Despite Better Unemployment Numbers, Job Sites See 'an Early Tsunami Warning' in Hiring Data
Sep 04 2020
- Although Friday's U.S. jobs data show continued declines in unemployment, many economists, such as from ZipRecruiter and LinkedIn, are concerned at the data they're seeing.
- One of them called the decline in employers' job postings on ZipRecruiter "an early tsunami warning" and a "pull-the-ripcord emergency moment."
- Several factors suggest pessimism from businesses about the near future, including the recent dry-up of government stimulus alongside ongoing operating constraints due to the pandemic.
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Friday's jobs report showed the U.S. unemployment figures continuing their decline to 8.4% in August, from a high of 14.7% in April.
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Despite that welcome news, more recent data from L.A.-based ZipRecruiter contains unsettling signs for the future. After 10 weeks of rising activity from employers, job postings have reverted to a downward trend since mid-August.<span></span>
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"This is an early tsunami warning," ZipRecruiter labor economist Julia Pollak told dot.LA. "It could be the start of exactly the sort of systemic breakdown the government was trying to avoid in the beginning [of the pandemic]."
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<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzYzNjA1MC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYyMTQ2NzMwM30.I3Ofqpb0lhvceXF7OlHGFKaFhdXfaLeUwQe3cs6Gte4/image.png?width=980" id="6f9c2" class="rm-shortcode" data-rm-shortcode-id="aa7034785691585692d8be382f34e24d" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">U.S. data provided by the U.S. Bureau of Labor Statistics. Local data provided by the California Employment Development Department and includes seasonally adjusted final data except for July, for which finalized data was not yet available. No local data was yet available for August.</small>
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Unemployment rates don't tell a full story about where the economy is headed, Pollak said. It's a reminder that she wants people in power to heed.<br>
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"I think Congress should see this as an emergency sign," she said, noting that job postings on ZipRecruiter tend to be an early indicator of job growth – or decline.</p><p>The job picture in California and Los Angeles is similar to that of the country at large, according to ZipRecruiter's data. Los Angeles <a href="https://www.bls.gov/web/metro/laulrgma.htm" target="_blank">has one of the highest rates of unemployment</a> among large metro areas. <br></p><p>LinkedIn, another job board, <a href="https://www.linkedin.com/jobs/blog/linkedin-workforce-report-september-2020-los-angeles-ca?src=re-other&veh=www.wsj.com%7Cre-other&trk=workforce" target="_blank">found hiring was 16.2% lower</a> this August than last year. </p><p>It's not surprising to Jerry Nickelsburg, an economist at the UCLA Anderson School of Management. He worries it will exacerbate inequality in Los Angeles, as industries being hit hardest tend to skew toward lower-income sectors, like logistics and tourism.</p><p>Nickelsburg said the federal unemployment data paints it a murky picture. The regulatory changes in recent months that led to a number of re-openings "mask what's going on underneath" at the economic level, he said. "We have less visibility than we normally have," Nickelsburg added. Assuming a continuation of the start-and-stop pace of opening up and the regulatory response, he foresees a "soft labor market in spite of the strong jobs report," noting that the job growth in today's data is fueled in part by temporary positions associated with the U.S. Census.<br></p><div class="rm-embed embed-media"><div aria-label="" class="flourish-embed flourish-chart" data-src="visualisation/3657274" data-url="https://flo.uri.sh/visualisation/3657274/embed">
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LinkedIn's principal economist Guy Berger also reported this week that hiring observed on LinkedIn (measured by the share of members adding a new employer to their profiles) fell from July to August. "Our takeaway is that this month's data shows that the virus has created a 'ceiling' on just how much the economy can return to normal," he said. "Given how much higher COVID transmission is here in the U.S. vs. aboard, the ceiling might be lower here."<br>
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"My real fear is what will happen in September," Pollak said. "I look at a downturn in job postings as a break-the-glass, pull-the-ripcord emergency moment."</p><p>Pollak said her alarm follows weeks of optimism. More companies had been signing up for ZipRecruiter's services. Every single industry and every single state had seen job postings increase in July and August, she said. But now, those trends have stopped, and a number of factors appear to be turning that summer of hope into a fall reckoning:</p><p style="margin-left: 20px;">
<strong>Ongoing Uncertainty: </strong>Without clarity on the pandemic and the government's policy to stop it, businesses remain inclined to do what they usually do in the face of uncertainty: sit and wait. Berger, the LinkedIn economist, said this is due at least in part to a "less centralized U.S. response" to the pandemic and that the uncertainty is holding businesses back from long-term investing and hiring.
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<strong>Reduced Economic Activity:</strong> Anticipated closures of spectator sports, performing arts, colleges and ski resorts will hurt not just the businesses in those industries, but also adjacent ones like bars and restaurants. This expected dampening follows a quiet summer, which is normally the banner season for many such businesses. "Summer profit margins weren't large enough to sustain many businesses," Pollak said. Facing a future with fewer customers, "many will have to close in the fall."
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<strong>Government Stimulus Is Drying Up:</strong> The $350 billion payment protection program loans designed to help employers pay their workers during the shutdowns ceased on August 8th. $600 weekly unemployment checks expired in July, causing a $60 billion reduction in unemployment payouts in August. "That is almost certainly reducing consumer spending right now," Pollak said, <a href="https://www.ziprecruiter.com/blog/how-unemployment-benefits-affect-job-search-during-coronavirus/" target="_blank">pointing to a survey ZipRecruiter conducted</a> this summer that found over 40% of respondents would be unable to pay their rent if unemployment payments shrunk. Congressional talks on renewing a stimulus program <a href="https://www.wsj.com/articles/mnuchin-urges-congress-to-passmore-stimulus-funding-11598988384" target="_blank">have been gridlocked</a>.
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<strong>Schools Aren't Opening: </strong>Berger called virtual classes and delayed school re-openings "a severe challenge for households where all parents work." That's behind his topline takeaway that, in addition to a vaccine, his data point to a "need to get money back in the hands of Americans who need it and a childcare solution for the interim."
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<strong>Consumer Confidence Is Down:</strong> Conference Board, a think tank, <a href="https://conference-board.org/data/consumerconfidence.cfm" target="_blank">released data this week</a> that consumer confidence has fallen two months in a row. "If confidence goes down, we can expect spending to go down," Pollak said – both among those who have no choice and those on the fence about, say, buying a house or a new car.
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Pollak added that since neither the stock market nor housing values have crashed, her data point to widespread "concern about COVID, the future course of policy, and the ability for businesses to reopen and be sustainable given reduced sales and rules limiting their capacity."
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Over the coming months she and others will be closely watching for the speed at which jobs are able to return to their pre-COVID baseline, and other indicators of a dynamic labor market. These include participation rates among prime-age workers and women, wage growth and long-term unemployment. But as long as the pandemic lingers, those indicators may be tepid.
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"We can't fully bounce back until there is more certainty around the virus," Berger said.
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In Crisis, L.A.'s New Civic Tech Program Pivots from Providing Internships to Basic Needs
Apr 22 2020
The vision of LA-Tech.org as it prepared to launch this month was of a thriving tech ecosystem coordinating its resources to give back to the L.A. community.
Built by a group of L.A. CEOs and founders from the likes of Cornerstone, Blackline and Factual, the coalition originally sought to bridge the growing divide between wealth and want in Los Angeles through programming to provide low-income youth with internship opportunities at tech companies like Snap and ZipRecruiter. The idea was both to give back and to support the L.A. tech world by strengthening its local labor pool and helping employees feel connected to their community.
<p>But as the coronavirus plagued one corner of the world after another, holding live events became impossible and the suffering of low-income Angelenos took on new urgency. Taking a page out of the startup playbook, LA-Tech.org has pivoted. It is now launching with a <a href="https://la-tech.org/covid-19-response" target="_blank">fundraising program</a> to raise $415,000 for two local nonprofits, <a href="https://homeboyindustries.org" target="_blank">Homeboy Industries</a> and <a href="https://www.ifoster.org" target="_blank">iFoster</a>. In doing so, LA-Tech.org is addressing two areas of severe collateral damage caused by the pandemic: food security and the digital divide.</p><h2>An Ugly Crisis, Acute Needs</h2><p>"The economic contraction that's happening in L.A. right now is worse than it was in the last recession," said LA-Tech.org Executive Director Sean Arian, who in 2008 was Director of Economic Development for L.A. Mayor Antonio Villaraigosa. "It is faster than it was in the last recession, and it is hitting the lowest-income people first."</p><p>The crisis, Arian told dot.LA, is thus exacerbating the economic inequality that spurred the formation of LA-Tech.org in the first place. Since 1990, low-wage service jobs have grown in L.A. by 17%, while high-wage, mostly high-knowledge jobs have grown by 7%. But middle-wage jobs have plummeted. </p><p>Whereas the 2008 recession first struck the well-off – mostly via finance and real estate – the coronavirus fallout is most acute among the economically vulnerable. Worse, the nonprofit community that seeks to serve such people has seen its funding shrivel. </p><p>"The need for services for low-income people has gone way up at the same time that revenues – basically donations – to nonprofits have started to dry up," Arian said.</p><p>After several conversations across government, nonprofits, and the private sector, LA-Tech.org had its plan of action.</p><h2>Combating Food Security with the Homies</h2><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<a href="https://upload.wikimedia.org/wikipedia/commons/2/28/Homeboy_Grocery_Salsas.jpg" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGd2lraXBlZGlhJTJGY29tbW9ucyUyRjIlMkYyOCUyRkhvbWVib3lfR3JvY2VyeV9TYWxzYXMuanBnJmhvPWh0dHBzJTNBJTJGJTJGdXBsb2FkLndpa2ltZWRpYS5vcmcmcz0zNjcmaD01YTVlZjQ2Y2Q1NzQ3NDBhNGI0YjQwOGViYTE5ODM0MWI3ZmFkYTUwYTUwMzAxZjdjNjkxMzI0MTI0OWE4M2FlJnNpemU9OTgweCZjPTI3NTg0Njg2OTQiLCJleHBpcmVzX2F0IjoxNjQ1NDc2NTI2fQ.9S3zTdhetOCBM5GE3TYg71LG2Frqwcbm7pL8Pimd9bc/img.jpg" id="4decf" class="rm-shortcode" data-rm-shortcode-id="efd3c187b259c04c59de244d85ac7f6b" /></a>
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</p><p>Homeboy Industries helps formerly incarcerated gang members heal from conflict and trauma and re-enter society. Included in its suite of therapeutic programs is a chain of social enterprises – the Homeboy café, bakery and catering service – where a subset of members work, usually before moving on to jobs elsewhere. About 90% of participants have never held a job for more than a month, Homeboy chief executive Tom Vozzo told dot.LA.<br/></p><p>With the coronavirus shuttering its programming and slashing business traffic, Homeboy can't serve or employ as many people. In response, it, too, has pivoted, to making fresh, prepackaged meals. And it will now be getting a hand from LA-Tech.org.</p><p>"If we can get to 1,000 meals a day then in our café we can get to employing the same amount of people we had before we closed our doors," Vozzo said. Currently they're making less than 500 meals per day. </p><p>Donations will not just help Homeboy keep its program running, but will also send prepackaged meals to the needy, including people experiencing homelessness, foster youth, and low-income seniors. </p><p>"There are a lot of tech companies that have these huge catering budgets they aren't using anymore," Arian noted. He hopes these funds can be redeployed via LA-Tech.org to Homeboy. </p><p>Having adjusted its operations to accommodate social distancing, Homeboy is ready to move quickly. "Once the L.A. tech community donates money to us, in 48 hours we're turning that around into meals." </p><h2>Filling the Digital Divide with iFoster</h2><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzE1MTY4OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMTM2NTk4MX0.TdVfWAV6fd9bR1AwjK-9yR4dNWxT0uqlAl6ONGjae7o/image.jpg?width=980" id="0f4ea" class="rm-shortcode" data-rm-shortcode-id="9a7b2f3ee871ba7bc43f08db3d9770c5" data-rm-shortcode-name="rebelmouse-image" />
</p><p>"What happens when someone who's a low-income student has to do all their learning online and doesn't have a laptop?" noted Arian.<br/></p><p>"Mass panic," said Serita Cox, co-founder and chief executive of iFoster, an L.A.-based, national nonprofit that aims to provide resources to foster youth. </p><p>Normally, Cox told dot.LA, items like laptops and smartphones are a key priority for iFoster, because technology isn't included in typical child welfare benefits. A joint study with USC, Cox noted, found that only 21% of late-high school and early-college age foster youth in L.A. county had access to the internet and a computing device at home; that compares to 79% of non-foster, low-income students aged 13-17, according to a Pew Research report. </p><p>"In child welfare, technology took a backseat to basic needs," Cox said. "But now, technology has come front and center as a basic need."</p><p>The list of resources that foster youth depend on but can no longer access face-to-face include school, family visits, social workers, attorneys and therapists. Requests for gear have ballooned, from a typical 50 per week to over 500. </p><h2>Stepping Up for L.A.</h2><p>LA-Tech.org has a fundraising goal to deliver 1,000 laptops through iFoster.<br/></p><p>"Only 8% of foster youth ever get a college degree," Cox said. "We can't make it worse."</p><p>Arian wants tech companies throughout the community to get involved with the <a href="https://la-tech.org/covid-19-response" target="_blank">Step Up For LA</a> program and "make it their own."</p><p>It's the beginning of what the LA-Tech.org founders hope will be an ongoing collaboration among the tech community in its efforts to give back. </p><p>"We felt," said Adam Miller, Chief Executive of Cornerstone OnDemand and co-chair of the LA-Tech.org Board (also a dot.LA investor), "like we could accomplish this collectively much better than we could individually."</p><p>---</p><p><em>Sam Blake is a reporter at dot.LA, where he primarily focuses on media & entertainment. Find him on Twitter @hisamblake and email him at samblake@dot.LA</em><br/></p>
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As regions nationwide steel themselves for the oncoming peaks of COVID-19 cases, the U.S. economy continues to stumble. But some emerging patterns suggest certain changes once it stabilizes.
For now, JPMorgan economists forecasted this week a 40% annualized decline in U.S. GDP for the second quarter, and a 20% surge in April's unemployment rate, with 25 million jobs lost. The number of people seeking unemployment benefits in the past three weeks totals 16.8 million.
<p>What could be in store once the economy rebounds?</p><p>As a tech-savvy online jobs marketplace, ZipRecruiter has a unique vantage point to monitor and forecast the labor market. Labor economist Julia Pollak spoke with dot.LA about what the latest batch of data signals for the other side of the crisis.</p><h2>Show Me the Data<br></h2><p>"This recession is like no other we've experienced," said Pollak. "People are calling this the Great Cessation." </p><p>Some people "will find that during the recovery the economy will have changed beneath their feet." </p><p>There is no sugarcoating the gloom. According to figures ZipRecruiter provided to dot.LA, average daily job postings across the internet have been declining for six straight weeks; worse, the rate of decline has been accelerating. In all but four of the 27 industries that ZipRecruiter tracks, job postings have plunged between the weeks ending March 8th through April 5th. </p><p>Travel (-51%) and tourism (-31%) have been hit hardest. So have states dependent on these industries, like Hawaii (-25%) and Nevada (-24%). These states and sectors are highly sensitive to nationwide trends, noted Pollak, meaning once things start to rebound, they should see relatively quick recoveries. </p><p>Conversely, some job postings are growing fast. These include jobs* in:</p><ul class="ee-ul"><li>Transportation: Commercial Flatbed Truck Driver postings are +2,614% over the past four weeks; Truck Driver Trainer +634%</li><li>Storage: Warehouse Laborer +83%, Warehouse Sorter +62%</li><li>Finance and Insurance: Claims Adjuster +212%, Financial Sales +93%</li><li>E-commerce: Distribution Associate +232%, Grocery Shopper +17%</li><li>Healthcare and Social Assistance: Intensive Care Nurse +188%, Nursing Assistant +184%</li></ul><div>*<em>Each with more than 1,000 daily active jobs on average each week.</em></div><p class="shortcode-media shortcode-media-rebelmouse-image">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkwMjY2NS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYxNTUzMjEzOH0.iIjMKKfW9xQC6GoiUmgPaDHhFB_jAcMPEJnjZOJmY1o/img.png?width=980" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkwMjY2NS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYxNTUzMjEzOH0.iIjMKKfW9xQC6GoiUmgPaDHhFB_jAcMPEJnjZOJmY1o/img.png?width=980" id="dc4b6" class="rm-shortcode" data-rm-shortcode-id="8302a266437556f90fc06497f61365b9" data-rm-shortcode-name="rebelmouse-image"></a>
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</p><h2>The best predictor of future behavior...</h2><p>As for what these foretell regarding the future economic contours, Pollak suggests also looking at past trends.<br></p><p>"All kinds of slow, gradual transformations that we were seeing in the economy before are now going to happen very quickly," she forecasted. </p><p>This includes the decline of certain industries, like manufacturing and retail. "Stores will go into bankruptcy much sooner than they might have," noted Pollak. </p><p>Other industries are likely to continue their ascent. "The healthcare sector has added 278,000 jobs each year on average over the past 10 years," said Pollak. Expect more growth, especially given pent-up demand for elective procedures (assuming age demographic trends mostly hold). </p><p>Meanwhile, workers and consumers are acclimating to formerly peripheral activities now <a href="https://dot.la/online-grocery-apps-are-thriving-during-the-covid-19-crisis-are-they-here-to-stay-2645673118.html?rebelltitem=2#rebelltitem2" target="_blank">becoming mainstream</a>. <br></p><p>"Some of the growth that's occurring now in e-commerce, distance learning and <a href="https://dot.la/can-telemedicine-stem-the-spread-of-coronavirus-2645650007.html" target="_blank">telemedicine</a> will be permanent," Pollak predicted. </p><p>Throughout the economy, "people are learning new technologies (and) interacting with new goods and services that they hadn't used before. And <a href="https://dot.la/coronavirus-prayer-2645604848.html" target="_blank">some are enjoying the experience</a>." </p><h2>Fitter, Happier, More Productive</h2><p>Firms, too, are adapting to new ways of doing business, which could mean increased productivity in the long run. "Companies have been forced to invest in all kinds of technology that may have been available and would have resulted in huge cost savings, and didn't (invest) because of inertia, but now that they've become familiar (with these technologies) they'll use them to great benefit," noted Pollak. </p><p>Reducing headcount, though often painful (and sometimes <a href="https://dot.la/bird-layoffs-meeting-story-2645612465.html" target="_blank">unceremonious</a>), may also ultimately make companies healthier. </p><p>"People get confused when the stock market goes up despite people losing their jobs," tweeted former Presidential candidate Andrew Yang on Thursday. "The truth is that many companies will be more profitable and efficient with fewer employees."</p><p>As working from home becomes commonplace, companies will be able to reduce land costs; and those unit costs will likely be cheaper. Some studies suggest a distributed workforce may increase productivity. </p><p>Workers on the low-end of the earnings distribution may become more productive, too. </p><p>Pollak has found that the federal aid package, combined with unemployment benefits, has left nearly half of all American workers at least as well paid as they were before the pandemic--albeit temporarily. "This offers an opportunity for many low-wage workers to overcome barriers they had to higher-wage employment in better jobs before," she said. There is no guarantee such workers will seize that opportunity, but many now have the time and financial support to train for skills, certificates and licenses that were previously out of reach. </p><p>The big question is the extent to which the damage done to the labor market overmatches the positive trends--and how long it will take to close that gap. The longer the health crisis lasts, the worse the problem will become so long as net jobs continue to decline.</p><p>In the meantime, actions like those taken by the Fed and Congress will buy the economy time, in hopes of hastening what ZipRecruiter Chief Executive Officer Ian Siegel called the "great American comeback story to come." </p>
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