Cooling Jobs Market? A Crash in Online Hiring May Be Signaling Exactly That

Could the U.S. Labor Market finally be cooling down?

All of the official statistics tracking labor market—from jobless claims, to payrolls, to openings—indicate that demand for labor remains sky-high and supply is still constrained.  Investors have begun to question the notion that the Federal Reserve will only implement two more quarter-point increases before pausing. Market indicators suggest that the Fed has at least three-quarters to go before pausing.

However, there are signs suggesting that the labor markets may be cooling. On Wednesday, ZipRecruiter, an online job-search platform, released its fourth quarter results.  Although the revenue was higher than expected, it was four percent lower than the fourth quarter of last year. Management blamed the situation on the fourth quarter’s hiring boom. “a continued softening in the hiring market.”

ZipRecruiter’s management indicated that they expect sales to be down between 23 and 20 percent in the first quarter and between 13 and 15 percent for the full year.

Chief financial officer Tim Yarbrough spoke on the conference call to discuss the results. :

In June 2022, we witnessed the beginning of a decline in the number jobs created. With a more challenging macroeconomic backdrop, we now begin 2023. Many companies are cutting back on staffing and have seen employers decrease their willingness to hire. We saw online job postings remain low, rather than the typical seasonal rebound following the December holiday slump.

Ian Siegel, Chief Executive Officer and co-founder of the company, had a similar message.

Let me just say a few things. We are clearly in a macroeconomic slowdown. Online recruitment has actually slowed across the country, particularly for SMBs. If you take a look at other companies with similar scales, you’ll see that they are delivering the same message as we do. We are also seeing a rise in job hunters, which is similar or corresponding to what you might expect from a slowdown in macroeconomics. These job seekers will take longer to find work when there are fewer jobs. That is exactly what we are seeing. Based on this backdrop, we assumed that 2023 would see a softening of the hiring environment based upon the information available at the time.

These signs of slowdown are not only being noticed by ZipRecruiter. Rand Ghayad was head of Economics and Global Labor Markets for LinkedIn two weeks ago. A post on the site stated this. The U.S.’s January employment-focused social media platform saw a drop of 23 percent over the previous year and a decrease of 0.7 percent in comparison to December.

ZipRecruiter’s shares dropped 26 percent on Wednesday. The stock is up 4.1 percent year-to-date.

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