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Expect a Sharp Reduction of Headcount in Key Sectors

Updated: Apr 1, 2020

How have U.S. corporate management teams adjusted their employment guidance in response to historically unprecedented coronavirus business disruptions? We scraped all Russell 3000 press releases and earnings call transcripts in March to find out. The message is as clear as it is unfortunate: the employment outlook has deteriorated sharply, with almost all firms that issued employment guidance in the past few days expecting or recently incurring a reduction in headcount.

For context, we bucketed management language into three categories: a reduction, an increase, or a freeze in headcount. For example, Cheesecake Factory (CAKE) announcing on March 27 that "we have furloughed approximately 41,000 hourly restaurant staff members" counts as a reduction. An example of a freeze includes Southwest Airlines (LUV) stating on March 16 that "we will freeze hiring across the company except to fill essential front line and management roles." And finally, Smartsheet (SMAR), a SaaS company, mentioning on March 17 that "we are hiring this year" constitutes an example of an increase.

Here's what we found:

  • Over the last four weeks, the share of companies that announced reductions in headcount (vs. freezes or hirings) rose sharply from 40% at the beginning of the month to 75% last week. This number is on track to reach 90% this week after a slew of retailers and food establishments announced furloughs, headcount reductions, and temporary leaves of absence just in the past few days.

  • The largest percentage of headcount reductions seems to be occurring in the Natural Resources segment amid the recent collapse in crude oil prices, as well as in the Leisure and Hospitality sectors as COVID-19 lockdowns continue. Real Estate and Wholesale Trading companies also disproportionately announced staff layoffs.

  • Companies in the Education and Health Services and Information Technology sectors have been the most likely to announce hiring increases (vs. freezes or reductions). 

Not every company reports every week, and many firms do not explicitly discuss employment guidance. Nonetheless, we anticipate that changes in this indicator could provide some forward insight into a wildly uncertain labor market.

We always welcome comments, questions, or suggestions. Feel free to reach out at

Note: We excluded Construction given the unusually low sample size for this sector.

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