The COVID-19 pandemic has left very few corners of the U.S. economy unscathed, but it has hit high-skill job seekers and small companies particularly hard, according to Cornell-led research that analyzed recent job-vacancy postings.
The paper “Corporate Hiring Under COVID-19: Labor Market Concentration, Downskilling, and Income Inequality,” was released in May as a working paper by National Bureau of Economic Research.
Co-authors are Murillo Campello, the Lewis H. Durland Professor of Management at the Samuel Curtis Johnson Graduate School of Management; Pradeep Muthukrishnan, doctoral student at Johnson; and Gaurav Kankanhalli, assistant professor of finance at the University of Pittsburgh.
The study reveals several dimensions of the impact of the COVID-19 pandemic on the U.S. job market, such as the dynamics of hiring – including a disproportionate reduction in high-skill hiring, known as “downskilling” – and possible challenges to the scale and speed of a recovery.
Hiring represents a form of optimism about a company’s future, the authors said, and scaling back hiring also is a measure of a firm’s expectations. To track hiring decisions during the early stages of the pandemic, the researchers used data on firms’ job postings from LinkUp, a leading labor market research firm.
LinkUp data includes job postings sourced from company hiring boards and websites of more 50,000 employers, encompassing public and private firms across all industries and regions of the U.S.
"We find that firms have cut back on postings for high-skill jobs more than for low-skill jobs, with small firms nearly halting their new hiring altogether,” Campello said. “New-hiring cuts and worker downskilling are most pronounced in localities where employment is concentrated in the hands of a few firms, in low-income areas and in areas with greater income inequality.”
This raises concerns about whether jobs lost to the pandemic are likely to return even when overall economic conditions improve. “We show that the pandemic has its worst effects in places that already have the worst levels of economic inequality,” they said. “It is clearly going to make those differences more acute.”
The researchers also found firms have increased their preference for part-time relative to full-time positions as reflected in their new postings. Firms are also hiring more into positions that are “core” to their operations following the onset of the pandemic. Given the forward-looking nature of hiring decisions, these results suggest important changes in the types of jobs firms may look to fill in the recovery, the researchers said.
And economic policy responses such as the Paycheck Protection Program (PPP) and elements of the Coronavirus Aid, Relief, and Economic Security (CARES) Act have provided firms with infusions of capital, with which they were able to retain employees, albeit with a decline in new hiring.
The study’s results, they said, highlight the challenges faced by policymakers in promoting job creation in a post-pandemic recovery. And as the pandemic evolves, the authors wrote, they will continue to monitor hiring patterns in an attempt to inform and assess policy decisions.
Stephen D’Angelo is a content strategist with the SC Johnson College of Business.