Santa is hiring fewer elves this year as inflation soars and as it appears ever more likely that the North Pole will fall into a recession.
Every year the retail, warehouse, and transportation sectors see a big surge in employment and job postings around September and October as companies gear up to meet demand during the busy holiday season. This year, though, it appears seasonal hiring will end up taking a hit from high inflation and a slowing economy.
By mid-November of last year, companies had announced 940,300 seasonal hires, according to consulting firm Challenger, Gray & Christmas. So far this year, though, companies have only announced just 592,400 seasonal hires for the holiday season, a 37% decline.
“Companies may be reluctant to announce their seasonal hiring plans, even if they do intend to hire, due to economic uncertainty. Some may not want or need to make a hiring push right now,” said Andrew Challenger, senior vice president at the firm.
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While seasonal hiring has slowed, the country is still grappling with lower labor supply, which means that while there hasn’t been the usual pop in job postings, employers are speeding up the process of hiring workers for the jobs they do need to be filled.
In a report, ZipRecruiter noted that, while on one hand, employers are being cautious and trying not to overhire for fear of a recession, they are also feeling the pressure to be competitive and hire good workers, given how tight the labor market is. The report also found that while employers are still using signing bonuses to attract talent, it is to a lesser extent than last year given the growing economic uncertainty.
“In other words, employers hiring for the holidays this year may be slower than usual to post seasonal jobs and reticent to offer bonuses and perks, but when they do decide to hire, they’re doing so lightning-fast, hoping to win on speed,” wrote Julia Pollak, ZipRecruiter’s chief economist
Inflation has made consumers in the United States poorer. Inflation stood at a 7.7% annual rate in October, near the highest pace in decades.
Average real earnings, how much people are able to take to the bank when inflation is included in the equation, have been declining sharply since early last year. Median weekly real earnings have fallen nearly 4% since the end of 2020.
Put simply, that means consumers have less money to use to buy Christmas presents, purchase food for the holidays, and to spend on holiday travel.
The labor market, despite the Federal Reserve’s historically aggressive interest rate hiking cycle this year, has managed to stay surprisingly robust. The country’s unemployment rate is still at 3.7%, an incredibly low level, especially given the likelihood of a recession.
Many economists expect the labor market to begin taking a hit as this year drags into the next because the supercharged rate hikes by the Fed take a bit of time to work their way through the economy. The increasing consensus is that the U.S. will enter a recession in the coming months.
Recent economic modeling by Bloomberg and the Conference Board has forecast the odds of a recession in the next 12 months as a near certainty.
Out of fear for how the country’s economic situation would look during the holiday season, many retailers opted to start pushing for the holiday shopping season to begin earlier than in years past.
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“In the past, we had thought about the holiday season starting with Black Friday, but really, many shoppers are shopping well before that for Christmas — into October,” Mark Mathews, the National Retail Federation’s vice president of research development and industry analysis, told the Washington Examiner last month.
Retailers are hoping to capitalize quickly, aware that the economy could deteriorate as the Fed hikes rates in a bid to slow economywide spending and bring down inflation.
