Ask the Economist: Why Are Tech Job Postings Down?

When COVID-19 struck in March, most workers found themselves in one of two positions: either temporarily out of work or asked to work from home. It was obvious that some industries were more vulnerable to business shutdowns than others — bartenders can’t serve drinks if bars are closed, for example, nor can dental hygienists clean people’s teeth from home. But other sectors seemed like they might be fine. Tech jobs, for example, appeared to be some of the easiest jobs to transition to remote work, with most business functions already being performed online.

In the early days of the crisis, this trend seemed confirmed, with the number of postings for tech jobs trending higher than the number of overall job postings on Indeed from mid-March to mid-May. But as the impact of COVID-19 drags on, the economic and employment effects are beginning to defy expectations. Starting in mid-May, Indeed saw tech job postings drop below the overall job-listing trend.

We wanted to learn more, so we sat down with AnnElizabeth Konkel, Indeed economist, to dig into Indeed data and uncover the story.

What are the key findings?

Postings for all jobs are trending below where they were last year; as of August 14, they were 20% below the trend compared to the same date in 2019. And tech jobs are doing even worse, at 35% below the previous year’s trend. 

We're seeing an impact beyond frontline workers to jobs that can be done from home.

AnnElizabeth Konkel, Indeed Economist

AnnElizabeth thinks we’re starting to see the longer-term effects of COVID and its economic damage.

“At this point, the effects on employment are not just isolated to places like restaurants and hair salons,” she says. “We’re seeing an impact beyond frontline workers to jobs that can be done from home.”

Another thing to keep in mind is that tech jobs don’t just exist at technology companies. Software engineers and IT professionals work for almost every kind of company imaginable. With industries such as food service, travel and hospitality hit particularly hard, companies in those fields may be slowing the hiring of tech workers in addition to customer-facing staff.

Finally, AnnElizabeth thinks the decrease in tech job postings is partly related to the high hiring and firing costs for those roles. 

AnnElizabeth says that some roles, such as restaurant staff, have a larger pool of candidates to choose from because less training and education is required than in other industries. These roles are often temporary positions with higher worker turnover, and they are easier and cheaper to fill.” 

This isn’t the case for tech jobs. Onboarding is often extensive and there is a comparatively smaller pool of workers to pull from due to the experience and education often required. So companies can’t immediately respond to improved economic conditions by hiring for these roles. Whereas retail stores and restaurants need to quickly hire staff in order to reopen, companies may be proceeding more cautiously with tech roles, thinking of growth from a long-term standpoint and carefully considering the best person for the job.

What does this mean for employers?

AnnElizabeth says tech jobs are in high demand, with job seeker interest for these roles on an uptick since the start of the pandemic. 

As opposed to the beginning of the year, when applicants were scarce and tech jobs were some of the hardest to hire for, this new competition “puts employers back in the driver’s seat,” she says. However, the increase in competition for tech roles may mean job seekers start losing some of this bargaining power.

“It’s probably too early to see this reflected in salaries, but we might start to see a loss of perks,” AnnElizabeth says. “Companies may decide that people are still productive without fancy perks and decide not to bring [those benefits] back.”

What does this mean for job seekers?

For job seekers, at least for right now, the data reveals there is greater demand for some tech roles than others. The jobs with the most postings are IT operations and helpdesk and systems engineer. This may be because these roles are vital to working from home; employees need to have the right hardware and be able to access systems securely when out of the office.

Roles in data science and IT management are experiencing comparatively lower demand. AnnElizabeth believes this is because many companies seem to view those positions as investments for the future; while important, they aren’t as essential to supporting a remote workforce. In this time of uncertainty and transition, a shortage of data analysis likely won’t have the same impact as workers being unable to access company systems.
Finally, AnnElizabeth points out that interest in tech jobs, with their benefits of flexibility and social distancing, is likely tied to the current demand for remote work. For example, after Twitter and Facebook announced they would allow for permanent remote work, Indeed saw huge spikes in searches for jobs at those companies.

Nothing about the novel coronavirus and its effects have been predictable, and the fate of tech jobs is no different. We’ll keep a close eye on job trends as the crisis continues and keep you informed about its impact on the labor market.