The term “labor hoarding” has recently come into play within economic circles as the job market remains strong despite the Fed’s best efforts to cool it down.

The latest jobs report shows labor market growth remaining strong, with U.S. payrolls surging by 261,000 in October, though there was a slight uptick in unemployment to 3.7%.

Even though layoffs are making the headlines, from Twitter to Stripe, the labor market is far from rolling over.

“There have been several thousand high-profile layoffs in the tech sector in the past couple of weeks. While this is unfortunate, it is useful to keep in mind that the labor market is significantly larger and has been overall healthy,” Bledi Taska, chief economist at labor market consulting and research firm Lightcast, said in an email.

There are 159 million people currently employed in the US, and in the past month there were 1.3 million layoffs.

“This is fairly normal and is historically low at a layoff rate of 0.9%,” he said.

Taska noted that even in tech and at private VC-funded companies like Stripe, layoffs are not surging overall. In the Professional and Business Sector (where most of the tech companies belong) layoffs dropped in September and startup layoffs have also dropped over the past few months. “Overall this means that while it is important to follow some of the high profile tech layoffs, they are not indicative of the overall trends in the labor market, or even in the tech sector,” Taska said.  

Labor hoarding has become a thing given how hard it has been to find workers to fill open positions. Taska is hesitant to read too much into the talk of labor hoarding yet, and he says there’s no denying the basics of labor economics in a downturn.

“You can’t have as many people around if demand decreases,” Taska said. “Yes, it was a period during which it has been hard to find people, but companies want people because they need them to be productive, and if people are costing too much, the bottom line will be the most important. You don’t want people for the sake of people,” he added.

Still, Taska and other labor market experts say the way CEOs and CFOs think about layoffs in a slower economy may be due for a change, as demographic trends that will persist beyond a single economic cycle make companies more strategic in workforce reduction planning.

Fill open positions, but maybe less of them

One primary reason labor decisions may be different than they’ve been in the recent past is related to all of those millions of unfilled positions, seven million before Covid which went up recently to as high as 11 million.

“At the very least, if you had 30 positions open, fill 15 of them,” Taska said.

C-suites are all expecting some form of recession. A recent survey from the Conference Board and Business Council found 98% of CEOs anticipating a recession over the next 12 to 18 months.

But so far, consumer demand has held up, making it harder to move quickly to cut jobs. Bank of America CEO Brian Moynihan says continued strength is his current view of the consumer.

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