What Does the Summer Hold for the Labor Market?

Labor markets around the world continue to shift as economies find their footings and employers evaluate the size of their workforces. LinkedIn Chief Economist Karin Kimbrough joins the #GetHired podcast once again to report on the latest trends, including why most U.S. states still have tight labor markets and why job seekers in the UK are better off than first thought. Kimbrough also tells us what to take away from all of this data.

Listen to the episode above or on Apple Podcasts by clicking here. You can also read a transcript of the conversation below.

TRANSCRIPT: What Does the Summer Hold for the Labor Market?

Andrew Seaman: So many things are fluctuating around the world, including hiring. So what do you need to know as you navigate your job search or the next step in your career? Well, we're talking all about it on today's bonus episode of the Get Hired podcast. From LinkedIn News, this is Get Hired, a podcast for the ups and downs in the ever-changing landscape of our professional lives. I'm Andrew Seaman, LinkedIn's senior managing editor for jobs and career development, bringing you conversations with experts who, like me, want to see you succeed at work, at home, and everywhere in between.

It's one of my favorite times of the month, a conversation with LinkedIn's incredible chief economist, Karin Kimbrough. We recently talked about what's going on with hiring around the world, including what you need to know about remote work and more.

Well, thank you so much, Karin, for joining us once again.

Karin Kimbrough: My pleasure. I'm happy to be here, Andrew.

Andrew: Let's jump right to the hiring numbers. I know we've talked the last few times about hiring actually being in pretty good shape around the globe, has anything changed?

Karin: Yeah, the state of the labor market is definitely still a story of slowing hiring overall, and this is on a global range. For the US, you'll remember that we're still seeing hiring slowing at about 30% year over year, so employers are pulling back a little bit on the pace of offering those jobs. But while those declines seem big, I do think we're starting to see a little bit of easing up. We won't continue to slow down as much and as quickly going forward. We may be hitting a plateau in the US.

Andrew: So can you tell us why maybe there's some good news from the UK?

Karin: Yeah. I think, starting with the big picture, we are no longer expecting the UK to go into a recession. We might just get very slow growth or maybe even a little bit of positive growth, which would be in this environment, good news. Data revisions are coming in a little bit better. We're also seeing that hiring is down 24% year-on-year, but when you compare that to the US number of closer to 30%, that's pretty good. So all in all, a little bit slower hiring, not expecting a significant uptick in the unemployment rate, and seeing some increase in slack in the UK makes for a relatively brighter picture.

Andrew: That's great. So basically it's not as bad as we thought it might be in the UK.

Karin: It's not as bad as what we thought it might be, and in some cases it's better than other parts of Europe.

Andrew: That's great. Obviously, we talk about the UK separately because they're not really part of the Eurozone anymore, right?

Karin: That's right. And that's a different story, they're slowing by a lot. We're seeing like 50%, 60% slowdowns in hiring there now, which is interesting because basically what this is telling me is that the US had their slowing first, and now we're seeing it start to affect Germany and the Netherlands and France. There's still bright spots. When you look across the European continent, you see that Italy isn't slowing by as much, Spain has traditionally also held up better. So some parts of southern Europe are interestingly a little bit more resilient still, but Germany, France, 50%, 60% slowdown in hiring.

I wanted to just maybe, Andrew, if I could, unpick that a little bit. There's always these cyclical factors, meaning the business cycle, the economy, and we see hiring react to that. And then there are the structural factors. There's the things like demographics, how old is the workforce? And then aging workforce means you have fewer workers. If you have immigration barriers, you may have fewer workers. Or people may be reluctant to move, because even though they can move from Spain to the Netherlands, they may not want to because they don't speak the language.

So you have these barriers that create almost structural headwinds, and I wanted to mention those because in some cases when you read about the labor markets in Europe, what you're reading about is actually labor shortages. In certain crafts and skills, there's actually still shortages of workers, and employers are still having a tough time finding as much support for the labor market as they need.

Andrew: Yeah, and I know that there's always those stories that are really interesting because some countries will basically bar immigrants from certain countries. However, there will be exceptions made if you're maybe a certain type of engineer or you're a certain type of skilled tradesman, right?

Karin: Correct. If you are, for example, a skilled tradesperson, that's one of the areas, if you're a joiner, an electrical engineer, if you are a nurse, these are often occupations that are in short supply, they don't have enough folks, and they're willing to consider bringing you in for.

Andrew: We'll be right back with Karin Kimbrough.

Andrew: And we're back with LinkedIn's chief economist, Karin Kimbrough. Turning our focus back to the United States, I know that in the latest edition of your team's newsletter, State of the Labor Market, you took a look at the labor markets in different states, and we found that actually in the vast majority of states, 41, it's actually a tight labor market, right?

Karin: Let me explain how we did that. We looked at labor market tightness, and just to remind you, the way we think about tightness is how many job openings are there and how many applicants? The ratio of those two tell us how tight it is. So when there's a lot of job openings and very few applicants, like a couple years back, that would be a very tight market. And the inverse is a loose market. When you have not that many openings and a lot of applicants competing, then that's a looser, slacker market.

So we're seeing a lot of tightness still in 41 states across the US, and this tightness we're measuring relative to, say, 2019, so even pre-pandemic. The point of saying that is that, in fact, there's a lot of places where there's still a lot of opportunity relative to the number of job seekers. Some of the tightest states, if you will, are Louisiana, Michigan, Alaska, and these are places that have an abundance of opportunities relative to applicants.

Andrew: Why do you think that there would be tightness in some states but not others? Why would it differ by geography?

Karin: I really think it's not so much the place, it's the concentration of industries that are in that place. So if you think about, let's say, let's take Alaska or Louisiana, those are places that have big oil and gas and energy sectors, and that is particularly a sector that's relatively tight, for example. Meaning that there's still a lot of jobs open relative to the number of applicants. So I think it's an industry story more than a state story.

We can see that when we look across our data, that there are, for example, industries that are still quite tight relative to pre-pandemic norm. And then others that are actually quite loose, meaning that people are having to apply to five, ten jobs before they get the one that they want, if they're looking, for example, in the sector of government, right? So that's Washington DC, that's a state that is not as tight, but has a lot of government jobs, and that government sector is one where we know that people are having to apply to more roles to secure one.

Andrew: Definitely. And I know that there's always really interesting work being done when it comes to the idea of maybe places that are too reliant on certain industries that are affected by downturns. I know that, I think, Las Vegas, because they're so dependent on tourism, they actually were trying to increase the amount of healthcare jobs to be more resilient to a recession, right?

Karin: Yeah, and it makes a lot of sense. You want to have these counter cyclical sectors, if you will, or at least you want to have a balance between, say, service sector jobs, things like entertainment, or think Nevada and Las Vegas, relative to something like healthcare and hospital roles, which are going to be perennial because everyone always needs at least a little bit of healthcare. So yeah, it's nice to have that balance, it gives you the most support through the shocks and the normal business cycle.

But there's actually one other thing that I wanted to add here, Andrew, which is how people are actually digesting all this. I think people are starting to realize that employers are slowly regaining a little bit of the upper hand. They have a little bit more opportunity to pick exactly the type of skill that they want, exactly the type of worker, they can set a few more terms around the location, hybrid versus remote. So we're seeing that rebalancing labor market continue to play out.

Andrew: Yeah. Actually, that leads me into my next question, which is we're seeing, among Gen Z applicants, they're applying to certain types of jobs when it comes to remote versus hybrid. What's going on there?

Karin: Yeah. So for a while, we've noticed that across all generations, Gen Z, the youngest generation, was the least interested in remote work. And it made a lot of sense to me, because at some point you're probably excited to get out of your apartment, that possibly you share, you're excited to get in there, get some coaching, get some mentoring, have some social life at work, and so they were the least likely to apply to remote work out of all the other generations.

What's interesting now is we're also tracking hybrid work, and we're seeing that the Gen Z population is the most likely to apply to hybrid. I mean, they're very interested in having maybe a day or two at home, but they really like being in the office. So they like the flexibility but want to be in the office, and so they are more likely to apply to hybrid relative to other generations, less likely to apply to remote. It makes perfect sense to me when you think through the story about what Gen Z gets out of being with other folks, especially other generations with more experience, makes a lot of sense that they would want to be in the office a little bit more.

Andrew: Yeah, so basically, Gen Z, they want a little bit more time in the office with some flexibility, whereas maybe older workers, millennials, Gen X, boomers, they're saying, "Eh, let me work from home", right?

Karin: Exactly. Particularly that middle generation that wants to have a little time with their kids, because their kids are little and have lots of needs, that older millennial, younger Gen X, they're the least likely to be looking to come back to the office. But older workers who are free of all those cares, and the younger workers who are just getting started, much more motivated to come back in.

I would say, just comparing full-time onsite work relative to hybrid work, relative to remote, we're seeing this continual rise in the popularity of hybrid. It seems to be where things are coalescing right now. I mean, who knows in three years where we'll end up, but right now it seems to be like hybrid is where the mass of people are coalescing.

Andrew: Really interesting. Then I think the big thing to probably hit home with is that even though hiring is slowing, hiring is still happening, it's just down from where we were a year ago, right?

Karin: Right. The labor market is rebalancing a little bit. It is definitely slowing, it's taken some knocks, and that's not just the US that's globally, because of the global growth slowdown, and that's all driven by employers who are a little bit cautious. They're thinking, "Do I want to continue to expand or maybe I just hold here and see how things play out for six months?" So you're seeing that caution among employers, and that's being expressed in some slower hiring.

But the trick is to remember that we're slowing the hiring from a really frenzied pace that we saw one or two years ago. So all in all, we're not that bad off. It's still a pretty good labor market. You've got record low unemployment across a number of major markets, not just the US, but globally, and you've got a lot of people that are still reengaged in the workforce, so all in all, it's really not a bad time to be working.

Andrew: That's great. Even with the news of layoffs, it seems that people are still finding jobs pretty quickly.

Karin: We're seeing that. I mean, certain sectors, the layoffs have been really, really notable, gotten lots of headlines in the tech and media sector, but what we're finding is that people are actually getting redeployed into other industries. So you may be having tech skills or media skills, and you may move from a large company to a small one within your industry, or you might move all the way out of your industry and find that there are other industries like finance, professional services, even think about manufacturing that are looking to pick up tech workers that they couldn't, in prior rounds, have been able to afford or attract, and now they're able to, so they're scooping them up.

We'll see what happens as we go through this year, where I think we're going to get some more slowing, unfortunately, but I'm hoping that the layoffs remain more episodic and don't overtake us completely.

Andrew: Yeah, let's hope for that.

Karin: Let's hope for that.

Andrew: We're ending on a good note that people are finding jobs. Thank you so much, Karin.

Karin: Thanks, Andrew.

Andrew: That was LinkedIn's chief economist, Karin Kimbrough. Remember, it's up to you to put her advice into practice. Still, you always have a community backing you up and cheering you on. Connect with me and the Get Hired community on LinkedIn to continue this conversation.

Also, if you liked this episode, please leave us a rating on Apple Podcasts. It helps people like you find the show. And don't forget to click that follow, subscribe, or whatever other button you find to get our podcast delivered to you every Wednesday, because we'll be continuing these conversations on the next episode, right here, wherever you like to listen.

Get Hired is a production of LinkedIn News. This episode was produced by Alexis Ramdaou, Rafa Farihah is our associate producer, Assaf Gidron engineered our show, Joe DiGiorgi mixed our show, Dave Pond is head of news production, Enrique Montalvo is our executive producer, Courtney Coupe is head of original programming at LinkedIn, Dan Roth is the editor-in-chief of LinkedIn, and I'm Andrew Seaman. Until next time, stay well and best of luck.