a job at Microsoft as a talent scout. Watson said he “feels good” about landing at Microsoft, where the company “is a lot more stable, in terms of stock price.”

For months, retail giant Amazon dangled generous sign-on bonuses and free college tuition to lure workers. The company has hired 600,000 employees since the start of 2021, but now it finds itself overstaffed in its fulfillment network.

Many of the company’s recent hires are no longer needed, with e-commerce sales growth cooling. Plus, employees who went on sick leave amid a surge in Covid cases returned to work earlier than expected, Amazon CFO Brian Olsavsky said on a call with analysts last month.

“Now that demand has become more predictable, there are sites in our network where we’re slowing or pausing hiring to better align with our operational needs,” Amazon spokesperson Kelly Nantel told CNBC.

Amazon did not respond to questions about whether the company foresees layoffs in the near future.

Recession shield

The reductions and hiring shifts are isolated for now, but they have some executives on edge.

“Any kind of news flow … when its high-profile companies around job losses, has the potential to chip away at sentiment a bit,” said Bank of America’s Tinsley, cautioning that the job market is still strong. “Things are not as bad perhaps as the picture some might paint.”

He said the pace of job growth in the service sector will likely begin slowing, however.

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

“There’s strong excess demand for workers. It really shields the economy from recession,” he said.

But job cuts can ripple through other sectors.

A sharp increase in hiring freezes, job cuts, wage stagnation or even a pullback in company spending on things such as employee benefits and a return to business travel could hurt the very service sectors that have thrived as Covid cases fell.

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

— CNBC’s Jordan Novet contributed to this story.

Business News

Walmart strikes exclusive streaming deal to give Paramount+ to Walmart+ subscribers

Published

on

In this photo illustration, a woman’s silhouette holds a smartphone with the Walmart logo displayed on the screen and in the background.

Rafael Henrique | Lightrocket | Getty Images

Walmart has reached a deal to offer Paramount Global‘s streaming service as a perk of its Walmart+ membership program, the companies confirmed on Monday.

Starting in September, customers who belong to the retailer’s program will get free access to an ad-supported plan on Paramount+, which includes movies and shows such as “Star Trek,” “Paw Patrol,” “The Godfather” and “SpongeBob Squarepants.”

Walmart launched Walmart+ nearly two years ago to drive sales and deeper customer engagement. The program costs $98 per year, or $12.95 per month, and is the company’s answer to Amazon Prime, but with a different set of perks. It includes free shipping of online purchases, free grocery deliveries for orders of at least $35 and discounts on prescriptions and gas.

Now it will also include access to the “essential tier” of Paramount+, which typically costs $4.99 per month and includes commercials. Paramount also sells a premium product without ads for $9.99 per month.

“With the addition of Paramount+, we are demonstrating our unique ability to help members save even more and live better by delivering entertainment for less, too,” Chris Cracchiolo, general manager of Walmart+, said in a news release.

Walmart said in a news release on Monday that it has had positive membership growth every month since its launch in September 2020. But since launching the service, the retail giant has declined to share its subscriber total.

According to estimates by market research firm Consumer Intelligence Research Partners, Walmart+ had 11 million customers as of July — the same as in the April. A survey by equity research firm Morgan Stanley pegged the subscriber count higher at about 16 million members as of May.

Paramount+ is one of the many services that compete for eyeballs in the streaming industry. Paramount Global announced earlier this month that Paramount+ has 43.3 million subscribers around the world. The company aims to reach 100 million subscribers by 2024.

The deal with Walmart will give Paramount+ a new distribution channel to add subscribers as well as a branding boost. Paramount+ is the only streaming service that has struck a deal with Walmart and wanted to launch exclusively to get full marketing attention, according to a person familiar with the deal who was not authorized to speak publicly about it.

Jeff Shultz, chief strategy officer and chief business development officer of Paramount Streaming, said the two companies have worked closely together for years by selling consumer products in Walmart’s stores.

The Wall Street Journal first reported the news of the deal.

Walmart will report its second-quarter earnings on Tuesday.

WATCH: Walmart+ members to get access to Paramount+

Continue Reading

Business News

People are spending lots of money on makeup and beauty, and retailers are cashing in

Published

on

Target has added new brands to its beauty department. At a growing number of stores, it also has mini Ulta Beauty shops with prestige brands.

Melissa Repko | CNBC

As prices creep up, some people have decided against getting a new outfit, delayed big purchases like TVs or cancelled Netflix accounts.

But for now, they’re still splurging on beauty.

For retailers, the beauty category has become a rare bright spot as people pull back on spending amid surging inflation. Often seen as an affordable luxury, it is the only discretionary retail category with rising unit sales in the first half of the year, according to The NPD Group, which tracks categories including clothing, tech and toys, as well as beauty products at specialty and department stores.

“You may not be able to go out to eat out as much, but you can buy yourself a lipstick,” said Olivia Tong, an analyst for Raymond James.

This spring, Target called out the strength of its beauty sales, even as it twice cut its profit outlook for the year. Walmart is also investing in the category and rolling out new beauty displays to hundreds of stores, despite its warnings that shoppers are skipping over discretionary categories like apparel.

Other factors work in the industry’s favor, too. Weddings and parties have picked up again. More people are heading back to the office, and can no longer hide behind their Zoom filters. And during the pandemic, some people got in the habit of pampering themselves at home with face masks, hair treatments and other beauty products.

Larissa Jensen, a beauty analyst for NPD, called it the return of thelipstick index” — a term made famous by Leonard Lauder, chairman of the board of Estee Lauder, to explain climbing sales of cosmetics during the recession in the early 2000s.

As consumer sentiment has fallen, lipstick sales volume has climbed, Jensen said. That increase has carried over to other beauty products. Makeup sales, including lipstick, are up 20%, skincare is up 12%, fragrance is up 15% and hair care is up 28% for the first half of the year — and they are all growing in units, as well as dollars, she said.

Much of the beauty category’s growth is coming from households that earn over $100,000 a year, and Jensen said discounters may have a tougher time capitalizing on the trend. Still, beauty’s resilience could provide some cushion for big-box retailers in a slowdown − if they can figure out how to cash in.

Beauty at $3, $5, $9

Walmart and Target both cut their profit forecasts after having to mark down prices on apparel, home goods and other products that aren’t selling. Yet both companies are refreshing their beauty departments and adding new brands to attract customers.

A year ago, Target began opening hundreds of Ulta Beauty shops inside of its stores with brands including MAC Cosmetics and Clinique. The company plans to add more than 250 this year and eventually have the shops at 800 locations, representing about 40% of its U.S. footprint.

And after seeing fragrance become the biggest sales-driver in prestige beauty during the last holiday season, it also added popular fragrance brands to the Ulta shops, including Jimmy Choo Man, Juicy Couture and Kate Spade New York.

Since January, Target has introduced more than 40 brands to its stable of beauty products, including “clean” products that are free of certain ingredients and Black-owned and Black-founded brands.

On an earnings call in mid-May, CEO Brian Cornell said beauty saw double-digit growth in comparable sales in the fiscal first quarter versus the year-ago period. That broke from other categories, besides food and beverage and essentials, which saw a noticeable slowdown.

Walmart has added about a dozen prestige beauty brands to select stores. It struck a deal with British beauty retailer, Space NK, to add the assortment and develop a private label.

Melissa Repko | CNBC

At Walmart, new beauty displays were set up this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology and other brands typically found at specialty beauty shops or department store makeup counters.

A more affordable display called “Beauty Finds” also began rolling to nearly 1,400 stores, offering shoppers lip glosses, lotions and more for $3, $5 or $9.

Walmart has also struck exclusive deals with direct-to-consumer companies like Bubble, a skincare brand with colorful packaging and focus on Gen Z and young millennial customers. For the past few quarters, it has seen double-digit growth in its cosmetics business, said Creighton Kiper, Walmart’s vice president of merchandising for beauty.

“Beauty is this fascinating category where it’s not like food and it’s not like health and wellness, but yet the customer interacts and engages with it every day,” he said in an interview earlier this summer. “You’ve got this mental wellness component to it around confidence and feeling good about yourself.”

When budgets get tighter, Kiper said customers might also fall back on skills they gained during the pandemic — such as doing their nails or hair color at home — and go to Walmart to shop for an at-home twist on the salon.

Ashley Marie Lemons, a stay-at-home mom in suburban Atlanta, said her family is eating out less often because they’re spending more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys hot dogs instead of pricier meats, such as ribs.

But she said she still allows herself to spend about $50 a month on beauty products like eyeshadow pallets and mascaras.

“It’s an outlet for me,” she said. “Some people like art. It’s a creative way for me to express myself.”

Continue Reading

Business News

Salman Rushdie reportedly on a ventilator and unable to speak after he was stabbed

Published

on

Author Salman Rushdie is reportedly on a ventilator and unable to speak after being attacked while on stage in western New York on Friday.

State troopers confirmed in a press conference Friday afternoon that Rushdie was stabbed at least once in the neck and at least once in the abdomen while on stage for a panel in Chautauqua in western New York.

Staff and audience members rushed to the stage and pinned the assailant to the ground following the attack, state troopers said. A state trooper who was present took the suspect into custody with the assistance of a local sheriff’s deputy.

Rushdie was treated by a doctor who was in the audience before emergency medical services arrived and airlifted him to a local trauma center.

After hours of surgery, Rushdie was reportedly on a ventilator and unable to speak on Friday evening.

“The news is not good,” Andrew Wylie, his book agent, wrote in an email reported by Reuters. “Salman will likely lose one eye; the nerves in his arm were severed; and his liver was stabbed and damaged.”

Author Salman Rushdie is tended to after he was attacked during a lecture, Friday, Aug. 12, 2022, at the Chautauqua Institution in Chautauqua, NY.

Joshua Goodman | AP

The state police department identified the suspect as Hadi Matar, age 24, from Fairview, NJ. The New York State Police is collaborating with the FBI and local police for the investigation.

A preliminary review of Matar’s social media accounts by law enforcement showed him to be sympathetic to Shia extremism and the causes of the Islamic Revolutionary Guard Corps, a law enforcement person with direct knowledge of the investigation told NBC News. Law enforcement officers reportedly found images of Solemani and an Iraqi extremist sympathetic to the Iranian regime in a cell phone messaging app belonging to Matar, according to NBC News.

There are no definitive links to the IRGC but the initial assessment indicates he is sympathetic to the Iranian government group, the official said.

The New York State Police released a statement immediately following the incident:

“On August 12, 2022, at about 11 a.m., a male suspect ran up onto the stage and attacked Rushdie and an interviewer,” the statement read. “Rushdie suffered an apparent stab wound to the neck, and was transported by helicopter to an area hospital. His condition is not yet known. The interviewer suffered a minor head injury. A State Trooper assigned to the event immediately took the suspect into custody.”

A spokesperson from the Chautauqua Institution, where the panel was being held, told CNBC that the organization was coordinating with emergency officials on a public response after the attack.

The Wylie Agency, which represents Rushdie, did not immediately respond to a request for comment.

Rushdie’s book “The Satanic Verses” forced him into hiding after it was banned in Iran and a $3 million bounty was put on his head. The Iranian government has distanced itself from the bounty, according to The Associated Press, but the fatwa has been continued by a semiofficial religious organization, which raised the bounty to $3.3 million.

Rushdie has been awarded many of the top literary prizes, including two Whitbread Prizes for best novel. He was knighted in 2007 while Tony Blair was prime minister. Blair released a statement on the attack.

Author Salman Rushdie at the Blue Sofa at the 2017 Frankfurt Book Fair on October 12, 2017 in Frankfurt am Main, Germany.

Hannelore Foerster | Getty Images

“My thoughts are with Salman and all his family,” Blair wrote on Friday. “A horrible and utterly unjustified attack on someone exercising their right to speak, to write and to be true to their convictions in their life and in their art.”

Rushdie was scheduled to sit on a panel alongside Henry Reese, president of City of Asylum in Pittsburgh, an organization that provides sanctuary to writers exiled under threat of persecution.

“We ask for your prayers for Salman Rushdie and Henry Reese, and patience as we fully focus on coordinating with police officials following a tragic incident at the Amphitheater today,” the Chautauqua Institution said in a tweet Friday. “All programs are canceled for the remainder of the day. Please consult the NYS Police statement.”

The institution’s website described the panel as “A discussion of the United States as asylum for writers and other artists in exile and as a home for freedom of creative expression.”

Rushdie was the former president of PEN America, a nonprofit that defends freedom of expression and supports persecuted writers. PEN America CEO Suzanne Nossel released a statement in the wake of the attack.

“Just hours before the attack, on Friday morning, Salman had emailed me to help with placements for Ukrainian writers in need of safe refuge from the grave perils they face,” Nossel wrote. “Salman Rushdie has been targeted for his words for decades but has never flinched nor faltered. He has devoted tireless energy to assisting others who are vulnerable and menaced.”

New York Gov. Kathy Hochul thanked the New York State Police for their response to the attack on Rushdie.

“Our thoughts are with Salman & his loved ones following this horrific event,” wrote the governor. “I have directed State Police to further assist however needed in the investigation.”

Hochul later said Rushdie is alive.

“It was a state police officer that stood up and saved his life,” the governor said during an event about gun violence, adding that the event moderator was also attacked. “We’re monitoring the situation, but he’s getting the care he needs at the local hospital.”

This is the latest in a series of onstage attacks against public figures, including Rep. Lee Zeldin, R-N.Y., in a town near Rochester, New York, earlier this summer, Dave Chappelle at the Hollywood Bowl, and Chris Rock during the Oscars.

NBC News contributed to this report

Correction: Rep. Lee Zeldin, R-N.Y., was attacked in a town near Rochester, New York, earlier this summer. An earlier version misspelled his name and misstated the location.

Continue Reading

Trending