This K shaped recovery is apparent in our data: LinkedIn Economist

Guy Berger, LinkedIn Principal Economist joins the On the Move panel to discuss the LinkedIn workforce report for October.

Video Transcript

ADAM SHAPIRO: But we want to talk about jobs. We got the weekly claims for-- initial claims for unemployment insurance, that on top of what we learned from Challenger, Gray & Christmas, 118.8 thousand layoffs were announced in September. That's up 186% year-over-year. Yes, that is attributable a lot to the pandemic. But what is happening with the pandemic?

We've got the latest report on all of this from LinkedIn, and we invite into the program Guy Berger, he is LinkedIn's Principal Economist, to talk about their latest workforce report. Guy, it's good to have you here. And there was something that jumped out to the team here On the Move that we wanted to start off with you, which was the slowdown in the pace of the recovery and bringing people back to work may have actually hit a COVID ceiling. What does that mean?

GUY BERGER: Thanks, Adam. That's a excellent question. You know, I think that when you look at that first stage of the recovery, whether in our data or in the government data, the first few months we just saw this tremendous growth. I think to be perfectly honest, it was faster than a lot of economists expected.

We've seen our data and, to some extent, the government data as well is, you know, we saw those big gains through our July data, and then all of a sudden since-- in the August data that we had, the September data that we had, hiring hasn't gone anywhere. It's actually down a little bit. And this COVID ceiling is just the fact that a lot of activity that we were used to in the pre-COVID world can't come back yet.

You know, we hear that, for example, indoor dining is a restraint. People are still afraid to go to certain places. Travel is not coming back the whole way. That's really holding back whether we can return to 100%. So maybe we can come back to 90%, but not the whole way there until we really get a better handle on this pandemic.

JULIE HYMAN: And so, Guy, when you look at your numbers that you guys gathered there at LinkedIn, you showed from August to September a pullback in hiring of about 7/10 of one percent. Now, we also got the ADP report this week that showed an increase in new jobs. We'll get the overall jobs report from the government tomorrow. So how do we put all of this data together to get a picture of what's going on in the jobs market right now?

GUY BERGER: Yeah, sure. So I think the biggest underlying theme is there's a slowdown in the pace of improvement. Hiring has improved enough that the sign on that net jobs number we get, whether from ADP or from the BLS, is positive. But you know, earlier in the summer we were adding millions each month. Now, the consensus and the forecasts are going to add less than a million.

That's-- you know, if that's the pace we're going to be increasing it every month, it's going to take a long time to close the gap with all the jobs we lost back in March and April. So to me, it is-- the question is not whether we're slowing, but how much are we slowing? Is this something that's going to-- we're going to be back to normal next year if we're lucky with a vaccine? Or is this something that is much like the last downturn, it's going to take years and years to bring us back to where we were? I hope it's the former.

DAN HOWLEY: Guy, are there any particular areas where there are improvements, where we're not seeing any slowdowns? Are there any sectors of the economy, or is it just kind of all over the place just bad news?

GUY BERGER: So no, I don't think it's bad news everywhere. I'll give you one example. Health care hiring is actually, like, around-- back to where it was before, which is actually a great sign, not entirely surprising, given what we experienced in the economy. Also, I know that a lot of people are talking about how hot housing is right now. Both real estate and construction in our data are not quite back to normal collectively, but they're doing a lot better than the rest of the economy.

So I really do think there are parts of the economy that are doing better. But the fact is that if you look at recreation and travel, it's still doing really poorly. Energy and mining is down by a lot. Even somewhat surprisingly, even though software wasn't hit that hard, hiring in software is a little softer now than the overall economy, which is surprising, given a lot of software companies can work remotely, maybe they're facing weak demand. But I think, again, this is-- this K-shaped recovery everybody's talking about is apparent in our data as well.

MELODY HAHM: And Guy, you mentioned a couple of the industries there that have been hit the hardest. But according to your report, art's actually down 51 and 1/2% year-over-year. I'm curious, just thinking about the structure of LinkedIn and the kind of people who are actually looking for jobs on LinkedIn, is it because it's not including a lot of those creative opportunities? How do you sort of take that into account when you think about agriculture, or arts, or perhaps construction, where hiring may happen elsewhere and not through LinkedIn?

GUY BERGER: That's a great question. I think when we look at our data, there's certainly certain kind of individuals represented more, but we see a lot of liquidity across all industries. So to me, I'm pretty confident that art's weak, and it's not really surprising when you think about it macro. A lot of art spending is some of the most discretionary spending that-- you know, that people choose.

Right now people are strapped for cash. A lot of them don't have a job. Their unemployment insurance benefits are shorter. They're worried what's going to happen to the economy next, even if they currently have a job.

They're spending a lot of essentials. They're worried about paying rent. I think that, to some extent, we're seeing with that extreme weakness, also the recreation and travel is, that's the last item people are thinking of spending money on, it's not surprising those industries are doing so poorly.

ADAM SHAPIRO: Guy, we're going to get the official employment situation report tomorrow from labor department. What is it that you're going to be looking for within that report to show perhaps a trend as to where we're headed?

GUY BERGER: Well, I think that's still the most underrated item in the report is the number of people that are unemployed due to permanent layoffs. Even as we've seen total unemployment come down, the people that are unemployed, the permanent layoffs, have been moving up month after month after month. It's now gone up as much as it did in the first-- more than a year of the Great Recession.

It's at a level comparable to what we had in the 2000 recession. So we have this little mini-recession still building up. We know that claims are still really high, way higher than we would have thought would be the case when the economy's recovery. To me, the more that number keeps going up, the longer and harder of a slog it's going to be to get back to normal.

ADAM SHAPIRO: OK. Guy Berger, it's always good to have you here, LinkedIn's Chief Economist out with the LinkedIn workforce report. And of course, we've got the big labor department report tomorrow. All the best to you and the team at LinkedIn.