Tag Archives: personnel

Google Parent Alphabet to Cut 12,000 Jobs Amid Wave of Tech Layoffs

Google’s parent company said it would cut its staff by 6% in its largest-ever round of layoffs, extending a retrenchment among technology companies after record pandemic hiring.

Alphabet Inc.

GOOG 5.72%

said the cuts would eliminate roughly 12,000 jobs across different units and regions, though some areas, including recruiting and projects outside of the company’s core businesses, would be more heavily affected.

The layoffs reached as high as the vice president level and affected divisions including cloud computing and Area 120, an internal business incubator that had already faced cuts last year, said people familiar with the matter.

The Google cuts make January the worst month yet in a wave of tech layoffs that began last year, according to estimates from Layoffs.fyi, which tracks media reports and company announcements. This week,

Microsoft Corp.

said it would eliminate 10,000 jobs, the largest layoffs in more than eight years. Online furniture seller

Wayfair Inc.

said it is laying off about 10% of its workforce, and

Unity Software Inc.,

which provides tools for creating videogames and other applications, also cut staff.

Earlier this month,

Amazon.com Inc.

said layoffs would affect more than 18,000 employees and

Salesforce Inc.

said it was laying off 10% of its workforce. Last year,

Meta Platforms Inc.

said it would cut 13% of staff.

Technology companies including Google expanded rapidly during the pandemic as life moved online. Recent cuts have been part of a broader pivot toward protecting profit and cementing the end of a growth-at-all costs era in technology. Google executives have in recent months said the company would be tightening its belt, reflecting a new period of more disciplined and efficient spending. But the company hadn’t announced cuts as deep as those of its Silicon Valley peers. 

Google hired aggressively as demand for its services rose during the health crisis, leading to more than 50% growth in total employee count across Alphabet since the end of 2019. The cuts this week appeared to fall short of the almost 12,800 employees Alphabet added to its roster in the third quarter last year.

“Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today,” Alphabet Chief Executive

Sundar Pichai

wrote in a message to employees sent out Friday and posted on the company’s website.

“I take full responsibility for the decisions that led us here,” Mr. Pichai wrote. The corporate mea culpa for overhiring has become a recurring message in recent months at tech companies as executives realized that some of the hiring they undertook to keep pace with soaring demand for all things digital early in the pandemic left them overstaffed as the business environment soured.

Among the executives who have made such apologies are Salesforce Co-Chief Executive

Marc Benioff,

Meta Platforms CEO

Mark Zuckerberg

and Twitter Inc. co-founder

Jack Dorsey.

The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin

Alphabet recorded $17.1 billion of operating income in the third quarter last year, an 18.5% decrease from the same period in 2021. Google executives partly blamed a slowdown in revenue growth on the company’s historic performance during the tail end of the pandemic. Alphabet shares rose 4.5% to $97.24 in morning trading Friday.

Alphabet earlier this month said it would cut more than 200 jobs at its Verily Life Sciences healthcare business, accounting for about 15% of the roles at the unit. Before that, some of the last major cuts Google announced were in 2009, when the company said it was reducing the number of jobs in its sales and marketing teams by roughly 200 globally.

Activist hedge fund TCI Fund Management, which had called on Alphabet to cut costs aggressively in November, said Friday the company should go further.

“Management should aim to reduce headcount to around 150,000, which is in line with Alphabet’s headcount at the end of 2021,”

Christopher Hohn,

TCI managing director, said in a letter. “This would require a total headcount reduction in the order of 20%.”

Current and former Google employees said layoffs would likely affect the company’s famously loose and collegial culture, which has been widely imitated in the tech industry.

Google employees have long enjoyed one of the most accommodating environments among large U.S. companies. A letter to potential investors in Google’s 2004 initial public offering said the company provided many unusual benefits, such as washing machines, and would likely add more over time.

As job cuts have accumulated in the tech industry, many employees at Google have pressed executives about the possibility of layoffs at the company. At a companywide meeting in December, Mr. Pichai told employees that the company had tried to “rationalize where we can so that we are set up to better weather the storm regardless of what’s ahead.”

A Google spokesman said that Friday’s cuts would affect not just Google, but also other Alphabet subsidiaries, but didn’t specify at what levels. Alphabet subsidiaries include Verily and the Waymo self-driving-car unit. The spokesman didn’t comment on which specific products or engineering units would be affected.

“Alphabet leadership claims ‘full responsibility’ for this decision, but that is little comfort to the 12,000 workers who are now without jobs,” said Parul Koul, executive chair of the Alphabet Workers Union, in a statement. “This is egregious and unacceptable behavior by a company that made $17 billion dollars in profit last quarter alone.”

Alphabet said it would offer U.S.-based employees two months notice, plus 16 weeks of severance pay, along with two additional weeks for each year an employee being laid off from the nearly 25-year-old company has worked there. In other countries, the company will follow local processes and laws, which sometimes require consultations with employee representatives before workers are laid off.

The company will also offer former employees access to resources to help them with their immigration status, job placement and mental health, the spokesman said. Tech companies in the U.S. often have employees on work visas tied to their employment.

Write to Sam Schechner at Sam.Schechner@wsj.com and Miles Kruppa at miles.kruppa@wsj.com

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Alphabet Unit Verily to Trim More Than 200 Jobs

Verily Life Sciences, a healthcare unit of

Alphabet Inc.,

GOOG 3.38%

is laying off more than 200 employees as part of a broader reorganization, the first major staff reductions to hit Google’s parent following a wave of layoffs at other technology companies.

The cuts will affect about 15% of roles at Verily, which will discontinue work on a medical software program called Verily Value Suite and several early-stage products, CEO Stephen Gillett said in an email to employees Wednesday. Verily has more than 1,600 employees.

Verily oversees a portfolio of healthcare projects largely focused on applying data and technology to patient treatments, including a virtual diabetes clinic and an online program for connecting research participants to clinical studies. 

“We are making changes that refine our strategy, prioritize our product portfolio and simplify our operating model,” Mr. Gillett wrote in the email. “We will advance fewer initiatives with greater resources.”

Originally known as Google Life Sciences, Verily is one of the largest businesses other than Google under the Alphabet umbrella, part of a group of companies known as “Other Bets.” Alphabet had 186,779 employees at the end of September last year, according to company filings.

The robotics software company Intrinsic, another unit in Alphabet’s Other Bets, also said on Wednesday it would let go of 40 employees. A spokesman said the “decision was made in light of shifts in prioritization and our longer-term strategic direction.”

Verily has recently looked to pare back a once-sprawling collection of projects spanning insurance to mosquito breeding. Last year, the company hired McKinsey & Co. and Innosight to do consulting work, The Wall Street Journal reported.

After a period of aggressive hiring to meet heightened demand for online services during the pandemic, tech companies are now laying off many of those workers. And tech bosses are saying “mea culpa” for the miscalculation. WSJ reporter Dana Mattioli joins host Zoe Thomas to talk through the shift and what it all means for the tech sector going forward.

The reorganization is a sign of the continued difficulties facing big tech companies trying to crack the healthcare industry.

David Feinberg,

the head of an ambitious health-focused group at Google, left the company in 2021 to become CEO of the healthcare technology company Cerner Corp.

In the email to employees, Mr. Gillett said Verily would largely focus on products related to research and care, while concentrating more decisions in a central leadership team rather than individual groups.

Mr. Gillett took over as Verily CEO this month, succeeding the well-known geneticist

Andy Conrad,

who moved to executive chairman.

“As we move into Verily’s next chapter, we are doubling down on our purpose, with the goal to ultimately be operating in all areas of precision health,” Mr. Gillett wrote to employees on Wednesday. “We will do this by building the data and evidence backbone that closes the gap between research and care.”

Google’s peers have cut jobs recently in response to worsening economic conditions and a decline in online advertising. Last week,

Amazon.com Inc.

announced layoffs that will affect more than 18,000 employees, the most of any tech company in the past year.

Tech Layoffs Across the Industry: Amazon, Salesforce and More Cut Staff

At a companywide meeting in December, Google CEO

Sundar Pichai

said he couldn’t make any forward looking commitments in response to questions about layoffs. Google has tried to “rationalize where we can so that we are set up to better weather the storm regardless of what’s ahead,” he added.

Activist investor TCI Fund Management called on Alphabet in November to reduce losses in Other Bets such as Verily, writing in a letter to Mr. Pichai that the company had too many employees.

Alphabet’s Other Bets recorded $1.6 billion in operating losses from $209 million in revenue during the third quarter last year, mostly from the sale of health technology and internet services. 

Verily said in September it received $1 billion in funding from Alphabet and other investors, without naming the backers. The private-equity firm Silver Lake, Singaporean fund Temasek Holdings and Ontario Teachers’ Pension Plan previously invested in the company.

Write to Miles Kruppa at miles.kruppa@wsj.com

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U.S. FAA says flight personnel alert system not processing updates after outage

Billy Nolen, acting administrator of the Federal Aviation Administration (FAA), speaks during the US Chamber of Commerce’s Global Aerospace Summit in Washington, D.C., on Thursday, Sept 15, 2022.

Valerie Plesch | Bloomberg | Getty Images

The U.S. Federal Aviation Administration’s (FAA) system that alerts pilots and other flight personnel about hazards or any changes to airport facility services and relevant procedures was not processing updated information, the civil aviation regulator’s website showed on Wednesday.

In an advisory, the FAA said its NOTAM (Notice to Air Missions) system had “failed”. There was no immediate estimate for when it would be back, the website showed, though NOTAMs issued before the outage were still viewable.

Over 400 flights were delayed within, into, or out of the United States as of Wednesday 5.31 am ET, flight tracking website FlightAware showed. It was not immediately clear if the outage was a factor.

“Technicians are currently working to restore the system,” the website showed. The FAA was not immediately available for further comment.

A NOTAM is a notice containing information essential to personnel concerned with flight operations, but not known far enough in advance to be publicized by other means.

Information can go up to 200 pages for long-haul international flights and may include items such as runway closures, general bird hazard warnings, or low-altitude construction obstacles.

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Hiring, Wage Gains Eased in December, Pointing to a Cooling Labor Market in 2023

The U.S. labor market is losing momentum as hiring and wage growth cooled in December, showing the effects of slower economic growth and the Federal Reserve’s interest-rate increases.

After two straight years of record-setting payroll growth following the pandemic-related disruptions, the labor market is starting to show signs of stress. That suggests 2023 could bring slower hiring or outright job declines as the overall economy slows or tips into recession.

Employers added 223,000 jobs in December, the smallest gain in two years, the Labor Department said Friday. Average hourly earnings were up 4.6% in December from the previous year, the narrowest increase since mid-2021, and down from a March peak of 5.6%.

All told, employers added 4.5 million jobs in 2022, the second-best year of job creation after 2021, when the labor market rebounded from Covid-19 shutdowns and added 6.7 million jobs. Last year’s gains were concentrated in the first seven months of the year. More recent data and a wave of tech and finance-industry layoffs suggest the labor market, while still vibrant, is cooling.

“I do expect the economy to slow noticeably by June, and in the second half of the year we’ll see a greater pace of slowing if not outright contraction,” said

Joe Brusuelas,

chief economist at RSM U.S.

Friday’s report sent markets rallying as investors anticipated it would cause the Fed to slow its pace of rate increases. The central bank’s next policy meeting starts Jan. 31. The Fed’s aggressive rate increases aimed at combating inflation didn’t significantly cool 2022 hiring, but revisions to wage growth showed recent gains weren’t as brisk as previously thought.

The Dow Jones Industrial Average rose 700.53 points, or 2.13%, on Friday. The S&P 500 Index was up 2.28% and NASDAQ Composite Index advanced 2.56%. The benchmark 10-year Treasury yield declined 0.15 percentage point to 3.57%. Yields fall as bond prices rise.

The unemployment rate fell to 3.5% in December from 3.6% in November, matching readings earlier in 2022 and just before the pandemic began as a half-century low. Fed officials said last month the jobless rate would rise in 2023. December job gains were led by leisure and hospitality, healthcare and construction.

Historically low unemployment and solid hiring, however, might mask some signs of weakness. The labor force participation rate, which measures the share of adults working or looking for work, rose slightly to 62.3% in December but is still well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.

The average workweek has declined over the past two years and in December stood at 34.3 hours, the lowest since early 2020.

Hiring in temporary help services has fallen by 111,000 over the past five months, with job losses accelerating. That could be a sign that employers, faced with slowing demand, are reducing their employees’ hours and pulling back from temporary labor to avoid laying off workers.

The tech-heavy information sector lost 5,000 jobs in December, the Labor Department report showed. Retail saw a 9,000 rise in payrolls, snapping three straight months of declines.

Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic, according to layoffs.fyi, which tracks industry job cuts. On Wednesday,

Salesforce Inc.

said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that

Amazon.com Inc.

would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as

Facebook

parent

Meta Platforms Inc.,

DoorDash Inc.

and

Snap Inc.,

have also recently cut positions.

Companies in the interest-rate-sensitive housing and finance sectors, including

Redfin Corp.

,

Morgan Stanley

and

Goldman Sachs Group Inc.,

have also moved to reduce staff.


Months where overall jobs gained

Months where overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Other data released this week point to a slowing U.S. economy. New orders for manufactured goods fell a seasonally adjusted 1.8% in November, the Commerce Department said Friday. Business surveys showed a contraction in economic activity in December, according to the Institute for Supply Management. Manufacturing firms posted the second-straight contraction following 29 months of expansion, and services firms snapped 30 straight months of growth in December.

Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They saw the unemployment rate rising to 4.7% by December 2023.

“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” said

Andrew Hunter,

senior U.S. economist at Capital Economics. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”

Max Rottersman, a 61-year-old independent software developer, said he had been very busy with consulting jobs during much of the pandemic. But that changed over the summer when work suddenly dried up.

“I’m very curious to see whether I’m in high demand in the next few months or whether—what I sort of expect will happen—there will be tons of firing,” he said.

Despite some signs of cooling, the labor market remains exceptionally strong. On Wednesday, the Labor Department reported that there were 10.5 million job openings at the end of November, unchanged from October, well more than the number of unemployed Americans seeking work.

Some of those open jobs are at Caleb Rice’s home-renovation business in Calhoun, Tenn., which has been consistently busy since the start of the pandemic. The small company has raised pay and gone to a four-day week in an effort to hold on to workers.

“If I could get three more skilled hands right now, I’d be comfortable,” Mr. Rice said. “The way it goes is I’ll hire five, two will show up and of those two one won’t be worth a flip.”

Fed officials have been trying to engineer a gradual cooling of the labor market by raising interest rates. Officials are worried that a too-strong labor market could lead to more rapid wage increases, which in turn could put upward pressure on inflation as firms raise prices to offset higher labor costs.

The central bank raised rates at each of its past seven meetings and has signaled more rate increases this year to bring inflation down from near 40-year highs. Fed officials will likely take comfort in the slowdown in wage gains, which could prompt them to raise rates at a slower pace, Mr. Brusuelas, the economist, said.

“We’re closer to the peak in the Fed policy rate than we were prior to the report, and the Fed can strongly consider a further slowing in the pace of its hikes,” he said. “We could plausibly see a 25-basis-point hike versus a 50-basis-point hike at the Feb. 1 meeting.”

Write to David Harrison at david.harrison@wsj.com

Corrections & Amplifications
A graphic in an earlier version of this article showing the change in nonfarm payrolls since the end of 2019 was incorrectly labeled as change since January 2020. (Corrected on Jan. 6)

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Amazon Layoffs to Hit Over 17,000 Workers, the Most in Recent Tech Wave

Amazon.

AMZN -0.79%

com Inc.’s layoffs will affect more than 17,000 employees, according to people familiar with the matter, the highest reduction tally revealed in the past year at a major technology company as the industry pares back amid economic uncertainty.

The Seattle-based company in November said that it was beginning layoffs among its corporate workforce, with cuts concentrated on its devices business, recruiting and retail operations. At the time, The Wall Street Journal reported the cuts would total about 10,000 people. Thousands of those cuts began last year.

The rest of the cuts will bring the total number of layoffs to more than 17,000 and will be made over the coming weeks, some of the people said. As of September,

Amazon

AMZN -0.79%

employed 1.5 million people, with a large percentage of them in its warehouses. The layoffs are concentrated in the company’s corporate ranks, some of the people said.

Amazon

was one of the biggest beneficiaries of the Covid-19 pandemic as customers flocked to online shopping. The rush to Amazon’s various businesses, from e-commerce to groceries and cloud computing, pushed forward years of growth for the company. To keep up with demand, Amazon doubled its logistics network and added hundreds of thousands of employees.

When demand started to wane with customers moving back to shopping in stores, Amazon initiated a broad cost-cutting review to pare back on units that were unprofitable, the Journal reported. In the spring and summer, the company made targeted cuts to bring down costs, shutting physical stores and business units such as Amazon Care. Amazon later announced a companywide hiring freeze before deciding to let employees go.

Many tech companies have cut jobs as the economy sours. Amazon’s layoffs of more than 17,000 employees would represent the highest number of people let go by a tech company in the past few months, according to tallies released on Layoffs.fyi, a website that tracks the events as they surface in media reports and company releases.

The trend has affected companies such as Amazon and others that have acknowledged they grew too quickly in many cases.

Facebook

parent

Meta Platforms Inc.

said it would cut more than 11,000 workers, or 13% of its staff, adding to layoffs at

Lyft Inc.,

HP Inc.

and other tech companies. On Wednesday,

Salesforce Inc.

said that it was laying off 10% of its workforce. Co-Chief Executive

Marc Benioff

said the business-software provider hired too many people as revenue surged earlier in the pandemic. “I take responsibility for that,” he said.

Write to Dana Mattioli at dana.mattioli@wsj.com and Jessica Toonkel at jessica.toonkel@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 5, 2023, print edition as ‘Amazon Layoffs To Exceed Initial Reports.’

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Stay for Pay? Companies Offer Big Raises to Retain Workers

Workers who stay put in their jobs are getting their heftiest pay raises in decades, a factor putting pressure on inflation.

Wages for workers who stayed at their jobs were up 5.5% in November from a year earlier, averaged over 12 months, according to the Federal Reserve Bank of Atlanta. That was up from 3.7% annual growth in January 2022 and the highest increase in 25 years of record-keeping.

Faster wage growth is contributing to historically high inflation, as some companies pass along price increases to compensate for their increased labor costs. Prices rose at their fastest pace in 40 years earlier in 2022. Inflation has cooled in recent months but remains high. Federal Reserve officials are closely monitoring wage gains as they consider future interest-rate increases to slow the economy and bring down inflation. 

Employees who changed companies, job duties or occupations saw even greater wage gains of 7.7% in November from a year earlier. The prospect that employees might leave for bigger paychecks is a main reason companies are raising wages for existing employees. 

Many workers aren’t feeling the pay gains, though. Wages for all private-sector workers declined by 1.9% over the 12 months that ended in November, after accounting for annual inflation of 7.1%, according to the Labor Department.

Workers in sectors such as leisure and hospitality can easily find job openings that might pay more, making it more enticing to switch jobs, said

Layla O’Kane,

senior economist at Lightcast.

“If I can see that the Burger King down the street is offering $22 an hour, and I’m making $20 an hour at the Dunkin’ Donuts that I work at, then I know very clearly what my opportunity cost is,” she said. “Employers are reacting to that and saying, ‘Well, we’re going to increase wages internally because we don’t want to lose the staff that we’ve already trained.’”

Employee bargaining power has increased as the economy rebounded from the pandemic, likely emboldening some employees to ask for wage increases from their current employers, Ms. O’Kane added. 

Alexandria Carter,

a billing specialist and accountant at an insurance company in Baltimore, received a promotion and a small pay bump earlier in 2022. After her year-end performance review, she received another 7% pay increase to reward her for her progress, and her bosses told her about their plans for her to keep moving up in the company. 

That was a contrast with some previous jobs she has held, where praise and pay raises were less forthcoming.

“They were telling me that I’m excelling in my position, and I just got it,” she said. “To have that recognition and that they notice the work I’ve put in and to be rewarded, it’s just nice.”

Alexandria Carter, a Baltimore billing specialist and accountant, got a promotion and two pay increases this past year.



Photo:

Alexandria Carter

There are signs wage gains are beginning to ease as the tight labor market loosens a bit. Average hourly earnings were up 5.1% in November from a year earlier, slowing from a recent peak of 5.6% in March. Many analysts expect wage growth could cool further in coming months.

In industries with high demand for workers, “companies are prepared for wage growth to match inflation,” said

Paul McDonald,

senior executive director at Robert Half, a professional staffing company. “As inflation comes down, it will be more in line with what wage growth has been.”

The consumer-price index, a measurement of what consumers pay for goods and services, climbed 7.1% in November from a year earlier, down from 7.7% in October. The pace built on a trend of moderating price increases since June’s 9.1% peak.

Still, wage pressures will likely continue in a competitive job market where poaching remains common. More than half of professionals feel underpaid, and four in 10 workers would leave their jobs for a 10% raise elsewhere, according to a Robert Half survey released in September.

Famous Toastery, a Charlotte, N.C.-based breakfast, brunch and lunch chain, is raising pay faster than ever before, said

Mike Sebazco,

the company’s president. Across the eight company-owned locations, wages for existing kitchen staff members are up about 15% from a year earlier.

“We didn’t want to be as easy to poach,” he said. It isn’t uncommon for managers from other companies to come to Famous Toastery’s dumpster pads to tell the breakfast chain’s workers, “‘Hey, come work for me, and I’ll give you an extra $2 an hour,’” Mr. Sebazco said.

To help cover higher labor costs, Famous Toastery raised menu prices in August for items such as the Western omelet composed of ham, roasted peppers, caramelized onions and American cheese. 

“Bacon and eggs and a lot of produce items will go up and down, and you can weather that,” Mr. Sebazco said. “We’ve never really experienced labor increases such as this.”

Many businesses in the Boston Fed district cited labor costs as a bigger source of inflationary pressure for 2023 than other types of expenses, according to the central bank’s collection of business anecdotes known as the Beige Book. 

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Most business executives remain confident that they can pass along wage increases to consumers in the form of higher prices, said

Lauren Mason,

senior principal at consulting firm Mercer LLC. “This makes compensation investments somewhat easier to absorb,” she said.

Wage and price increases can feed off each other. In fact, higher inflation is pushing some workers to seek cost-of-living increases, helping contribute to wage growth among job stayers, economists say.

More broadly, pay is rising for both job stayers and switchers because companies can’t find enough workers. Across the economy, job openings—at 10.3 million in October—far exceeded the 6.1 million unemployed Americans looking for work that month.

Companies are using merit-pay increases to hold on to employees and minimize the potential productivity drain of recruiting and training new hires. Firms are budgeting more for merit-pay increases in 2023 than they have in 15 years, according to a Mercer survey of more than 1,000 companies. 

Daniel Powers,

a recent college graduate, received a 10% year-end raise at a management consulting firm in Chicago, after starting out with a six-figure salary when he was hired in September.

“They understand the realities of the market—there’s no false illusion of, ‘we’re family here,’” Mr. Powers said of his firm’s management.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com and Sarah Chaney Cambon at sarah.chaney@wsj.com

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Southwest Airlines Gears Up for a Normal Flight Schedule on Friday After Mass Cancellations

Southwest Airlines Co.

LUV 3.70%

executives said the airline is gearing up to resume its full flying schedule on Friday, removing limits on ticket sales and rebuilding crew schedules after an operational meltdown led it to cancel thousands of flights over the past week. 

Executives also pledged to continue work to update technology systems that company and labor officials have blamed for exacerbating Southwest’s troubles, leaving scheduling systems jammed and crews dispersed as the airline struggled to rebound from a winter storm.

“I can’t imagine that it doesn’t boost the focus in certain areas, maybe shift priorities based on what we learned,” Chief Executive

Bob Jordan

told reporters Thursday. “This has been an incredible disruption, and we can’t have this again.”

Southwest canceled nearly two-thirds of its flights Tuesday, Wednesday and Thursday, as part of an effort to dig out from a cascading meltdown after last week’s severe winter storm threw operations into disarray. While other airlines were able to recover from the brutal weather within a few days, Southwest continued to spiral.

Southwest has canceled nearly 16,000 flights in the past week, according to FlightAware. The airline scrubbed 39 flights scheduled for Friday that Chief Operating Officer

Andrew Watterson

said it was unable to staff, but executives said they believe they are ready for a smooth operation Friday.

Mr. Jordan told employees Thursday morning in a video message that shrinking Southwest’s operations had helped, with 95% of its flights on time on Wednesday. “Together we did what we needed to do to set ourselves up to operate our regular schedule tomorrow,” he said.

As it works to resume normal operations, Southwest faces heightened scrutiny from regulators and lawmakers, who have said they are closely monitoring the airline’s response to the crisis.

Transportation Secretary Pete Buttigieg on Thursday wrote to Mr. Jordan, describing the disruption as “unacceptable.” He reiterated his expectation that the airline will assist stranded passengers, honor commitments to cover passengers’ expenses, issue prompt refunds and ensure passengers are reunited with their bags. The airline has said it is providing those accommodations now.

Union leaders who represent Southwest pilots, flight attendants and other workers have faulted what they said was the airline’s lack of investment in technology over the years for many of its problems. Executives have acknowledged the need to upgrade inadequate platforms, such as the SkySolver system that it uses to redo crew schedules during disruptions and that was overwhelmed by the magnitude of the problems over the weekend.

Baggage Stuck in Southwest Airlines Cancellation Fiasco

Mr. Watterson said Thursday in a call with reporters that the upgrading process had already been under way. Southwest has made crew-scheduling its own department, hired more staff and made what he described as incremental improvements to current systems as it began to look for replacements. He said the “modest work” that had been done had started to pay off this fall, but that the winter storm created unique challenges.

While the airline has started to contemplate the broader questions of what it could have done differently, executives said their more immediate task this week has been to piece the airline back together—making sure that pilots and flight attendants are where they need to be, reuniting bags with their owners and ensuring that planes are tuned up and ready to go.

In an effort to make sure the airline is ready for Friday, Southwest added some flights for passengers on Thursday and ferried planes and crew to position them, Mr. Watterson said.

Ticket sales resumed, executives said, after the airline had limited bookings on remaining flights for much of this week, hoping to avoid a scenario where customers bought seats on flights that would ultimately be canceled. The airline also wanted to make sure seats would be available to take pilots and flight attendants where they had to be on Friday, Mr. Watterson said.

Southwest Airlines was ferrying planes and crew to make sure the company was ready for a full flying schedule.



Photo:

Matt York/Associated Press

To get to this point, Southwest sought volunteers to help work through a deluge of tasks to repair schedules for pilots and flight attendants.

At the height of the disruption, the airline’s crew schedulers had to revert to manually assigning pilots and flight attendants to flights when automated software couldn’t keep pace with the volume of changes. Even with the smaller schedule, the group was overwhelmed by the remaining workload, Mr. Watterson told employees this week.

Former crew schedulers working in other areas of the business stepped in to triage inbound phone calls, according to an internal memo Wednesday from

Lee Kinnebrew,

Southwest’s vice president of flight operations, and

Brendan Conlon,

vice president of crew scheduling. Other employee groups were being trained to support overwhelmed schedulers.

Mr. Watterson said the “volunteer army” has been trained on systems and could be called on to pitch in again if the airline begins to see signs that current technology is becoming overwhelmed, as it works on broader fixes. Airline executives said they are confident that existing technology systems can handle the airline’s normal operations while it works on a plan to update them.

Southwest’s ground-operations staff worked to scan thousands of missing bags to figure out where they had ended up. The airline set up new call centers to investigate lost items and update customers, Mr. Kinnebrew and Mr. Conlon wrote. The final step was to coordinate with FedEx Corp. and other delivery companies to truck bags between airports and reduce the strain on Southwest’s remaining flights this week, they wrote.

Running a smaller schedule introduced some new technical challenges, executives said. Planes can’t stay parked for long before they need to be put into short- or long-term storage, so the airline had to rotate through its fleet to ensure that aircraft weren’t sitting idle too long. Maintenance workers had to fan out to different locations to perform checks and regular work on planes that weren’t in their usual locations,

Kurt Kinder,

vice president of maintenance operations, wrote to employees Wednesday.

Southwest Airlines has canceled nearly 16,000 flights since Dec. 22, as customers have struggled to reach their destinations and find lost luggage. The airline said its reduced schedule would extend at least until Thursday. Photo: Albuquerque Journal/Zuma Press

Write to Alison Sider at alison.sider@wsj.com

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A long-term illness crisis is threatening the UK economy

A queue of ambulances outside the Royal London Hospital emergency department on Nov. 24, 2022, in London. In the U.K., the number of “economically inactive” people — those neither working nor looking for a job — between the ages of 16 and 64 rose by more than 630,000 since 2019.

Leon Neal/Getty Images

LONDON — Along with sky-high inflation and energy costs, a Brexit-related trade tailspin and a recession in progress, the U.K. economy is being hammered by record numbers of workers reporting long-term sickness.

The Office for National Statistics reported that between June and August 2022, around 2.5 million people cited long-term sickness as the main reason for economic inactivity, an increase of around half a million since 2019.

The number of “economically inactive” people — those neither working nor looking for a job — between the ages of 16 and 64 has risen by more than 630,000 since 2019. Unlike other major economies, recent U.K. data shows no sign that these lost workers are returning to the labor market, even as inflation and energy costs exert huge pressure on household finances.

The U.K. avoided mass job losses during the Covid-19 pandemic as the government’s furlough program subsidized businesses to retain workers. But since lockdown measures were lifted, the country has seen a labor market exodus of unique proportions among advanced economies.

In its report last month, the ONS said a range of factors could be behind the recent spike, including National Health Service waiting lists that are at record highs, an aging population and the effects of long Covid.

“Younger people have also seen some of the largest relative increases, and some industries such as wholesale and retail are affected to a greater extent than others,” the ONS said.

Though the effects of the issues mentioned above haven’t been quantified, the report suggested the increase has been driven by “other health problems or disabilities,” “mental illness and nervous disorders” and “problems connected with [the] back or neck.”

Legacy of austerity

Jonathan Portes, professor of economics and public policy at King’s College London, told CNBC the scale of the labor market depletion is likely a combination of long Covid; other pandemic-related health issues such as mental illness; and the current crisis in the NHS.

On top of that, he noted that factors that hurt public health directly — such as increased waiting time for treatment — could have a knock-on effect: people may have to leave the workforce to care for sick relatives.

“It’s worth remembering the U.K. has been here before, arguably at least twice. In the early 1990s, the U.K. saw a sharp recovery, with falling unemployment, after ‘Black Wednesday,’ but it also saw a large, and lasting, rise in the number of people claiming incapacity-related benefits,” Portes said, adding that not working is generally bad for both health and employability.

“The government clearly isn’t doing very much about this. Apart from resolving the crisis in the NHS, the other key policy area is support for sick and disabled people to get back to work, and there’s not nearly enough happening on this — instead the government is harassing people on Universal Credit with penalties and sanctions which we know don’t help much.”

In his recent Autumn Statement, Finance Minister Jeremy Hunt announced that the government will ask over 600,000 people receiving Universal Credit — a means-tested social security payment to low income or unemployed households — to meet with a “work coach” in order to establish plans to increase hours and earnings.

Hunt also announced a review of the issues preventing re-entry into the job market and committed £280 million ($340.3 million) to “crack down on benefit fraud and errors” over the next two years.

Although the pandemic has greatly worsened the health crisis leaving a hole in the U.K. economy, the rise in long-term sickness claims actually began in 2019, and economists see several possible reasons why the country has been uniquely vulnerable.

Portes suggested that the government’s austerity policies — a decade of sweeping public spending cuts implemented after Former Prime Minister David Cameron took office in 2010 and aimed at reining in the national debt — had a significant part to play in leaving the U.K. exposed.

“The U.K. was particularly vulnerable because of austerity — NHS waiting lists were rising sharply, and performance/satisfaction was falling sharply, well before the pandemic,” Portes said.

“And support for those on incapacity and disability benefits was hollowed out in the early 2010s. More broadly, austerity has led to a sharper gradient in health outcomes by income/class.”

Inequality and surging waiting lists

That’s borne out in the national data: The ONS estimates that between 2018 and 2020, males living in the most deprived areas of England on average live 9.7 years fewer than those in the least deprived areas, with the gap at 7.9 years for females.

The ONS noted that both sexes saw “statistically significant increases in the inequality in life expectancy at birth since 2015 to 2017.”

In the aftermath of the pandemic, NHS waiting lists grew at its fastest rate since records began in August 2007, a recent House of Commons report highlighted, with over 7 million patients on the waiting list for consultant-led hospital treatment in England as of September.

However, the report noted that this isn’t a recent phenomenon, and the waiting list has been growing rapidly since 2012.

“Before the pandemic, in December 2019, the waiting list was over 4.5 million – almost two million higher than it had been in December 2012, a 74% increase,” it said.

“In other words, while the rise in waiting lists has been accelerated by the pandemic, it was also taking place for several years before the pandemic.”

Former Bank of England policymaker Michael Saunders, now a senior policy advisor at Oxford Economics, also told CNBC that the U.K. has been particularly badly affected by Covid in terms of severity, and that some of this may have been the result of the country’s higher rates of preexisting health conditions — such as obesity — which may have been exacerbated by Covid.

“The U.K. is a relatively unequal country, so that may be part of the reason why even if we’ve had the same Covid wave as other countries, we might get a bigger effect on public health, because if you like you have a greater tail of people who would be worst affected by it,” he added.

Saunders suggested that any growth strategy from the government should include measures to address these health-care challenges, which are now inextricable from the labor participation rate and the wider economy.

“It’s not just a health issue, it’s an economic issue. It’s important in both ways. I think it’s important enough as a health issue, but it merits extra importance because of the effects on potential output which then feed through to these other economic problems.”

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Laid Off Tech Workers Quickly Find New Jobs

Most laid off tech workers are finding jobs shortly after beginning their search, a new survey shows, as employers continue to scoop up workers in a tight labor market.

About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a

ZipRecruiter

survey of new hires. That was just below the 83% share of all laid-off workers who were re-employed in the same time frame.

Nearly four in 10 previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in the survey

“Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,” said

Julia Pollak,

chief economist at ZipRecruiter. “They’re still the most sought-after workers with the most in-demand skills.” 

Job openings across the economy—at 10.3 million—are down from record highs but far exceed the number of unemployed Americans, providing opportunities for workers who lose their jobs and those who choose to seek another.

Workers previously employed in other industries, including entertainment and leisure, transportation and delivery, and manufacturing, also found new jobs quickly, the ZipRecruiter data showed.

The job market for tech workers is slowing as the broader economy falters under the pressure of Federal Reserve interest rate increases and high inflation. Layoffs and hiring freezes are occurring at startups and large tech companies such as Amazon.com Inc. and

Facebook

parent Meta Platforms Inc. that hired aggressively early on in the pandemic. The cuts are hitting workers in tech jobs—such as software engineers—and other corporate roles including recruiters.

Still, tech firms making cuts are outnumbered by those that are hiring.

A smaller share of tech workers is spending long periods searching for work after a layoff. About 5% of laid off tech workers who found jobs from April to October had spent more than six months hunting for work, down from 26% of those hired between August 2021 and February 2022, ZipRecruiter said.

Wen Huber, age 23, was laid off from a videographer job at a real estate tech startup in late July. Mr. Huber, who lives near Seattle, thought it would take awhile to land a new position, given he didn’t have a four-year-college degree and many other job seekers were flooding the tech job market.

“When I was applying, to be honest, I didn’t feel very confident because there was such an influx of competition with a lot of people also being laid off,” he said. 

Mr. Huber had built up a savings buffer, allowing him to be more selective in his job hunt as he sought to pivot into social media. He documented his unemployment experience in a series of videos on LinkedIn. The videos helped him land an interview—and ultimately an offer—for a social media manager job at a software startup, Mr. Huber said. He started in September.

“I was surprised at how quickly I was able to secure an offer for a job,” he said.

Wen Huber landed a job offer for a social media manager position within one-and-a-half months of his layoff.



Photo:

Devon Potts

Short job searches in tech have become slightly less common as the labor market slows from earlier in the year. Among people who recently lost a job and worked in tech previously, 37% found a new position within one month of starting to look, according to ZipRecruiter. That compared with 50% in February’s survey. 

“We’ve definitely seen a slowdown in hiring, but the reason why is that the job creation level was beyond record highs because of the slingshot effect of the pandemic,” said Ryan Sutton, district president at Robert Half, a global recruitment firm. “From August 2020 to May 2022, it wasn’t red-hot. It was lava-hot.”

Usually when mass layoffs hit, there is an influx of tech candidates contacting his company to help with their job search, Mr. Sutton said. 

“We have not seen it yet—we haven’t seen more candidates coming to market,” he said. “Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.” 

Client firms in tech also haven’t mentioned any plans to cut jobs, Mr. Sutton said. 

About 74% of workers recently hired after losing or leaving a job at a tech company remained in the industry, according to ZipRecruiter. Others who previously worked at tech companies switched to firms in industries such as retail, financial services and healthcare in the six months ending in mid-October. 

The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin

Pinnacol Assurance, a 650-person workers’ compensation insurer, saw a 46% increase in job candidates from big tech companies including Meta, Microsoft and Twitter between September and mid-December, said Tim Johnson, the company’s chief human resources officer.

The influx of applicants has helped Pinnacol fill tech-related roles such as data scientist, machine-learning engineer and cloud architect in recent months. In mid-December, Pinnacol’s recruiting team made an offer to a job candidate from Google, Mr. Johnson said.

Ayanna Chapman, 42, started a systems-engineering job job at Pinnacol overseeing its computer systems in mid-November after she was laid off from another systems-engineer position this spring. 

‘Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.’


— Ryan Sutton of global recruitment firm Robert Half

A generous severance package allowed her to take several months to freshen skills and study for certifications including in the Python programming language. When the Atlanta–area resident began looking for work in the second week of October, recruiters quickly reached out with interview opportunities, she said.

Ms. Chapman was keen on finding a job with stability and thought Pinnacol would fit. She received an offer from the Denver–based company about two weeks after beginning the interview process, much faster than previous experiences, she said.

“I literally cried tears of joy like, ‘Oh, my God, I got the job. I can’t believe it,’” Ms. Chapman said.

Employers broadly are responding to job candidates fast, likely for fear of losing them in a competitive market with a historically low jobless rate of 3.7%. Nine in 10 ZipRecruiter survey respondents said they heard back from a recruiter or hiring manager within a week of applying for a job.

ZipRecruiter’s most recent survey was drawn from 2,550 U.S. residents who had started a new job within the six months ending in mid-October. The data align with other job-market figures that signal the hot labor market is cooling. 

Of the ZipRecruiter survey respondents who said they previously worked in tech, most of them likely worked for tech companies regardless of their occupation, Ms. Pollak said. In other words, a recruiter at Amazon would likely be classified as a tech-industry worker in the survey. But a data scientist at

Home Depot

would be a retail-industry worker.

Separate labor-market figures suggest employers across industries are still seeking to hire tech workers, though less so than earlier in the pandemic. Postings on job-site Indeed for tech occupations are still well above prepandemic levels, but have fallen steeply over the past year. 

Software developer job ads on Indeed are down 34% from a year earlier, and ads for mathematics roles—which include data scientists—are 28% lower. Overall postings are down 7.7% from a year ago.

“With tech workers, it’s a much bigger pullback,” said

Nick Bunker,

an economist at Indeed Hiring Lab. “It’s still above prepandemic levels, but if the current trend keeps up, I don’t imagine that talking point will be true anymore at some point next year.”

The uncertain economic outlook is likely weighing on employers’ appetite for white-collar workers, since they tend to base hiring plans for higher-paid workers on the longer-term business outlook, said Mr. Bunker. By contrast, firms usually gear hiring for waiters, deliverers and other lower-paid jobs according to immediate business needs, he said.

Many companies with among the highest shares of new tech job postings on Indeed in late November were in industries such as consulting, financial services and aerospace.

“For tech jobs, it is still a relatively healthy economic climate and relatively healthy labor market,” said Scott Dobroski, Indeed career expert. “A lot of bright spots for tech workers currently lie outside of traditional tech companies.”

U.S. aerospace companies cut more than 100,000 workers during the pandemic, but have been hiring back at a fast clip and struggling for a year with staffing shortages that have crimped supply chains.

Raytheon Technologies Corp.

CEO

Greg Hayes

said during the summer he was optimistic that layoffs among tech companies would start to ease his own hiring challenges. There are signs that is happening.

“We are starting to see an uptick in interest from the tech layoffs,” said

Mike Dippold,

chief financial officer of

Leonardo DRS Inc.,

which is based Arlington, Va.

Mr. Dippold said the defense-sensor specialist, like many peers, still had more open positions than it would like, but the staffing situation was starting to improve.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and Gwynn Guilford at gwynn.guilford@wsj.com

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TuSimple Plans Layoffs That Could Cut at Least Half Its Workforce Next Week

Self-driving trucking company

TuSimple Holdings Inc.

TSP -3.75%

plans to cut potentially at least half of its workforce next week, people familiar with the matter said, as it scales back efforts to build and test autonomous truck-driving systems.

A staff reduction of that size would likely affect at least 700 employees, the people said. As of June, TuSimple had 1,430 full-time employees globally. It has operations in San Diego, Arizona, Texas and China.

The retrenchment follows a dramatic series of events, including the removal of the chief executive in October after a board investigation concluded that TuSimple had shared confidential information with a Chinese startup. TuSimple faces multiple federal investigations into its relationship with the Chinese startup, Hydron Inc.

TuSimple President and Chief Executive

Cheng Lu,

who previously held the CEO job and returned to the position in November, said on Friday, when asked for comment on the planned layoffs, that he intended “to right the ship, and this includes ensuring the company is capital efficient.”

The company plans to scale back significantly its work on building self-driving systems and testing self-driving trucks on public roads in Arizona and Texas, the people familiar with the matter said. As part of the downsizing, much of TuSimple’s operation in Tucson, Ariz., where it does a lot of its test driving, will be eliminated, and the team that works on the algorithms for the self-driving software will be pared back significantly, the people said.

TuSimple will focus on building out a software product that matches self-driving trucks with shippers that have freight to haul, with the aim of offering freight transport at a lower cost than human-driven trucks, the people said.

This month, TuSimple and Navistar International Corp. said they had jointly ended a two-year-old partnership. TuSimple had planned to incorporate its self-driving systems into Navistar trucks that would be sold to freight haulers starting in 2025. TuSimple doesn’t build trucks itself.

Employees have been bracing for the layoffs. Early this month, Mr. Lu sent an email to staff that said management was reviewing “our people expenses, the biggest part of our cash burn,” according to a copy viewed by The Wall Street Journal. He advised employees “to focus on the work at hand.”

TuSimple, based in San Diego, told employees this week that offices would be closed Tuesday and Wednesday, the people said. The job cuts are expected to be announced on Tuesday, they said.

TuSimple is cutting costs and scaling back its ambitions as it reels from a string of crises this year, including a crash of one of its self-driving trucks in April, the loss of key business partnerships, two CEO changes, a plummeting stock price and concurrent government investigations. Federal authorities are probing whether TuSimple improperly financed and transferred technology to Hydron, the Journal reported in October.

TuSimple has struggled to generate significant revenue as its technology remained in a testing phase; in the first half of the year, it reported $4.9 million in revenue on $220.5 million in losses. That revenue largely came from hauling freight for shippers in trucks while keeping a human driver behind the wheel. In recent weeks, some of those partners, including McLane Company Inc., have moved to distance themselves from TuSimple, according to people familiar with the matter.

“McLane is aware of the recent leadership, operational and route changes at TuSimple and is in communication with their team. We are in the process of assessing the business relationship with TuSimple and will determine the next course of action in due time,” said Larry Parsons, McLane’s chief administrative officer.

In October, following a board investigation and the day after the Journal reported that the Federal Bureau of Investigation, Securities and Exchange Commission, and Committee on Foreign Investment in the U.S., or Cfius, were investigating TuSimple, the company’s board fired then-CEO

Xiaodi Hou.

After being ousted, Mr. Hou joined forces with fellow co-founder Mo Chen, who is also the leader of Hydron, to fire the board. Together they brought Mr. Lu back to run the company. Mr. Chen now controls the company with 59% of the voting power, while Mr. Hou has 30%, according to securities filings.

Last month, accounting company KPMG LLP said in a letter to the SEC it had resigned as TuSimple’s auditor as a result of the board firing, which also involved dismissing TuSimple’s audit committee.

TuSimple has announced leadership changes in an effort to get back into compliance with regulators and public stock market rules. This included adding two independent board directors and a security director to its board. Cfius had required the security director role as part of a national-security agreement with the company, but TuSimple fired the previous security director.

TuSimple’s stock closed at $1.54 on Friday, a 75% decline over the past two months and down 96% from its 2021 initial public offering price.

Write to Heather Somerville at heather.somerville@wsj.com

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