If a U.S. recession arrives as anticipated, information services, transportation and warehousing, and construction are the industries at the greatest risk of job losses, according to The Conference Board Job Loss Risk Index.
“While a short and shallow recession remains our most likely scenario for the U.S. in 2023, we expect job losses to vary widely by industry,” said Frank Steemers, Senior Economist at The Conference Board. “The Index will help leaders in every industry understand the unique dynamics of this recession, judge their own exposure, and make strategic decisions to protect their workforces and bottom lines.”
The information services industry saw a significant increase in employment during the pandemic due to teleworking and a spike in tech adoption. Now that more employees are back in the office, the demand for information services is lessening, making layoffs and hiring freezes more likely. In addition, rising interest rates are pressuring companies in the industry to cut back on spending.
In transportation and warehousing, the consumer preference for online shopping drove a hiring surge during the pandemic. But consumer spending is expected to decrease in the event of a recession, which is likely to drive job losses in the industry. It’s a similar story in construction — it’s projected that demand for labor will lessen now that lockdowns have ended and consumers are restricting discretionary spending.
On the opposite end, the healthcare, government, and educational services sectors are least likely to experience significant job losses, as they’re not as sensitive to changes in interest rates and didn’t tend to over-hire during the pandemic.
The Conference Board uses the following indicators to assess risk of job loss in an industry:
- Exposure to labor shortages
- Sensitivity to monetary policy
- Job function and required education levels
- Pandemic recovery
- Labor demand trends
- Age composition and experience levels
See the full report for more information on how the potential recession would impact job loss in major industries.