It's getting hot in here, don't lay off all your staff : The Indicator from Planet Money The U.S. economy is red hot, adding 517,000 jobs in January. Unemployment is at its lowest rate in more than 50 years. So why are there so many jobs when there's talk about a possible recession?

One idea that's been talked about is labor hoarding, where employers hold onto more staff than they need. That's because the costs of rehiring are so high.

We find that the answer is more complex — and maybe a little more optimistic as well.

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Is it hot in here, or is it just the new jobs numbers?

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Once again, the U.S. economy has been pumping with jobs.


WOODS: This jobs Friday, we learned 517,000 jobs were added to the U.S. economy in January. That is much, much higher than expected. And the unemployment rate fell a little, to 3.4%. That is the lowest it's been in over 50 years.


The great beating heart of the American jobs market is not slowing down, which has got us wondering yet again, what's up with that?

WOODS: Yeah, interest rates shot up over the last year. That made it harder to borrow. The stock market sunk. A lot of people have been talking about an impending recession. So all of this should make jobs more scarce.

MA: One potential explanation we've heard for all of this is labor hoarding. That is this idea that employers might be holding onto staff even when business is down because they know how hard it'll be to hire them again when demand picks back up.

WOODS: And what we discovered from talking to a labor economist and a business owner was a little bit more complex than that but also, perhaps, more hopeful. This is THE INDICATOR FROM PLANET MONEY. I'm Darian Woods.

MA: And I'm Adrian Ma. Today on the show, labor hoarding and the booming jobs market.


MA: To better understand how employers are feeling about their staffing in these uncertain economic times...

Hi, Mike.


MA: ...We spoke to Mike Kaeding, who's up in the Twin Cities area of Minnesota, Minneapolis-Saint Paul.

How's things?

KAEDING: Things are really well. How about yourself?

WOODS: Mike is the CEO of Norhart.

KAEDING: We design, build and rent apartments, and we're really focused at driving down the cost of housing.

WOODS: Norhart is this vertically integrated apartment company. It does everything from making fittings for their apartments to constructing the buildings and managing the rentals. And Mike is still hiring for a bunch of roles.

KAEDING: Precast concrete erector.

MA: That is a person who helps hoist up big slabs of concrete.

KAEDING: The steel wall panel plant factory foreman.

MA: That is a supervisor for a factory that makes steel walls. Also, Mike says he wants to hire someone who can draft building plans using a software called StrucSoft.

KAEDING: StrucSoft drafter. It's the very, very specific, niche kind of positions, are the ones that we struggle the most with.

WOODS: And to attract the best staff, Mike says he pays top-of-the-market rate, and he gives this message to his existing workers if another company calls them.

KAEDING: Take the call when a recruiter calls you. We want working here to be a choice that you make. But secondly, and maybe sneakily, I want to know what those other places are offering. If they offer something better, we will match or beat what's out there 'cause we never want pay or benefits to be the reason why you leave.

MA: Mike has also tried radical new things with benefits at his company, inspired by the tech industry.

KAEDING: Unlimited paid time off for hourly construction workers. Another one is we have remote-first, right? That enables people to choose their own hours to do their own work. And there's headaches in doing that.

WOODS: Yeah. That does sound like a risk. I mean, these all sound, you know, good in theory, but you've got buildings to build. You've got limited budgets at some points. And so was that scary for you, as the CEO?

KAEDING: Oh, it's terrifying. But what I'll say is you find the best people, and then that enables these things to happen.

MA: But there are storm clouds in the housing industry. Across the country, demand for apartments is down. New construction starts are falling away, and there's a chance Mike won't need all of those new workers over the next couple of years.

KAEDING: I had one staff member come to me, actually just today, and said, Mike, the market's in turmoil. I see the tough environment. Like, am I at risk of getting let go? And the reality is, if we didn't have the long-term mindset in place, the answer probably would be yes. But for us, I don't want to lose that person. It took me two years to find that person of that caliber. I'm going to fight tooth and nail. I'm going to give up my own paycheck before I'm going to lose that person. And maybe that's born out a little bit of the fact over the last three, five years, it's been so hard to find those good people. And that's so engrained in my mind that I don't want to risk having to go back through that process.

WOODS: So this, it could be argued, is a form of what's called labor hoarding. Even though the economic tea leaves are looking a little murky, bosses like Mike are holding onto staff. We asked Julia Pollak about it. Julia is the chief economist at the job site ZipRecruiter and a friend of the show.

JULIA POLLAK: That is a very common experience across the economy. We just ran a survey at ZipRecruiter of 2,500 people who started jobs in the last six months. And about 1 in 4 of these new hires say that their previous employer asked them to stay and countered their outside offer. That shows how much employers are trying to hang on to their workers and stave off this threat of competition from other employers.

WOODS: Is this idea that's been talked about called labor hoarding - do you think this might be part of the story?

POLLAK: It could be. There are some surveys that suggest that companies are holding onto more workers than they'd need, but most companies aren't sitting there hoarding talent they don't need. On the contrary, about 40% of factories say that they're operating below capacity due to labor shortages. Many industries, like leisure and hospitality, still have a substantial shortfall in staffing. So I think companies are hanging onto workers because they really still are short-staffed, and they really still need to - you know, to hold onto the workers they've got.

MA: Julia says the big reason for this struggle to hire is because there are just millions of workers who have left the workforce during the pandemic.

POLLAK: That is due, in part, to long COVID, in part, of course, due to COVID-related deaths but also because many people retired during the pandemic and don't appear to be coming back. And also, there are positive reasons that people chose not to come back. Their house value skyrocketed. Their 401(k) portfolios looked very, very attractive. And so people looked at their wealth and saw their net worth rise and thought, hey, maybe I don't need to work.

WOODS: I mean, just stepping back, this whole story of employers still scrambling for workers kind of feels at odds with all those layoffs that were announced recently. Like, I mean, just this week, we heard from Mark Zuckerberg at Meta. Meta has been purging a lot of staff. And Mark Zuckerberg said 2023 would be the year of efficiency.

MA: Yeah, that doesn't bode well. And because Julia Pollak works at ZipRecruiter, she has her analytic stethoscope right on the chest of the job market's beating heart. We asked her what was happening. Like, was the economy just enjoying one last hurrah before it got sick?

WOODS: I just want to read a list of December layoffs. Goldman Sachs - 4,000 employees on the cutting block. Wells Fargo laid off hundreds. We had redundancies in Adobe and Plaid and CNN. I mean, I could keep going. This really sounds like bad news in the economy, right?

POLLAK: I think one way to interpret them is that tech and finance punch above their weight in headlines. You know, the Goldman Sachses of the world, the Facebooks, the Googles - they're the opinion makers. They determine, you know, stock market valuations. And so they can drive the headlines, whereas it's the, you know, McDonald's and the Macy's and the companies on Main Street that employ far more Americans and that really set the tone for most American families.

WOODS: Julia said that tech makes up roughly 4% of overall jobs. But when you ask jobseekers where they'd like to work, 20% say tech. So tech is synonymous with a lot of American's hopes and dreams. And so that can explain why those headlines feel like a big deal to a lot of people.

MA: Yeah, but once you step outside of Silicon Valley and Wall Street, you get a sense of the real jobs market. And while labor hoarding might be happening in some places, the bigger factor seems to be that Main Street is still hungry for workers.


WOODS: This episode was produced by Noah Glick, with engineering by Katherine Silva. It was fact-checked by Sierra Juarez. Viet Le is our senior producer. And Kate Concannon edits the show. THE INDICATOR is a production of NPR.


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