US job cuts surge in August, East Coast port strike looms, Lyft plans staff reduction

Job reductions announced by U.S.-based companies during August nearly tripled from the prior month as private payroll job growth showed further signs of slowing, according to closely watched reports issued Thursday by industry analysts.

Outplacement firm Challenger, Gray & Christmas said employers announced 75,891 cuts in August, up 193% from the prior month’s 25,885 and also 1% higher than the figure for August 2023. The August number was the highest non-pandemic-year total since August 2009, when 76,456 reductions were announced, but lower than the 115,762 posted in August 2020.

“August’s surge in job cuts reflects growing economic uncertainty and shifting market dynamics,” Senior Vice President Andrew Challenger said in a statement. “Companies are facing a variety of pressures, from rising operational costs to concerns about a potential economic slowdown, leading them to make tough decisions about workforce management.”

In another sign of a cooling economy, private companies added 99,000 jobs during August, the smallest monthly gain since January 2021, as pay rose at an average annual rate of 4.8% from a year earlier, according to payroll services provider ADP and Stanford University’s Digital Economy Lab. “The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” ADP Chief Economist Nela Richardson said in a statement.

Challenger reported that job cuts in the first eight months of 2024 followed similar trends as last year, with technology still leading all industries for announced reductions at 105,426, including 39,563 in August. Year-to-date total U.S. cuts were slightly lower than in 2023 but remained among the highest for that period in 20 years of tracking at 536,421.

Many of the most recent announced reductions are yet to be reflected in initial claims for unemployment insurance that totaled 227,000 for the week ended Aug. 31, down 5,000 from the prior week’s revised level, the Labor Department reported. The government on Sept. 6 is scheduled to report August’s total private and public job growth along with the latest national unemployment rate, which was 4.3% in July. 

Retailers and manufacturers are among companies bracing for a potential strike next month by dockworkers at East Coast and Gulf Coast ports that collectively handle more than 40% of all U.S. imports, as contract talks remained deadlocked.

The International Longshoremen’s Association said this week in a video statement that union members are prepared to “hit the streets” on Oct. 1 if agreements cannot be reached with port operators on a new contract, with the current pact expiring Sept. 30. Members of several union chapters gathered for two days of internal talks that were slated to wrap up late Thursday and provide some direction on the union’s next move.

The union and the United States Maritime Alliance, which represents port owners, are at odds on issues including pay and future use of automation. Both sides have applied for federal mediation, and the Biden administration has encouraged the parties to remain at the bargaining table to avert a strike.

In the meantime, the National Retail Federation said some retailers have rerouted a portion of merchandise orders to Los Angeles and other West Coast ports to avoid potential shipping disruptions ahead of the crucial holiday shopping season. Analysts have noted that shifts in cargo traffic have implications for warehouse and other logistics property demand.

“The threat of a strike during the peak shipping season has many retailers already implementing costly mitigation strategies,” Matthew Shay, CEO of the retail trade group, said in a statement urging the two sides to reach a new labor contract. “At a time when inflation is on the downward trend, a strike or other disruption would significantly impact retailers, consumers and the economy.” 

Ride-hailing service provider Lyft plans to cut 1% of its workforce of about 3,000 as it looks to exit and sell off its operations tied to rented bikes and scooters.

Based in San Francisco, the company said staff cuts are part of larger cost-reduction efforts, as Lyft deals with rising competition and reduced consumer demand in some urban areas. The company will take $34 million to $46 million in charges tied to layoffs as it discontinues dockless scooters in Washington, D.C., and potentially other regions such as Denver, according to a statement.

Company executives told analysts during an August earnings call that Lyft is looking to focus more on its core ride-hailing services and de-emphasize services like scooter rentals that have seasonal demand fluctuations in much of the country.

Lyft and primary rival Uber have both been cutting costs during the past two years in a bid to increase profits. Uber has also been trimming its office real estate and putting space up for subleasing in its headquarters city of San Francisco.