The jobs recovery in work-from-home cities is fizzling out: Morning Brief

Friday, June 26, 2020

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Working from home is great if you already have a job.

In recessions, lots of bad things happen to the labor market.

Unemployment rises sharply.

Wage gains level off.

And the number of open jobs plummets.

All of which leads to dimmer prospects for those both employed and unemployed.

After a sluggish recovery for the labor market during the early part of the 2010s, data showing the number of workers quitting jobs on the rise, the number of job openings at record highs, and wages rising at the fastest rate in almost a decade were all signs that dynamism had returned to the labor market.

And while we’re still in the early stages of appreciating just how disruptive the current shock is to the labor market, data from Indeed suggests the biggest trend in workforce management is a negative for the overall health of a region’s labor market. And that trend, of course, is working from home.

“This crisis has hit different places unevenly,” writes Jed Kolko, chief economist at the Indeed Hiring Lab, in a post published Thursday.

“In some metros, job postings plummeted as much as 60%. Even seven weeks into a modest rebound, job postings in many large metros remain 40% below last year’s trend…Most surprisingly, metros like Seattle, San Francisco, and New York, where more people can do their jobs from home, have seen some of the biggest drops in job postings.” (Emphasis added.)

Job postings in metro areas where working from home is more likely have rebounded slower than other areas of the country, suggesting businesses and services related to these office jobs will be under pressure until companies feel comfortable bringing workers back into the office. (Source: Indeed)

Kolko notes that, as expected, the biggest decline in job postings has been from the hospitality & tourism sector as well as the arts and child care.

But the decline in these hardest-hit sectors is larger in cities where a bigger share of the population can work from home.

Cities like New York, San Francisco, Seattle, and Boston that are more focused in the tech and finance sectors which have transitioned to working from home are seeing job postings for these seemingly unrelated sectors rise slower than in cities where less of the workforce can work remotely. But of course all parts of a city’s labor market are connected. And when a sizable number remain hunkered down in their homes or apartments, everything tangential to that typical activity slows down, too.

Since May 1, for instance, job postings in Seattle and San Francisco have declined while openings in New York are flat. In Miami and Denver, in contrast, are up 11% and 7%, respectively, during that period.

“Retail and personal-services sectors have suffered more in places where a larger share of local customers have been able to work from home,” Kolko writes. “This is consistent with recent evidence that richer people’s spending has dropped more, hurting businesses more in richer neighborhoods than in poorer neighborhoods.”

Kolko adds that, “inequality in tech hubs, finance centers, and other work-from-home metros — which was already high to begin with — may be worsening during this pandemic…in these metros, opportunities may be drying up more for people who were already struggling.”

And so while on Thursday we noted some politicians had echoed Fed Chair Jerome Powell’s sentiment when it comes to the virus determining the path of the economic recovery, in Kolko’s comments we see another key part of Powell’s crisis message to the public and to lawmakers — this crisis has hit hardest those least able to weather these effects.

In metro areas where working from home is less prevalent, retail job postings have almost returned to levels seen before the pandemic. The labor market is lagging is areas where working from home is more popular. (Source: Indeed)

Economist Claudia Sahm highlighted on Thursday that the lowest quartile of earners were made whole by stimulus from the CARES Act and have increased their spending during the early days of this crisis. A sign that sending money to consumers and struggling workers can help keep this consumer-driven economy afloat.

As we argued earlier this week, if the spread of the virus continues to accelerate it will hamper the recovery regardless of what rules are put in place by lawmakers.

If consumers do not feel safe leaving their homes they will stay inside.

Indeed’s data shows clearly how opportunities in the labor market remain elusive for so many, and may perhaps even be dwindling the longer this recession drags on and the longer the virus continues its uncontrolled spread.

And so it is imperative Congress not short-circuit this recovery by thinking this first round of stimulus will be enough to support the economy. Because we’re only just beginning to appreciate how much economic damage has been wrought by the virus.

By Myles Udland, reporter and co-anchor of The Final Round. Follow him at @MylesUdland

What to watch today


  • 8:30 a.m. ET: Personal Income, May (-6.0% expected, +10.5% in April)

  • 8:30 a.m. ET: Personal Spending, May (+8.8% expected, -13.6% in April)

  • 10 a.m. ET: University of Michigan Sentiment, June final (79.0 expected, 78.9 prior)


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