Opinion: Why a recession might not mean huge job losses
August 05, 2022 at 21:35
Most recessions in US history have been accompanied by severe job losses and high unemployment rates, but this time may be different.
Should a recession take hold in the US, the ongoing labor shortage may be the key to protecting vulnerable workers in what may prove to be a "job-full" recession.
If the US descends into recession this year, then businesses will likely pull back on help-wanted ads.
However, instead of drastically cutting workers, as in most recessions, businesses may hold on to their talent.
Businesses know that this means the labor market is tight and it will still be difficult to find and keep workers.
Labor shortages are likely here to stayLabor shortages remain and likely will persist even if the US goes into a brief and potentially mild recession.
Even as businesses are starting to retrench in terms of production, they know they will still need to find more workers.
Some employers may place workers on furloughs with benefits and possibly a promise to make up for lost pay later.
Others may defer merit pay raises, promotions and future discretionary compensation, or may encourage voluntary early retirement or job separations.
Employers may also institute job sharing, where two people work one job, to keep their best people amid demand lulls.
If the impending recession is likely to be shallow and last a few quarters or a year at worst, businesses are likely to keep their hard-won workers amid a shrinking working-age population.
For these reasons, the US economy may escape a surge in unemployment that harms millions of households, especially lower- and middle-income families.