Hello, everyone.
I'm Daniel Culbertson, economist with the Indeed hiring lab,
here with the labor market update.
In this video, I'll cover the supply and demand dynamics
inside the labor market that have created
such a difficult recruiting environment,
and also talk a bit about when we
might be getting some relief from some of the supply
side constraints that are limiting
the number of job seekers.
Let's get started talking about demand.
What's changed in the labor market over the past couple
of months is that demand for workers has come back,
and it's come back quite strong.
And this is something that we can
see at Indeed zone data set.
This chart here is the overall trend
in job postings on the Indeed site.
As a job postings aggregator, Indeed scrapes jobs
from all across the internet.
So this is a look at the online labor market at large.
The way we're showing the data in this chart
is this is the percent change in job postings since February
1st, 2020.
So just making a comparison back to that pre-pandemic baseline.
On the left side of the chart, you
can see the impact of COVID-19, where job postings on Indeed
fell by about 40% from February 1, 2020 to May, 2020.
And since then job postings have slowly but rather
consistently come back on our site.
In January of 2020 when we crossed
our pre-pandemic baseline, meaning we
hit the point where we had more jobs on our site
than we did before the pandemic.
And as of June 18 we are 30.5% ahead
of our pre-pandemic baseline.
There's a couple of key takeaways here.
For the overall economy and the labor market in particular
this is great news.
It's also a great news for job seekers,
because it means there's plenty of opportunity for those
who are looking for a new role.
But for employers, what this means is
you are facing that much more competition
when you're heading out into the labor market
and looking to make hires.
And unfortunately this increased level of competition
is running up against several factors on the supply side that
are limiting the number of job seekers,
and the folks that are out there looking for work.
There's two separate lists I'm going
to run through, factors that are limiting
the supply of job seekers.
A list of factors that have been around
since the start of the pandemic, and also some factors that
are new to 2021.
And as I'm going through these lists
it's important to keep in mind that these reasons aren't
mutually exclusive.
There's likely a lot of overlap between these categories
when we're thinking about reasons that people may not
be looking for work.
Let's get started with some of the factors that
have been around since the start of the pandemic.
First and foremost is caution over the pandemic,
particularly for workers in roles
that have a higher risk of exposure,
whether that's from being in health care,
having a lot of face to face contact with customers,
or being in close proximity to colleagues
for long periods of time.
These are the types of roles that job seekers are still
cautious about.
We can help quantify this through a survey that's
run by the Census Bureau.
Since the start of the pandemic, the US Census Bureau
has been running a survey every week
where they ask a lot of questions
to see how life has changed during the pandemic.
One of the questions they ask is if you have not
worked in the past week, what is the primary reason.
And a survey that they ran the end of the week of June 7th,
2.8 million US adults who hadn't worked in the past week
cited worries about contracting or spreading
COVID-19 as the primary reason that they hadn't worked.
So this is a pretty substantial share of our labor force
that is sitting on the sidelines primarily out
of concern of COVID-19.
This is something that we hope to see come
down further in the future.
I will say there has been some good news recently.
This number was as high as 4.2 million in the month of May.
The other factor is family and caregiving responsibilities
that have kept some workers out of the labor market.
With the amount of school closures and daycare closures
that we saw over the past year, that
has changed the home life for millions of workers
across the United States, particularly
for working mothers.
And this is a trend that we hope to see reversed later this year
as daycares and schools open up at a higher rate in the fall.
A third factor that has been around
since the start of the pandemic is
that some workers expect to return to their previous job.
And this factor is illustrative of what
makes this recession a bit different from some
of the recessions we've experienced before.
In a typical recession, when we see the unemployment rate rise,
it's usually a pretty safe assumption
that there's going to be a lot of folks
out there looking for a new role.
However in this past recession during the COVID-19 pandemic
much of the unemployment that we saw was temporary.
This data shows what I mean.
This data comes from the Bureau of Labor Statistics.
When the BLS runs their survey where we get the unemployment
rate, they ask the unemployed a lot of different questions
about the conditions of their unemployment.
One of the questions they ask is, do you
consider yourself to be on a temporary layoff,
meaning do you expect a return to your previous job.
In the month of April, when millions of folks
fell into unemployment at the same time,
77.9% of the unemployed expected to return
to their previous role.
As of May, 2021 this number has come down a lot.
But it's still elevated at 19.6%.
So this shows why over the past year
we may not have seen the volume of candidates
that we would anticipate at a time like this
because so many workers were just waiting it out to go back
to their previous job.
This is something that we've been dealing
with over the past year, and this
is a factor that will remain relevant
as we continue to move through the COVID-19 pandemic.
Moving on to some of the supply constraints
that are new to 2021.
At the top of this list is the enhanced federal unemployment
benefits that were paid out on top of workers usual benefits.
This likely creates some type of disincentive to work.
But to try to quantify how many workers are sitting
on the sidelines of the labor force
for this particular reason is rather difficult.
We've seen over the past couple of weeks
numerous states come out and make announcements
that they are going to end the federal program early, or opt
out of the program, and stop paying benefits
before September.
And what this does is give us a nice natural experiment
where we can take a look at job seeker
activity in those states that have made announcements
that they're opting out early, and compare that
to job seeker activity in the states that are remaining
in the program until September.
This is what we've already started to do on our data.
This chart here is making a comparison
in click activity on our site, again,
between the states that are opting out early
and the rest of the states that are staying in the program.
And what you're looking at here on the x-axis of this chart
is essentially a timeline.
So 0 right here at the center of the chart, that
is the day that each of these states
made an announcement that they were dropping out
of the federal program early.
While you can see that there was an increase in job seeker
activity on the date that those announcements were made,
it was up by about 5%, but as you
move across the right side of the chart what you can also see
is that by day eight after those announcements were
made most of that increase in job seeker activity
had subsided.
So there is a bit of an increase in some of those states
that made announcements that they were opting out
of the program, but it was rather short lived.
The real test will come when these states actually
start to cut benefits in June and July,
and we'll be keeping an eye on our data
to see if there's any noticeable impact there.
The second reason that is new to 2021
is that there's just more optimism about the economy
and the labor market this year.
If you think back to 2020, this time last year,
everything was very new.
Everything was very scary.
There was almost no end in sight to COVID-19,
so at that time anyone who is looking for work
was probably pretty likely to take
whatever job they could find at whatever
pay rate they could find.
This year, with the vaccine rollouts
being largely successful, job seekers
are aware that the labor market and the economy
are coming back.
There's a lot of opportunity out there.
So they can be a bit more choosy about the job
that they take, especially if they're already
on the sidelines of the labor force for one
or the other reasons like child care,
caution over the pandemic, or the benefits.
Also factored into that for reason three
is that leisure time is just much more valuable this year.
Again, if you think back to 2020,
people couldn't travel, they couldn't visit family,
they couldn't take vacations.
This year that's something that people
are much more able to do.
So for those folks, again, who are already
on the sidelines of the labor force for another reason,
this gives them all the more reason
to take advantage of that enhanced value leisure time,
and wait until they find the right job that
is the right fit for them.
And if we want to think about when we might be getting
some relief from some of these factors,
I should say, of course, that this is not
an official forecast, but it looks
like the largest of these factors
might start to ease by September and October.
As vaccinations rise and case numbers continue to decline,
concerns about workplace health should fade out
as we move through the summer.
Hopefully most schools and daycare
should fully reopen in the fall.
So we should see more children going
back to school full time, which will free up plenty of adults
to rejoin the labor force.
And whether a state is ending the program early,
or staying until September, those enhanced federal
unemployment benefits will end in September,
and we may get some relief there as well.
That's all for now.
As always you can keep up with our research on hiringlab.org.
Again, that's a free resource of information
that's available for anyone who's interested in labor
market insights.
Thank you for your time and your attention.
Until next time, take care.