When job postings fail to get back on track despite mega stimulus packages from governments, economic recovery for both India and America in the short term won’t be easy and breezy.
Coronavirus pandemic has thrown the world economy into doldrums, plundering through the job market. Be it India or the United States of America, the two countries with the highest number of coronavirus cases and deaths across world have similar patterns of economic downturn and subsequently, an underwhelming job posting scene.
“Both India and the US job posting markets are showing similar patterns during the Covid induced economic downturn.”Gurinderpal Singh, Founder and CEO, TMSS Talent21
According to US Bureau of Labor Statistics, unemployment rate slipped to 8.4% in August. Only a handful of people are returning to jobs, but recovery is extremely slow. There is a sharp dip in job postings in the US and the road to recovery seems full of obstacles. If we cast a glance at trends of job postings in different segments of market in the US, many patterns come to the fore.
New Job Posting patterns and trends in the US market
Some of the Covid hiring patterns are opposite to the general trends, while some portray the grim situation aptly. One of my first observations is that firms have cut back on postings for high-skill jobs more than the low-skill jobs. In a scenario like this, small firms have nearly stopped their new hiring projects. It has also been noticed that new-hiring cuts and worker down-skilling are most pronounced in localities where employment is concentrated in the hands of a few companies, in low-income areas, and in areas with greater income inequality.
Industries where workers are more unionized, and non-tradable sectors are also not averse to job cuts. In fact, job cuts are deeper in those industries. The labor market has witnessed the least number of job postings, having been hit severely by Covid lockdown norms. A similar case is also true for the non-tradable sector, where job cuts are in abundance, because restrictions on in-person economic activity and social distancing have affected finances.
The other significant trend that has emerged in the market is countries with maximum number of COVID-19 cases are witnessing companies cutting weekly job postings by 10 percent of the 2017–2019 average. Small companies are finding it most difficult to cope up with economic situation. Compared to larger companies, weekly job postings in small firms have decreased by a striking 59 percent of the 2017–2019 average level.
Emerging Covid Job Posting Patterns:
- Firms have cut back on high-skill job postings more than the low-skill jobs.
- Small firms have nearly stopped any new hiring.
- Hiring cuts and down-skilling are most pronounced in areas where employment market is concentrated in the hands of a few companies.
- Unionized industries and non-tradable sectors have also not been able to evade job cuts.
- Weekly job postings in countries hit worst by the pandemic is down by 10 percent of the 2017–2019 average.
The future of job posters and applicants
Companies all across US are facing severe liquidity crunch. As a result, they have shown preference for part-time positions in comparison to full-time onboardings. Since cash-strapped companies are forced to run their operations with least resources, they are hiring more into positions that are core to their operations. Even if the economy recovers in next few months, these trends can continue before companies gain full confidence and start rehiring at their usual speed.
Watch: Job losses in America amid Covid
Since access to finance modulates corporate hiring, credit-constrained firms in America are limiting their job postings the most. It is noted that companies without bank credit lines are cutting their weekly jobs by 13% of the 2017-19 average, compared to firms with at least one credit line. Companies are also cutting jobs more in non-competitive markets than the competitive ones. It is because competitive labor markets always face risk of being unable to rehire workers when the economic situation improves. Sooner or later, the derailed economy will come back on track, so competitive labor markets are keeping themselves prepared.
“Since access to finance modulates corporate hiring, credit-constrained firms are limiting their job postings the most.”Gurinderpal Singh, Founder and CEO, TMSS Talent21
Economic aid policies such as Paycheck Protection Program (PPP) and Coronavirus Aid, Relief and Economic Security Act are designed to help companies in a way that they retain their employees, even if not creating new positions. But in a trend that looks contrast to the general rule, PPP recipient firms, after receiving coronavirus aid, have cut their job postings more than other firms in America.
Once the crisis subsides and the economy returns to a bullish outlook, policymakers will still not find it easy to create jobs. There is a possibility that economic recovery may be hindered because hiring cuts have been bad in concentrated local labor markets, among high-skill jobs, and across smaller firms with limited access to capital. To fight this problem, additional stimulus packages may be required targeting firms who hire for high-skill positions in the US rural and ex-urban areas.