- Sectors with previously robust hiring plans are leading the decline in job postings on Indeed this year, a sign demand for workers could remain solid even as hiring appetites fade.
- The US labor market remains hot with strong demand and relatively low levels of joblessness, leading to strong nominal wage gains for workers.
- Job postings on Indeed were 48.8% above their pre-pandemic baseline as of October 21, signaling vigorous hiring intentions. New job postings, those that have been on Indeed for seven days or less, also reflect a healthy appetite for new hires, coming in at 55% above their Feb 1, 2020 level.
- Strong wage growth has been driven by the high level of competition for hires, although the gains for many have been negated by inflation.
- Workers are still quitting their jobs at rates above those seen before the pandemic, but layoffs remain near two-decade lows.
Spotlight: The pullback in job postings is less concerning once you know where it’s concentrated
After a ravenous 2021, employers’ hiring appetites have waned this year. This trend is apparent in a variety of data, including the dramatic decline of 1.1 million job openings in the August 2022 Job Openings and Labor Turnover Survey data. Job postings on Indeed are also declining, but their reduction has been more gradual. While both measures are diminishing, they remain elevated compared to pre-pandemic levels. Indeed data shows the starkest declines in job postings are in sectors that led the way during the pandemic.
Job postings on Indeed have declined by about 9% from December 31, 2021, through October 21 of this year, but the reduction has been more severe in certain sectors. Surprising no one who has read the news this year, Software Development job postings have dropped quite a bit over the course of 2022 as tech companies rein in hiring plans. Other high-wage sectors friendly to remote work, such as Marketing and Mathematics, the latter of which includes many data science jobs, have pulled back sharply as well.
Several sectors related to the production (Production & Manufacturing), transportation, and storage (Loading & Stocking) of goods have also experienced notable downturns in postings.
These sectors all saw considerable growth in job postings on Indeed over the course of the pandemic through the end of last year.
While each sector is unique, the general trend suggests that a large portion of the decline in job postings is coming from sectors where employer demand has been satiated or as companies rethink expansion plans. A job postings pullback primarily driven by these reasons would be cause for celebration. A cooldown centered in the pandemic’s hottest hiring sectors is more likely to result in a normalization of the labor market than a rapid withdrawal which induces a downturn. The outlook for the US labor market is highly uncertain; in charting its future course, tracking the sources of waning hiring intentions is a valuable indicator to keep an eye on.
Labor Market Overview
The US labor market remains hot. As the US economy bounces back from the initial COVID-19 shock, demand for labor has grown much more quickly than supply. Employment has rebounded, wages are growing quickly, and joblessness is approaching pre-pandemic levels. The labor market is, however, showing some signs of normalizing, particularly as demand for workers cools. The Federal Reserve’s aggressive tightening of monetary policy risks turning this normalization into a sustained downturn.
Employer demand for workers remains strong. As of October 21, 2022, job postings on Indeed were 48.8% above their pre-pandemic baseline. New job postings, defined as those on Indeed for seven days or less, are also well above their pre-pandemic baseline, up 55%. While job posting growth has slowed, the leveling out has been relatively moderate. The recent decline in postings has been led by job sectors in which remote work is more frequently advertised, such as Software Development and Marketing.
Strong wage growth, but inflation is eating away gains
Strong demand for workers across multiple sectors has pushed wage growth up a range of 5% to 6% on an annual basis, a faster growth rate than at any point over the past 20 years. This is what economists call nominal wage growth — that is, pay gains before taking inflation into account. However, rising prices are eating away at those gains and causing many employees to lose ground when it comes to actual purchasing power.
One of the biggest questions for the US economy is the future path of nominal wage growth. Many economists had expected that wage growth was on the precipice of declining earlier this year. The most recent data from high-quality measures of wage growth, such as the Employment Cost Index, show continued high levels of competition for hires. However, there are some indications wages may have lost some momentum. but even if wages are slowing down, they have a ways to go before they return to their slower pace circa 2019.
People are returning to work
Labor supply has not grown as swiftly as demand, but people are returning to work. The growth in the labor force participation rate and the employment-to-population ratio has declined in 2022, but significant progress has been made. Consider the employment-to-population ratio for workers ages 25 to 54, a good measure of the health of the labor market. As of September, this ratio stands only 0.3 percentage points below its February 2020 level, a level consistent with a healthy labor market. This is in addition to total payroll jobs which have already returned to pre-pandemic levels.
The employment rate for all workers is further from its pre-pandemic rate, due in large part to a lagging recovery for older workers. Many people continue to ‘unretire,’ but the recent stagnation in this trend and rise in workers entering retirement suggests we shouldn’t expect older Americans to be a significant source of employment moving forward.
Quitting is still elevated, but fading as layoffs remain low
While cooling somewhat in recent months, the job quitting rate is still 16% above the pre-pandemic norm as employed workers continue to find are also finding new work. Notably, quitting has fallen in sectors that saw elevated quitting in 2021, namely Leisure and Hospitality and Retail Trade. Quits rates in sectors like Construction and Manufacturing, on the other hand, have held steady at elevated rates.
Workers are leaving their jobs voluntarily at high rates, but employers seem loath to let go of their employees. Despite headlines about increased layoffs and a headfake from weekly unemployment insurance claims data, key measures of layoffs continue to show suppressed levels of involuntary job loss.
The US labor market has plenty of opportunities for workers while presenting some challenges to employers. However, the current situation undoubtedly will change. We will continue to monitor these trends and track others as the labor market evolves.
Data on seasonally adjusted Indeed job postings are the percentage change in seasonally adjusted job postings since February 1, 2020, using a seven-day trailing average. February 1, 2020, is our pre-pandemic baseline. We seasonally adjust each series based on historical patterns in 2017, 2018, and 2019. We adopted this methodology in January 2021. Data for several dates in 2021 and 2022 are missing and were interpolated. Non-seasonally adjusted data are calculated in a similar manner except that the data are not adjusted to historical patterns.
The number of job postings on Indeed.com, whether related to paid or unpaid job solicitations, is not indicative of potential revenue or earnings of Indeed, which comprises a significant percentage of the HR Technology segment of its parent company, Recruit Holdings Co., Ltd. Job posting numbers are provided for information purposes only and should not be viewed as an indicator of performance of Indeed or Recruit. Please refer to the Recruit Holdings investor relations website and regulatory filings in Japan for more detailed information on revenue generation by Recruit’s HR Technology segment.