Opinion: Layoffs are coming, but not in every industry

Editor’s Note: Dana Peterson is chief economist at The Conference Board. Frank Steemers is senior economist at The Conference Board. The views expressed here are their own. Read more opinion on CNN.

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As recession worries grow, it begs the question: Which sectors are most likely to start shedding jobs?

We at The Conference Board decided to construct an index to help answer that question.

The industries at most risk are information, transportation and warehousing, and construction, followed by repair and personal services, manufacturing, real estate and wholesale trade.

Over the past two years, employers have had a difficult time recruiting and retaining workers. An aging population, tighter immigration laws, fewer multiple jobholders and residual effects from the pandemic (long Covid, child care and adult care challenges, for instance) have led to constraints on the number of workers, while demand for labor has been strong.

Now, as high inflation has persisted and the Federal Reserve has rapidly increased interest rates, the larger cost of borrowing can be expected to have a more profound, negative impact on the US economy this year, and may result in a short and shallow recession. Even though the labor market has continued to be resilient, some employers are shedding jobs to protect their bottom lines.

Of course, employers have experienced varying degrees of labor shortages, with some industries suffering more than others. The difficulty in hiring and retaining workers will drive how many job losses can be expected in individual industries. Employers with severe labor shortages will likely be careful about laying off workers, because this would risk facing the same hiring difficulties all over again after a downturn.

Indeed, according to The Conference Board’s new Job Loss Risk Index, which identifies each industry’s relative chances of experiencing layoffs, those at greatest risk of job loss have generally had fewer labor shortages, while those at low risk have had the greatest recruitment and retention difficulties.

Labor shortages are one of the key factors in the new index, but not the only one. The index incorporates five other factors to ascertain a…