Tech companies, banks overstaffed while airlines, hotels need workers

It wasn’t long ago that Amazon, Shopify and Peloton doubled their workforces to manage through the pandemic surge, while Morgan Stanley staffed up to handle a record level of IPOs and mortgage lenders added headcount as rock-bottom rates led to a refinancing boom.

On the flipside, Delta Air Lines, Hilton Worldwide and legions of restaurants slashed headcount because of lockdowns that rolled through much of the country and other parts of the world.

Now, they’re scrambling to reverse course.

Companies that hired like crazy in 2020 and 2021 to meet customer demand are being forced to make sweeping cuts or impose hiring freezes with a possible recession on the horizon. In a matter of months, CEOs have gone from hyper-growth mode to concerns over “macroeconomic uncertainty,” a phrase investors have heard many times on second-quarter earnings calls. Stock trading app Robinhood and crypto exchange Coinbase both recently slashed more than 1,000 jobs after their splashy market debuts in 2021.

Meanwhile, airlines, hotels and eateries face the opposite problem as their businesses continue to pick up following the era of Covid-induced shutdowns. After instituting mass layoffs early in the pandemic, they can’t hire quickly enough to satisfy demand, and are dealing with a radically different labor market than the one they experienced over two years ago, before the cutbacks.

“The pandemic created very unique, once-in-a-lifetime conditions in many different industries that caused a dramatic reallocation of capital,” said Julia Pollak, chief economist at job recruiting site ZipRecruiter. “Many of those conditions no longer apply so you’re seeing a reallocation of capital back to more normal patterns.”

For employers, those patterns are particularly challenging to navigate, because inflation levels have jumped to a 40-year high, and the Fed has lifted its benchmark rate by 0.75 percentage point on consecutive occasions for the first time since the early 1990s.

The central bank’s efforts to tamp down inflation have raised concerns that the U.S. economy is headed for recession. Gross domestic product has fallen for two straight quarters, hitting a widely accepted rule of thumb for recession, though the National Bureau of Economic Research hasn’t yet made that declaration.

The downward trend was bound to happen eventually, and market experts lamented the frothiness in stock prices and absurdity of valuations as late as the fourth quarter of last year, when the major indexes hit record highs led by the riskiest assets.

That was never more evident than in November, when electric vehicle maker Rivian went public on almost no revenue and quickly reached a market cap of over $150 billion. Bitcoin hit a record the same day, touching close to $69,000.

Since then, bitcoin is off by…