Survey: businesses are holding on to their employees despite concerns about economy

A new survey shows that employers are trying to hold onto their workforces and avoid layoffs even as they steer through economic headwinds that are highlighted by a 53-year low unemployment rate.

Those conclusions come from Littler Mendelson P.C., a San Francisco-based employment and labor law firm that represents management. The firm surveyed more than 450 in-house lawyers, C-suite executives, and human resources professionals across the U.S. for its “Employer Pulse Survey Report: 2023 Economic Outlook.”

The results show that employers are seeing mixed messages about the economy, with negative measures like persistent inflation and headline-grabbing layoffs being counterbalanced by positive trends like a historically low unemployment rate and increased consumer spending.

In spite of those contradictory signals, the survey found that employers expressed a high level of confidence in the state of their own businesses both currently (76%) and 12 months from now (75%). But at the same time, they were concerned about broader economic conditions, with more than three-quarters (77%) being worried about how the uncertain economic outlook and/or a potential economic downturn could impact their workforce management and planning.

Those contradictory stances can also be seen in companies’ labor practices, as survey responses showed that some employers have caution in hiring, but that layoffs are not widespread. A minority of companies in the survey (24%) say they have implemented workforce reductions / layoffs or are in the process of doing so. But a much larger portion (6 in 10) say they are not planning or even considering layoffs, and 50% of respondents say they are either currently, planning on or considering growing their workforces.

According to Littler, the high percentage of employers avoiding layoffs could reflect lessons learned from the pandemic and a fiercely competitive talent market. “During the first few months of the initial COVID-19 outbreak, thousands of employers engaged in mass furloughs or layoffs due to business shutdowns,” Terri M. Solomon, shareholder at Littler, said in a release. “Many employers have clear memories of being short-staffed and unable to hire up again quickly when businesses began to reopen in mid-2020.” 

Broken into sectors, hiring conditions are worst in the technology industry, as 60% of tech industry respondents said their organizations have conducted, or are conducting, workforce reductions or layoffs. That compares to 29% in healthcare, 21% in retail and hospitality, and 19% in manufacturing.

“Our survey finds some companies trying to avoid layoffs in favor of measures that maintain the stability of their workforces, as well as employers continuing to focus attention on keeping employees engaged and retaining talent,” Solomon said. “At the same time, nearly a quarter of respondents are conducting workforce reductions or layoffs and such measures are especially prevalent in the tech industry and other business sectors that substantially ramped up hiring to cater to the needs of consumers during the pandemic.”