How Higher Interest Rates Are Putting Some Americans' Jobs in Danger

Job cuts explode as companies reassess economic conditions.

As the economy recovered after COVID, companies had a hard time finding talent. Now, the hiring boom seems to be over. Amid rising inflation, higher interest rates, and slowing demand, several industries have cut more jobs in May than in the previous four months combined.

Industries with the most job cuts

U.S. companies have slashed headcount so far this year. Certain industries have cut more jobs than others. Five industries had more job cuts in May than the previous four months combined.

• Healthcare/Products: The healthcare/product industry, which includes hospitals, healthcare products manufacturers, and other care-related entities, announced the most job cuts this year at 18,301, a 57% increase from the same period last year.
• Technology: The tech sector announced 4,044 job cuts in May, up 781% from the 459 cuts the industry announced in the first four months of the year. It is the highest since December 2020.
• Fintech: The fintech sector announced 2,059 job cuts in May, up 268% from the 556 cuts the industry announced in the first four months of the year.
• Construction: Inflation and the increase in interest rates are starting to affect the housing market. Construction firms cut 817 jobs in May, totalling 1,150 job cuts so far this year. This is 55% more than the 741 job cuts during the same period in 2021. It is also the highest since October 2020.
• Automotive: The automotive industry counted 2,918 cuts in May, for a total of 5,380 this year. Automakers are still dealing with a shortage of semiconductors and other supply chain issues. With high gas prices, many people are pivoting towards electric cars, resulting in workforce restructuring.

U.S. companies slow hiring

Companies such as Facebook, Salesforce, Snap, Microsoft, and Coinbase have stated they will either slow down or pause hiring as a result of economic conditions. Some companies even had to rescind job offers to people who hadn't started work yet.

Other companies like Tesla have taken a further step by announcing that 10% of its salaried workforce will be cut. Policygenius laid off 25% of its staff and Robinhood announced it would lay off 9% of its workforce.

In April, the price of consumer goods was up 8.3% year-over-year, according to the Labor Department's most recent data. The average American is now paying close to $4,100 more in necessities and gas this year. High inflation has forced the Fed to raise interest rates. Business growth is slowing and labor costs are still high. This combination is causing U.S. companies to cut jobs across many industries.