Andrew Challenger, senior vice president of Challenger, Gray & Christmas Inc., joined Cheddar News to discuss looming layoffs in the tech industry and what the October jobs numbers tell us about the overall state of the labor market.

Andrew Challenger, senior vice president of Challenger, Gray &amp; Christmas Inc., joined Cheddar News to discuss looming layoffs in the tech industry and what the October jobs numbers tell us about the overall state of the labor market. “For those workers at some of these organizations and tech, their skills are in high demand across lots of different sectors," he said. "They're still really rare and valuable workers so I would imagine their job searches will be relatively quick."

Tech Layoffs Weighing on Labor Market 

Welcome back to closing bell and cheddar news. Everyone. I'm kristen Schoeller down here on the floor of the stock exchange and the october jobs report was released earlier today, giving a final glimpse of the state of hiring wages and unemployment before the midterms next week. The US economy adding 261,000 nonfarm jobs in october with the unemployment rate rising a bit to 3.7% still historically low joining me now is Andrew Challenger senior vice president at outplacement firm Challenger Gray and christmas, thank you so much for coming on the show. A pretty positive report. Certainly better than expected. What was your takeaway? Yeah, thanks for having me. It was a pretty strong report beat a lot of economists expectation on how many jobs would be added to the economy. And it's a sign that the labor market remains resilient despite the Fed continuing to increase interest rates to try to slow down the economy. I would say we have seen a slight slowdown from reports we were seeing a few months ago, I think there are enough signs out there to say that we've probably hit an inflection point. We're start to move towards a cooler and cooler labor market. But this job market, for the time being, does remain hot. There's lots of opportunities. People that are being let go during this time are able to find new roles very quickly. Andrew is the same true for those in the technology space, losing their jobs. For instance, at twitter, 3700 people expected to lose their job today under new leadership of Elon musk. And we've seen other companies announce hiring freezes or layoffs in the tech space as well. Yeah. Over the last month, tech was the area where we've seen the most job cuts announced. It's one of those areas of the economy that's first to slow down. When we see the overall economy slowed down. They tend to hire out into the future when things start to cool, they have to make cuts more quickly than other parts of the economy. For those workers at some of these or organizations and tech, their skills are in high demand across lots of different sectors. They're still really rare and valuable workers. So I would imagine their job searches will be relatively quick, but we are seeing not just a number of cuts from technology industries, but also organizations like Apple and Amazon announced they're gonna cool hiring, We've come off of a really strong, higher hiring period and it looks like that may be slowing or coming to an end. So Andrew. I'd be curious to get your, take the Fed president making it clear obviously the Fed chair that the labor market may cool ahead as interest rates continue to rise. What's your outlook for the labor market the next 3 to 6 months? Do you expect that the labor market can continue at its current robust pace? I don't think it can continue at this pace. We've been moving the labor market's been moving at a breakneck pace for a year and a half. It's been running so hot that the Fed is actually trying to cool it down and while we haven't seen it cool down too much yet, almost inevitably in the next 3 to 6 months and into the next year, we'll continue to see it cool down even if they have a perfect soft landing, it's still going, I mean, rising layoffs and lower opportunities. If the Fed over correct, we could see much further cuts and layoffs in the future. So how should americans prepare for these next 3 to 6 months even into next year? Andrew? Because we keep hearing about the R. Word recession, that the recession is on the horizon might not have a major dramatic effect on the labor market, but for people trying to plan ahead, what would you advise them? Yeah, I mean, we're still seeing americans quit at a really high record high rate. Uh but I would say to people that are thinking about switching jobs, it might be worthwhile considering that when a recession comes, a lot of companies policy is last in first out, when they look at layoffs, so your tenure at an organization, if we do go into a recession is something valuable and worth thinking about, even though there are clearly still opportunities available to increase your current wages and negotiate because the labor market is remains hot and there are opportunities out there. Uh, opportunities, do we know which sectors are seeing the most hiring Andrew that you expect will persist and what does that mean for wages? Yeah. Well, the wages are still growing eventually. They'll start to cool off from the pace that we've seen them growing at over the last year. Right now, we saw the highest number of new jobs added in the healthcare sector will continue to see that as we see this long term trend of baby boomers retiring starting to age and need more health care. Uh, that's an area that we expect to see grow over the long term. I would stay away from sector like automotive and construction and new home sales. Those are areas of the economy that tend to be most acutely affected by rising interest rates. Has the labor market fundamentally changed? Andrew in the wake of Covid? Because it is still wild that there are millions of job openings and the overall jobs picture has held up despite some of the other challenging factors out there. Yeah, that's a good question. We don't know whether or not americans are ever going to come back into the workforce at the same level that we saw prior to Covid. We're still down about a full percentage point. When we look at the employment to population ratio, it's about 3 to 4 million fewer americans than we would expect to be working if we stayed on trend where we were prior to the pandemic. Although we've been in a very long term downward trend and participation in the economy, so it might have just been a slight step forward in that progression. Hopefully we do start to see americans come back in greater numbers to the workforce to fill some of these holes that have caused this, increased quits, rate, high opportunities and, you know, this low period of this real labor shortage that we've been in for now a year and a half. Alright. Andrew, Challenger, senior vice president and outplacement firm Challenger Gray and christmas Andrew, thanks so much for taking the time, especially on a friday.