US labor market comes into balance; spotlight on women in leadership

By Karin Kimbrough , Chief Economist at LinkedIn

A pickup in US price increases to start 2024 caught the attention of many as we continue to look for signs of ongoing deflation and possible rate cuts by the Fed. A consensus is emerging around the first rate cut coming in the summer, and policymakers across the globe will likely be watching closely to follow suit, including the ECB and Bank of England. The US labor market remains a key piece to the puzzle of what the Fed will do, and women’s participation is critical to the performance of the US labor market. So in this month’s newsletter, we take a closer look at the state of the US labor market and spotlight findings specific to women in honor of Women’s History Month.

The resilience of the US labor market continues. As we look across hiring, job openings, and job seeking behavior, the pattern is one of gradual cooling and rebalancing between labor demand and supply.

Professionals across LinkedIn continue to be hired at relatively stable rates, with the US national hiring rate accelerating 1.3% from January to February. On an annual basis the hiring rate is now only about 10% slower than last year this time, and while a 10% decline may sound unimpressive, the deceleration in hiring on an annual basis continues to improve, suggesting that the labor market is gradually stabilizing.

As an industry, Technology, Information, and Media experienced one of the sharpest decelerations in hiring in recent years (as shown above) but is now recovering and showing some improved momentum. For example, the pace of hiring across all industries has slowed 5% compared to last July, but the pace of hiring within the Technology, Information, and Media industry has actually sped up by 8% compared to last July. This industry also now has one of the smallest year-over-year declines compared to February 2023 (-5.4%), third only to Consumer Services (-2.3%) and Construction (-3.0%). The improvements underscore our view that the long period of contraction in tech sector hiring may finally be over. For more details on the latest US hiring trends, please see our March Workforce Report. 

Employers are continuing to hire, albeit with moderation. The number of open jobs posted on our platform, while coming down from its peak in April 2022, is still far above the pre-pandemic level. The gradual reduction in the number of job vacancies is indicative of hirers who haven’t retreated from the labor market, but are far more cautious than a year or two ago. US official layoff data points to a depressed rate of layoffs, which might suggest that throughout the uncertainty of 2023 “will we, won’t we get a recession?,” employers have opted to hold on to their talent in what some called “labor hoarding.” 

That recession uncertainty also spilled over into trends around people moving jobs, in which we saw people change jobs less frequently and generally stayed in their roles. While transitions seem to be reverting to a slightly higher rate of change, the year-on year pace is still negative and below the pre-pandemic pace. 

Overall with fewer roles and more job seekers, the labor market has gradually moved away from extreme imbalance of job abundance and job candidate scarcity to a more balanced supply of jobs to job candidates (if not a surplus of candidates). The soft landing debate may not be resolved yet, but a gradual rebalancing in the labor market as supply picks up and demand softens is helpful. 

A strong labor market is a boon for women’s representation in leadership

With March as Women’s History Month, we’re releasing new findings around how the state of the economy affects women’s hiring into leadership roles and the impact of AI on female representation. For example, we found that when labor markets weaken, fewer women are hired into leadership. This relationship is strong enough that the recent downturn in labor market conditions was enough to rewind nearly 3 years of progress for women in leadership. 

This is not due to a lack of labor supply – in fact, the share of leadership applicants who are women does not decrease with worsening labor markets. Rather, we see that women are more likely to apply for leadership roles during a weakening labor market, especially for roles in female-dominated industries. This suggests that the gender gap we see during a weakening labor market is caused by actions that hirers are, or aren’t, taking. 

In addition to the benefits that female representation within an organization has on its ability to be efficient and effective, we also see that in companies where the baseline share of women is higher, the impact of a weakening labor market on the rate of women being hired into leadership roles is less significant. This suggests that the more women are represented at all levels of the workforce in a certain industry, the more women’s ability to progress in an industry is shielded from the effects of worsening labor markets.

As AI becomes even more prominent in the workplace, we may see this issue exacerbated across all industries. New LinkedIn research finds that in the US more than a third of women work in positions that may be disrupted by Generative AI, compared to a quarter of men. Women are less represented in the tech industry in general, and unlike the overall share of hiring, the share of female hiring in tech fluctuates by more than 5 percentage points year on year – highlighting how women in tech often bear a larger burden during economic downturns. This is particularly startling given the fact that there is less than 1 percentage point difference (0.9) in the share of tech-specific skills between men and women when looking at skills people list on their Linkedin profile as well as skills we infer from their job descriptions. These gender gaps are also not specific to the US. For example, our research found that women were more likely to be working in GAI-disrupted occupations than men in over 95% of 74 countries examined.

By recognizing the interplay between labor market conditions, gender diversity in leadership, and the possible impacts of AI, we can work towards creating environments that empower and elevate the contributions of women in the workforce.

Special thanks to our teammates Kory Kantenga, Ph.D., Matthew Baird, Silvia Lara , Mar Carpanelli, and Danielle Kavanagh-Smith for their research included in this newsletter.